£200m support for Northwest businesses as tough economic climate continues to bite

The event marked the launch of a new document drawn up by the Government and the NWDA for discussion with business, local authorities, housing groups, communities and the voluntary sector. It sets out how the Northwest economy has changed and restructured in recent years and the main challenges and opportunities it faces in the period ahead. It also sets out how the Government and the NWDA will work with other agencies across the Northwest to continue to help Northwest businesses and families through the more challenging times ahead and continue to enable the region to deliver its long term goals.

At the launch Ministers and the Chairman of the NWDA highlighted five such initiatives that will provide support to Northwest businesses in the coming years:

-          £140m Venture Capital Loan Fund (VCLF) consisting of £70m of European funding will be one of the   first initiatives announced by the £521m, 2007-13 European Regional Development Fund (ERDF) Programme in 2009.

-          £40m package to stimulate business investment in skills

-          New £10m High-Growth business support programme

-          £4m Innovation Voucher Scheme

-          Improved Access to Finance

Yvette Cooper MP, said: “The Northwest economy, like every region across the world, is being affected by the twin economic problems of the credit crunch and the high oil and food prices.  But unlike in previous decades this region is now much stronger after years of strong growth and rising employment, backed by sustained and increasing government investment.  

But we are determined that Government, along with regional and local agencies, will work to ensure that businesses and households get the support they need in these times of uncertainty.  Looking ahead, we will continue to make the investment that has supported regional regeneration and growth in the past, to ensure that growth continues well into the future.”

VCLFs are a key instrument in European, UK and regional policy for stimulating innovation, R&D and growth in SMEs.  The provision of equity and mezzanine funding is to support small and medium sized businesses unable to raise finance on the commercial market because of the equity gap. These Venture Capital funds are designed to address a long-term structural weakness in the provision of risk capital to small and medium sized businesses by providing a source of funding which would otherwise not be available.

This £140m fund, a priority project of the ERDF 2007-13 programme, is now out to tender and will be ready to take applications early in 2009. The fund will really make a difference in plugging the finance gap, helping businesses to gain access to finance to innovate, invest and grow, which in turn will generate growth in the Northwest economy.

Steven Broomhead, Chief Executive of the NWDA said: “Obviously businesses can access financial support from a wide range of channels but what we are doing is strengthening, to reflect changing business concerns. Businesses are now telling us that access to finance is their number one priority and we are making sure our services reflect that need.”

The document also highlights that the NWDA is preparing a £40m package of support to stimulate investment in priority skills development. As the tough trading conditions inevitably force businesses to cut-back on operational costs, the Agency support continued investment in skills training. This initiative will be developed to meet business needs over the months ahead.

With the support and investment of the new ERDF programme, the NWDA also aims to deliver a £10m programme of support to help 1,000 high-growth, new and established businesses in the Northwest. High growth companies are defined as either new businesses that have the scope to grow to £0.5M in 3 years or established SMEs that have the ambition and capability of achieving a minimum of 20% per annum growth. The project aims to provide intense coaching and support to businesses in the Northwest that demonstrate this high growth potential. This initiative will be ready to take applications later this year.

Beverley Hughes, MP, said: “I believe the North West region is now more resilient and in better shape to cope with more difficult economic times. Over the past decade, the North West economy has enjoyed a period of unbroken growth.

“During this time there has been a significant structural shift in employment away from manufacturing towards the hi-tech sectors including biotechnology, digital and creative, chemical, aerospace and financial and business services.

“This shift means the region’s economy is very different than when it faced the economic downturn of the 1990’s.

“As Minister for the North West I don’t underestimate the impact of changing economic circumstances and as this document, and the measure outlined in it makes clear, we are determined to work together to help business, people who work with them families and communities. I am confident that businesses that are innovative and invest in the skills of their people will continue to have a bright future.

Steven added: “There are significant initiatives in this document, some already in place that will help support the long term success of Northwest businesses during and after this challenging economic period.

And the little things can make a big difference too. Prompt payment and cash-flow are serious issues for businesses as they now, more than ever, need to keep a tight-ship and rely on prompt payments so they can continue at a solid pace without interruption. The 30 day payment target, already set, is achievable and I would like to see all public sector partners working hard to ensure this deadline in not exceeded.”

The NWDA has already recognised the need to make access to finance easier. The Agency is setting up a new, enhanced, Access to Finance service for businesses which will be available next month via Business Link Northwest, as the primary gateway for business support, which will diagnose business needs for finance, provide SMEs with skills/expertise to secure private funding and assist in brokering direct to the relevant finance provider.

Other initiatives are also outlined in the document including a forthcoming £4m Innovation Voucher Scheme that will help over 1000 businesses to work with the Knowledge Base, i.e. universities, on collaborative projects, plus ideas for High-Growth support, a new business start-up programme and other ideas for the business community to comment on. 

The document also highlights the success of Business Link Northwest (BLNW) after its first full year as a regional service and promises to bolster this success by enhancing the regional Business Link Northwest service even further in the future. Already BLNW now has 50% more business brokers on the ground compared to the 2006 service and is accepted as the single point of access for Business support in the region with £18m a year to help Northwest business to grow and succeed. All of which is helping our businesses in the Northwest to ride-out the worst of the ‘credit-crunch’.