Background to the report
There are around 5.7 million businesses in the UK, ranging from multinationals to sole traders. The government provides a range of support to businesses, including tax reliefs, advice and finance in the form of grants and loans. In 2017, the Department for Business, Energy & Industrial Strategy (the Department) published its Industrial Strategy, which sets out the government’s objective to boost productivity and earning power throughout the UK.
Government support to businesses is intended to contribute to the achievement of this objective, alongside other government activities such as investing in infrastructure and skills. The Department, which is responsible for the Industrial Strategy, administers a larger number of business support schemes than any other government department.
Content and scope of the report
This report includes:
- a description of the overall landscape of government’s support to businesses and how the Department supports businesses (Part One);
- our assessment of how the Department set up and managed a sample of 10 of its schemes against a set of good-practice criteria we derived from our previous reports and government guidance (Part Two); and
- our assessment of how the Department is managing its business support portfolio (Part Three).
We have published a separate report on the British Business Bank, a wholly owned government company accountable to the Department, which aims to make finance markets work better for small businesses in the UK at all stages of development. Therefore, we have not included schemes in our sample that the British Business Bank manages.
The Department administers more schemes to support businesses than any other department, costing around £2.4 billion a year. While we found both strengths and weaknesses in the management of the 10 schemes in our sample, the way they were designed and evaluated by the Department did not consistently follow government’s own guidance. Most schemes in our review lacked measurable objectives from the outset or evaluations of their impact to know if they are providing the most value or if they should be discontinued. Without such analysis, the Department cannot know if its business support is providing value for money.
More widely across government, the joint costing project has shown that the landscape of business support, which cost around £17 billion in 2016-17, has developed piecemeal and includes a mix of policy interventions administered by different departments. HM Treasury and the Department recognise the need to make support better coordinated and prioritised. This work is both urgent and critical if government is to provide the most effective support to the UK economy when it replaces the support that currently comes from the EU.