UK government commits £56m to close SME productivity gap

The government has pledged to help small and medium-sized businesses to enhance their leadership and management skills, and to steer more graduates into “complex” areas of business.

The funding forms part of a Business Productivity Review announced by the Department for Business, Energy and Industrial Strategy (BEIS) and the Treasury, that sets out a 10-point action plan intended to help smaller UK companies “harness technology” and “boost productivity”.

It was first announced during the 2018 Autumn Budget by then Chancellor of the Exchequer, Philip Hammond.


Productivity Gap - PRODUCTIVITY BY COUNTRY, BY YEAR - GDP PER HOUR WORKED

Productivity levels by country and year relative to GDP per hour worked


The government-backed review advises UK companies to focus on certain areas in order to increase their productivity, including embracing “the best leadership and management models and techniques”, and adopting “tried-and-tested” technologies such as on-line accountancy and Customer Relationship Management (CRM) software.

To this end, BEIS and the Treasury have split the £56m fund across three areas:

  1. An £11m grant will go towards the creation of a Small Business Leadership Programme, to provide management training in those companies.
  2. Another £20m will be used to strengthen locally-focused business networks so UK companies can share management strategies and their experiences with certain technology adoption
  3. A further £25m has been set aside to expand Innovate UK’s Knowledge Transfer Partnership (KTP) programme.

It is hoped that the KTP investment will drive upwards of 200 skilled graduates “into businesses with complex management issues to translate their research insights into business growth”.

That project will reportedly open on 12 December 2019 and close on 19 February 2020.

“It is vital for a growing and competitive UK economy that business and government collaborate to close the productivity gap”

BEIS is also challenging high-end businesses to adopt a new Be the Business mentoring programme for SMEs – an online dashboard that keeps track of company progress and enables learning from peers.

An additional provision led by BEIS, technology firms, banks and professional services will support UK businesses who do not typically engage with the state, to embrace fresh management practices and modern business tools.

92% Of manufacturers believe Smart Factory technologies will enable them to increase productivity levels per headcount

The £56m and Business Productivity Review follows a previous Business Basics Programme launched by the government, in which organisations can apply for a share of up to £2m to run trials in England to test ways to encourage SMEs to adopt existing productivity-boosting technologies.

The latest round of funding is open until 4 December.

In October, BEIS also invested £88m to help close the productivity gap between the UK and major world economies, by funding research and development of advanced computer software and by encouraging smaller companies to adopt new technologies and more efficient business practices.

“As a former small business owner, I know how important it is to harness technology to make your business more productive and our review sets out crucial actions that businesses can take to boost their own productivity, said small business minister, Kelly Tolhurst.

By Rory Butler, Staff Journalist