Business Links could fall over shaky foundations

The House of Commons debate next week on the Business Links network comes two years after the launch of the first pilot and the subsequent opening of a flurry of Business Link shops.

The expansion of the network has snowballed in the three years since the scheme was first launched, and the Department of Trade and Industry, which has provided start-up funding for the network and oversees the Links, says it has been an unqualified success. So why is the Government still coming under attack over the future of the network and being criticised over the way in which it has been set up?

And why are there still questions being raised about funding and whether the Links can survive in the long-term?

The history

One of the main criticisms surrounding the network, and one which will surely be brought up in next week’s Commons debate, is the speed with which the network has been set up.

The Business Links scheme was launched – amid much fanfare – by Michael Heseltine in July 1992. Its aim was to provide support for all businesses, but primarily for small and medium-sized companies keen to grow and export. Business Links were heralded as one-stop shops for business information and advice. The network is based on a system of advisers, including design counsellors, who provide business advice and services to a range of companies.

The DTI put in 24m, mainly to kick off the scheme. Another 32.7m was advanced by the Training and Enterprise Councils. The ultimate aim was to have 200 shops open by the end of 1995.

The first shop was opened in Leicester in September 1993, with the first of 70 planned design counsellors in the network being appointed in March 1995 at the St Albans shop in Hertfordshire.

Those in favour

The DTI claims that the scheme has been a success and points to the constantly expanding network as a measure of this success. The fact that some shops, like the Birmingham Link which has been established for a longer period of time, are now beginning to charge businesses for the service and advice they deliver and are some way towards contributing to their own income, is another measure of success, according to a Business Links spokesman.

“Businesses which go to the Business Links network are prepared to pay for a tailored service which suits their needs,” says the Business Links spokesman. But “the future depends on each Link shop, since each develops its own long-term business strategy”, he adds.

The Design Council is also fully behind the Links network. “This is the best way to provide companies with a comprehensive service,” says Sean Blair, design director at the Design Council. “The philosophy behind Business Links is very good – business managers have been baffled in the past by the array of services on offer and where to find them. Business Links resolves that problem,” he adds.

But the Design Council is not impartial about the scheme. It has been officially contracted by the DTI to carry out an evaluation of design advisory services nationally, and this includes evaluating the service offered by Business Link design counsellors. A design support group for design counsellors has also been set up by the council, which will also be looking to develop a code of best practice.

And the design counsellors themselves say the scheme is a success, with design being promoted to companies which were previously unaware of it, and with business advice being given to consultancies.

Those against

Those criticising the network make up a formidable foe which ranges from Labour MP and Shadow Small Business minister Barbara Roche to the British Chambers of Commerce.

Roche’s criticisms are based on a leaked DTI document compiled by Government auditors. The document itself is critical of the speed with which the network has been set up. The first pilots were opened with the aim of the department reporting back on their success before implementation of the whole programme. But the auditors found that Heseltine had ordered new shops to be opened before any evaluation of the first group had taken place. As a result, guidelines and appraisal procedures had not been observed.

A failure to notify the European Union in time meant the scheme went ahead without approval, with payments made before September 1994 exposing the DTI to “financial risk and potential embarrassment”.

The scheme also relied on private money from businesses, but the auditors found that the “financial appraisal of the Business Link business plans has not been sufficiently rigorous”, which may have contributed to the “parlous financial state of many Business Links”.

The medium and long-term viability of many of the shops was uncertain at the time the document was written a year ago, and the Business Links spokesman refuses to comment on finances or funding of the shops. So the precarious financial state of those Links referred to in the document remains unresolved, as does the nature of any subsequent Links set up after the document was delivered. This is something Roche has written to Board of Trade President Ian Lang about, and will no doubt bring up in the Commons debate.

Meanwhile, the British Chambers of Commerce is continuing to look at the current support systems for businesses and how they can be improved, says a BCC spokeswoman.

The BCC criticised the Business Links in July 1993 as being too expensive and has called for new-style chambers of commerce funded by business rates.

The future

The DTI plans to have some 240 Links open by March 1996, and there is still funding for 52 design counsellors.

But the long-term stability of the Links remains to be proved and the outcome of the Commons debate will be significant, if only in clearing up the murky area of funding the Links at inception. Roche in particular is keen to see that “taxpayers’ money has not been… jeopardised by a lack of financial appraisal”.

So while Link shops will continue to open, their future is not as optimistic as the DTI would hope. In theory, the philosophy behind the Links seems steadfast; but in practice, proper monitoring of the pilots did not take place and teething problems may have been overlooked. The future is uncertain and only time will tell whether the scheme survives or not. Watch this space.