Councils and Local Enterprise Partnerships need stronger evidence about what works - and what doesn't - when it comes to supporting local businesses
The What Works Centre for Local Economic Growth has recently taken a hard look at the effectiveness of public sector business advice and mentoring policies. We are interested in finding out whether programmes like Business Link, and export support schemes like those run by UKTI, are making a real difference for British businesses.
After considering almost 700 policy evaluations and evidence reviews from the UK and other OECD countries, we found 23 that met the Centre’s tough minimum standards, and used these as the basis of our study. It revealed some interesting and important findings.
Overall, 17 of the 23 evidence reviews found positive impacts on at least one aspect of performance – whether through productivity, employment or sales. Only four evaluations indicated that the advice had no statistically significant effects on any outcomes for businesses (although two in fact found that it might be harmful in certain cases).
Given the scepticism that’s sometimes levelled at business support programmes, that overall success rate should be quite encouraging for policymakers in Whitehall, LEPs and local government.
The review also revealed some interesting findings in terms of business advice policy objectives, design and delivery. First, programmes demonstrate consistently better results for productivity and output than they do for employment – maybe because it’s easier to help raise productivity, or because productivity increases come first, and lead to employment gains in the longer run.
We also found that programmes using a hands-on, ‘managed brokerage’ approach may perform better than those using a ‘light touch’ approach. Taken at face value, this suggests that a strong relationship between the company and the public sector advisor is an important factor in delivering positive outcomes.
It was challenging in some cases to assess whether programmes had truly succeeded or failed against their objectives, as many had multiple, convoluted aims, and at times the evaluations bore no relation to them. Based on this experience, we would advocate clearer policy design and more tightly commissioned evaluations to help improve on this in the future.
A valuable and concerning aspect of the study was how it revealed that many issues discussed in current debates in Whitehall and the media are actually based on inconclusive evidence. For example, only five of the 23 shortlisted studies actually assessed cost-effectiveness in their cost-benefit analyses, and not all of these used measures that are comparable across studies.
Given the current constraints on the public purse, this is a serious barrier for policymakers looking to establish value for money on programme spend.
Similarly, we found no evidence that would suggest one level of delivery – national or local – is more effective than another. It is also difficult to reach any conclusions about the effectiveness of public-led versus private-led delivery. Again, we know this will be frustrating for people working in local government and LEPs, many of whom are setting up locally-led business support hubs.
So where do we go from here? There’s a clear an urgent need for better quality evaluations, especially in the areas of policy where we’re still not clear what works: levels of delivery, public and private sector roles, and in particular, cost-effectiveness.
Although many local authorities are really feeling the pinch, local flexibility that allows for greater experimentation does provide an opportunity to undertake such evaluations.
We are starting conversations with a number of LEPs and local authorities regarding this. If you are interested in helping us experiment in this area and improve our understanding of what works, please don’t hesitate to get in touch.
Henry Overman is director of the What Works Centre for Local Economic Growth
