At a recent meeting with LDA senior managers we got around to discussing why they are so reluctant to fund “Business Support” programmes and (uniquely in terms of extent for a RDA) so keen to commit resources to programmes that help the unemployed in London find work.
And thereby replicate, duplicate and top-up the efforts of JCP, LSC and individual London councils.
The answer turned out to be the attitude and politics of senior managers and board members at the LDA who are, for the most part, not inclined to spend any money on business support. Is it really needed, does it address market failure, why not get the business to fund their own programmes are the prevailing consensus at the LDA. That means that our Regional Development Agency for London spends less than 20% of its budget on measures to support businesses to grow the London economy.
This reluctance to spend public money evaporates when it comes to supporting the unemployed in London to find work. The political pressure to be seen to be doing something to address the unemployment and workless issues in London has resulted in the LDA spending ever more sums on measures and programmes that help the long term unemployed better compete against the short term unemployed for the relatively few jobs that are available.
At a time when there over 10 unemployed residents in London chasing every job vacancy, I estimate that in this financial year that collectively government agencies will be spending in the region of £300m+ in London to help the unemployed to prepare for and compete for what jobs our no-growth economy can muster. The sad truth is that all this money will not create a single new job.
This situation has left me pondering what the enterprise movement in London can do to show the worth of supporting the creation of new businesses and supporting the survival and growth of London’s remaining small businesses. Here are my suggestions.
- Rebrand. I think the problem is the word “business” which generates in the mind of the public and politicians ideas associated with money, success and greed. I suggest in future we banish the phrase “Business Support” and replace it with the phrase “Job Creation”. We become organisations and agencies that help create new employment opportunities for the unemployed. Who can be against that?
- Re-focus. We should take a good look at all our programmes to make sure that the intervention provided actually leads to a job being created and sustained. If there is no direct causal link to job creation then we should re-design the programme so that there is one.
- Promote “Demand” side market interventions. Let’s see if we can have another go at convincing London’s funding bodies to take a new look at supporting demand side measures that will encourage businesses to create jobs. I think measures such as reducing the cost of doing business in London, by for instance reducing the cost of renting property ( see the void property clearing house) and cutting the cost of employing new staff ( i.e. graduate intern programme) are schemes that will encourage businesses to grow and create jobs.
- Integrate Job Creation programmes with “Back to Work” programmes. As a rule of thumb we probably all could do improve our working relationships with job brokers and skills agencies to ensure what jobs we do help to create are filled by the unemployed. Although it does take two to tango and I don’t see a lot of job agencies banging on our doors.
- Emulate the best practice of Job Brokers. Job brokerage agencies have been very successful in using pre-screening to segment the unemployed into those (who due to their attitude, work experience and qualifications) they are able to match to available job vacancies and those who need more support to become so called “job ready”. They then as a rule focus their resources and efforts on those they can match to a job vacancy (the term they use is called “Ride”) and refer those who they can’t immediately help on to FE programmes etc (the term they use is “Park”). We do not operate a pre-screening “Park and Ride” scheme for the unemployed who want to become self-employed. Maybe we should?
- Do not confuse Social focused programmes with those focused on Economic growth. It was pointed out to me by Tim Heath CEO of ELSBC that many of our members main focus is not economic growth but tackling social exclusion- helping those entrepreneurs and small businesses excluded for one reason or another from mainstream provision. Community Development Finance Institutions are a classic example of programmes that do not focus on maximise returns or maximise the number of jobs created but on helping those excluded, in this case from mainstream bank finance. We need to continue to argue passionately that these social programmes that support entrepreneurship in places the free market has left behind, are worthy of public support regardless of their relative job creation /economic growth impact for London as a whole.
Those are my ideas. I am sure you can do better.
