This entry is an excerpt from the OECD’s International Compendium of Entrepreneurship Policies (2020), which contains 16 case studies from 12 OECD countries. The Compendium examines the rationale for entrepreneurship policy, presents a typology of policy approaches and highlights principles for policy success. Case studies span policies for regulations and taxation, entrepreneurship education and training, advice and coaching, access to finance, internationalization, innovation, and holistic packages for ecosystem building. (OECD Publishing, Paris, https://doi.org/10.1787/338f1873-en.)
This particular case study explores the UK government’s decision to adopt a localized approach to supporting business growth based on the idea that locally-driven and -owned Growth Hubs are more efficient than centralized programs in identifying and responding to local needs.
Establishing Growth Hubs also responded to the need to provide entrepreneurs with a single point of contact to firms. Growth Hubs facilitate access to business support, encouraging more firms to utilize it.
Growth Hubs aim to improve the coordination and delivery of business support services to local companies based on local needs with a focus on:
Administrative procedures (e.g.: taxes, legislation, regulation, access to finance and national funding streams),
Specialized assistance by signposting businesses to receive existing support in the public and private sector, and
Delivering business support to smaller businesses that may lack the resources to seek out support services.
Growth Hubs act as one-stop-shops, offering a point of entry for business support and information (national and local) at different stages of development (startup, scale up and job creation). As the Growth Hubs develop, the government placed a strong emphasis on cooperation and communication among the Hubs to foster collaboration, best practice exchange and other network effects (such as sharing announcements of events and opportunities).
The Growth Hubs offer face-to-face professional advice and signposting of appropriate local and national resources. During the initial meeting, a Growth Hub adviser evaluates the business’s growth plans and establishes a diagnostic assessment of support needs. Depending on the type of assistance required (e.g. HR, marketing, sales, e-commerce, funding and finance, export, etc.), support may be delivered by the Hub itself or through external organizations, including local and national public and private sector partners (e.g. local universities if innovation is a priority, the Department for International Trade if export support is required).
The Ministry of Housing, Communities and Local Government (MHCLG) has policy responsibility for the 38 English Local Enterprise Partnerships (LEPs). The Department for Business, Energy and Industrial Strategy (BEIS) is specifically responsible for Growth Hub policy.
Each of the 38 English Local Enterprise Partnerships (LEP) has its own Growth Hub, over which it has ownership and governance. LEPs are partnerships between local authorities and local private sector actors that determine local economic priorities and undertake activities to drive economic growth and job creation, improve infrastructure and raise workforce skills. LEPs operate independently and their network (the LEP Network) facilitates knowledge sharing among LEPs and dialogue with the government and other stakeholders. Each LEP developed its own Strategic Economic Plan that outlines its priorities and serves as a basis for developing Growth Deals, through which government funds are awarded to LEPs for projects that benefit the local area. Growth Hubs were set up as a key element of these Growth Deals.
Growth Hubs are independent so that they can respond to local needs without being bound by a centralized structure. As such, they vary in terms of capacity and support services offerings. They are, however, required to adhere to BEIS's five Principles of Funding:
(i) Management, governance and coordination;
(ii) Data monitoring, reporting, evaluation and value for money;
(iii) Strategic partnerships and business support simplification;
(iv) Triage, diagnostics and signposting; and
(v) Supporting ambitious and high-growth businesses (scale-ups).
Growth Hubs are open to businesses of all sizes.
2014 – present
The Growth Hubs were established in 2014 in the context of developing “Growth Deals” by Local Enterprise Partnerships.
The Growth Hub Network is currently active. By the end of Financial Year 2019/20, the UK government made GBP 62 million (EUR 71 million) available to support the Hubs. A further GBP 12 million (EUR 13.8 million) will be provided in FY 2020/21, with funding beyond March 2021 to be agreed.
BEIS designed a specific Growth Hubs monitoring and evaluation framework. The framework ensures the collection of data that contributes to understanding which business services are most useful to local companies, and how their performance can be improved to increase their impact on local and national economies and wider society. The framework establishes the “minimum sets of data to collect.” In addition, Growth Hubs are encouraged to collect any additional data they believe will improve operations. Metrics were designed in accordance with EU requirements and with the goal of reducing burdens. Growth Hubs are asked to report aggregated data.
Growth Hubs are expected to record data when providing face-to-face support and referring users to a business support service. LEPs are expected to report “non-aggregated” data for their Growth Hubs in an accessible format (e.g. on a spreadsheet with metrics as the columns and interactions as rows) at six month intervals or when specifically requested by BEIS.
As each Hub operates independently, BEIS encourages LEPs to develop a robust evidence base for their Growth Hubs to ensure they demonstrate impact so as to support future bids for public sector funding. This may include a LEP’s internally agreed KPIs. LEPs are therefore responsible for both day-to-day performance monitoring and wider strategic impact evaluations of their activities – including value for money at a local intervention level.
BEIS produced a template to help LEPs draft individual Growth Hub Annual Reports. BEIS assesses how well individual Growth Hubs are performing against its five principles of funding based on these reports, which showcase success stories and identify best practices and local innovations likely to aid the development of the wider Network.
An independent evaluation with a control group conducted in 2017 found that businesses in contact with a Growth Hub were growing faster than those that were not. This was true in terms of both turnover (9.0% for Growth Hub users, 2.5% on average for other companies) and employment (8.0% for Growth Hub users vs. 0.1% for the comparison group).
Data from October 2017 show that overall, 582,815 businesses had engaged with Growth Hubs and/or been supported by them as well as 31,834 individuals, including entrepreneurs, pre-startups and startups. Of these, 105,356 users received referrals for public/private support. Growth Hubs also helped 11,459 individuals start a business. A customer satisfaction survey of Growth Hubs support found an average satisfaction rate of 86.6%.
Growth Hubs are seen in the UK as a successful way to support to local economies and the competitiveness and productivity of local business.
Challenge: Attending to the needs of diverse business profiles
One of the main challenges BEIS faces operating the Growth Hubs is efficiently dividing resources so that different categories of businesses (from small startups to larger scale-ups) receive appropriate support services. The Hubs address this challenge through specialization at the local level by offering support that is focused on the problems faced by small startups (e.g., access to premises, skilled workers, good infrastructure and finance) while addressing the needs of scale-ups by signposting national support and enabling local networking and collaboration.
Another challenge in providing specialized services to different types of firms and business support to specific sectors of the economy is that it often leads to a complex advisory services landscape. A challenge for Growth Hubs going forward is to address complexity and collaboration in the business support market in order to facilitate access by smaller firms.
Lessons for other ecosystems:
Success factors for the Growth Hubs that may be relevant for similar policies and initiatives include:
Provide political support to the centres at the national level. The creation of LEPs and Growth Hubs was flagged as a national political priority by the government under the support of the House of Commons' Business, Energy and Industrial Strategy Committee. The strong political support contributed to better engagement among stakeholders. Defining a national strategy was an important tool to signal this commitment.
Develop strategic plans at the local level. Implementation at the regional and local level requires bottom up contributions to inform the national authorities and define and achieve the most appropriate goals for the local context.
Involve a variety of stakeholders. The combination of a top down with a bottom up approach, where local stakeholders are strongly engaged and play a key role, allowed for wider participation and leveraging local capacity.
Create of a network linking the Growth Hubs. The development of a national network contributes to consistency among the services offered across hubs, and provides opportunities for organizations to learn from each other.
Establish a monitoring and reporting system. After their establishment, Growth Hubs require a high level of monitoring and reporting to national authorities in order to know whether their services are corresponding to the national and regional plans or ambitions, and also to know their outcomes and impact, as well as to allow for benchmarking opportunities.
Embed the Growth Hubs in new national strategies. Involving Growth Hubs as partners in the definition and implementation of new strategies ensures the Hubs’ relevance and allows for leveraging their capabilities. For example, the National Industrial Strategy uses the Growth Hubs to reach out to local stakeholders and businesses.
Direct sufficient and continuous funding. Financial support is needed on a regular basis to ensure continuity of service.