The Government’s commitment to manufacturing has been questioned after funding for business growth was cut.
The Business Growth Service (BGS), which includes the popular Manufacturing Advisory Service (MAS) and the Growth Accelerator programme, has been shut down after Chancellor George Osborne pulled funding.
David Bailey, professor of industrial strategy at the Aston Business School, said the cuts, along with the absence of over-arching industrial plans, would hold production firms back.
The cuts were announced by the Department for Business, Innovation and Skills (BIS) which said it would save the Government £84 million.
Instead, it said it was investing £12 million per year into 39 local growth hubs that were led by local enterprise partnerships – which has been described as “peanuts”.
Writing in today’s Post, Prof Bailey said: “BIS has gone out of its way to suggest that MAS is effectively being replaced by local growth hubs. But this is somewhat misleading. For a start, the £12 million across 39 LEPs works out at just over £300,000 a LEP. Peanuts.
“Secondly, while LEPs here in the West Midlands have prioritised manufacturing as one of their key sectors as part of their strategic plans. What about those LEPs that don’t prioritise manufacturing?
“In such cases, local growth hubs are unlikely to offer much support – if any – to manufacturing firms. There is no longer a national drive to support manufacturing, it seems.
“Thirdly, the growth hubs are simply unready in many cases to take on the mantle.
“All of this leaves a fundamental question of where manufacturing firms go for help to when MAS is scrapped. It also raises wider questions about the government’s commitment – or not – to using industrial policy to support manufacturing.”
The closure follows last month’s autumn statement and spending review in which the Chancellor announced a 17 per cent spending cut for the business department.
However, Mr Osborne made no specific mention of the move to close the BGS in his speech to parliament.
Furthermore, there is no mention of the service being scrapped in the BIS settlement in the spending review and autumn statement, commonly known as the “blue book”, which sets out in more detail how the chancellor’s plans are to be realised.
Staff at the BGS are said to have been shocked to discover their jobs were at risk – despite having listened to the autumn statement.
Larry Joyce, chairman of Cradley Heath-based Kimber Drop Forgings, praised the work of MAS, saying it “contains individuals who are pro-active and have the right contacts to make things happen”.
He told The Guardian much was at risk following its closure, adding: “It is a terrible indictment of the government that they are risking the regeneration of industry, which is still in its infancy.”
Business owners who have already signed agreements with the BGS are being told they will still be honoured.
However, those planning to access the BGS’s match-funding, coaching or mentoring services will not be able to do so.