A new report from the All-Party Parliamentary Group for Entrepreneurship calls on the Government to expand and reform its two flagship schemes for boosting the productivity of Britain’s small- and medium-sized enterprises. Supporting SMEs Successfully finds that while the Help to Grow schemes have shown promise, they are still falling short of their full potential.
UK labor productivity is in a sorry state. While it grew at 2.7% per annum on average between the 1970s and the 2008 Financial Crisis, since then it has only grown at a rate of 0.5% per annum on average. UK labor productivity is now 23% lower than in the US, and 17% lower than even France and Germany. As author Eamonn Ives said: “Restoring productivity growth to historical trend rates is an economic imperative – for seeing better living standards and shoring up the public finances.” At the 2021 Budget, Rishi Sunak, then as Chancellor, announced two schemes to boost SME productivity.
Help to Grow: Digital subsidizes the cost of digital technologies, and Help to Grow: Management trains small business leaders in how to better manage their firms.
On Help to Grow: Digital, the report argues that more technologies should be made eligible for subsidy. Businesses can currently get discounts on just three types of software – for e-commerce, digital accounting, and customer relationship management (CRM). Experts have called for other software to also qualify for discounts, including for cloud computing, cloud storage, HR tools, and artificial intelligence and machine learning. Previous research shows the potential productivity benefits of these technologies to SMEs, which will only become more important as the economy increasingly digitizes.
On Help to Grow: Management, the report highlights how many business leaders believe it is too time-consuming, which has restricted uptake. The management courses require 50 hours, spread over 12 weeks, to complete – a sacrifice many business owners feel they cannot make. The report suggests increasing the flexibility of how they are delivered to open them up to more SMEs – for instance trialing online-only courses, or delivering courses in a more tailored timeframe.