The Scrutiny Working Group - Business Support met to review the work of Business Swansea, the council's primary business engagement and support service. The group discussed the effectiveness of various grant schemes, outreach methods, and the overall impact of Business Swansea's initiatives on local businesses. The meeting concluded with a discussion on potential recommendations for the Cabinet Member regarding improvements to business support services.

Business Support Report

The Scrutiny Working Group received a comprehensive report detailing the activities and impact of Business Swansea, which was established in April 2021. The service aims to support businesses in Swansea, a city with the second-largest business base in Wales, by coordinating a wide range of interventions. These include grant schemes funded by the UK Government's Local Growth Fund (LGF) and the UK Shared Prosperity Fund (SPF), as well as events, workshops, and communication strategies.

The report highlighted that Business Swansea has supported businesses through various stages of development, from individuals considering self-employment to established companies looking to invest and grow. Key achievements from the SPF programme (April 2023 - March 2026) included the awarding of 314 business grants totalling £3.15 million, the leveraging of £3.72 million in private sector investment, the creation of 128 new businesses, and the creation of 151 new jobs with 243 safeguarded. The service also provided non-financial support to 750 businesses.

During the meeting, councillors raised several questions regarding the reach and effectiveness of Business Swansea's support. Councillor Mike Day questioned how businesses are informed about available support and whether resources are sufficient for proactive outreach. Officers explained that awareness is raised through a fortnightly e-newsletter, monthly business surgeries, social media presence, and attendance at networking events. They also highlighted the use of case studies to promote their work.

Councillor Day also inquired about specific sectors or geographical areas that may not be reached as effectively. Officers stated that while support is available to a wide range of sectors, they have a proactive approach towards high street retail and independent businesses, and also focus on businesses looking to increase resilience against rising energy costs. They also target manufacturing and industrial estates with good growth potential.

Peter Black CBE raised concerns about measuring the lasting impact of grants. Officers confirmed that successful grant applicants are followed up at six and twelve months to track productivity increases and job growth. They emphasised that grants are also a tool for engagement, fostering ongoing relationships with businesses. Mr. Black also asked about support for unsuccessful grant applicants. It was explained that grant panels are supportive, and unsuccessful applicants receive reasons for rejection and are encouraged to access support from other providers like Business Wales.

A key discussion point was the joined-up nature of the support offer from various organisations, including Business Swansea, Business Wales, and the Development Bank of Wales. Officers described their role as an honest broker, working closely with partners to deliver a coordinated programme. They highlighted that surgeries are often attended by multiple support organisations, facilitating cross-referrals and avoiding a siloed approach.

Councillor Mike Day asked about the biggest challenges businesses are currently facing. Officers identified the rise in operational costs, particularly employer's national insurance contributions and energy costs, as the main concerns. They noted that this is reflected in a lower uptake of the growth grant, as businesses are reluctant or unable to create jobs. Feedback mechanisms, including questions within grant applications and follow-up surveys, are used to continually improve the service and understand business challenges.

The effectiveness of grants in encouraging businesses to invest their own money was also discussed. It was confirmed that most grants require a 50% match funding, and the SPF programme leveraged £3.72 million in private investment against £3.1 million in grant funds. Emphasis is placed on local economic benefits, including the utilisation of local supply chains and recruitment.

Regarding business survival rates, it was noted that national data from the Office for National Statistics shows Swansea's one and five-year survival rates are now above the Wales and UK averages. The business stock in Swansea has also increased, working against the national trend.

Concerns were raised about the potential limitation of external funding in the future. Officers stated that Business Swansea could continue to operate as an honest broker by working with partners, even with reduced funding, though the scale of grant funding would be impacted.

The issue of businesses regularly requesting support that cannot currently be provided was also addressed. Officers mentioned that while vehicles cannot be directly supported, related costs like vehicle wraps can be. They also highlighted that they look at the full picture for businesses, exploring alternative grant programmes if an initial application doesn't fit specific criteria. The High Street Helper Grant was specifically designed to support businesses taking on retail premises, covering initial outlay and some overheads.

The process of grant allocation was discussed, with officers confirming that grants operate on a first come, first served basis. They explained that grant panels meet weekly, and applications are typically processed within two to four weeks. While this approach has not been a significant issue with current funding, the group discussed the potential for a good project to miss out if funding is allocated before they can apply.

The challenge of businesses having to spend money upfront before claiming reimbursement was raised, particularly for those with cash flow issues. Officers explained that while procurement rules necessitate this, they offer stage payments to help businesses manage cash flow. Grants like the High Street Helper and Pre-start grants do not require match funding.

The complexity of the application process was acknowledged, with a balance being struck between safeguarding public money and making funding accessible. Officers explained that requirements like business plans and cash flow forecasts are in place to ensure businesses have thoroughly considered their risks and strategies for long-term resilience.

Councillor Mary Jones inquired whether micro-businesses and sole traders access support at the same rate as larger SMEs. Officers indicated that the majority of applications are from micro-businesses, but acknowledged that engaging with sole traders, particularly in sectors like construction, has been challenging. They are working to improve engagement through supply chain support and workshops. The ability of Business Swansea to support businesses in adopting digital technologies and artificial intelligence (AI) was also discussed. Officers confirmed that Business Wales offers a wider range of support in this area, and Business Swansea also runs workshops on topics like AI, which are recorded and available online. Adoption of technology, including AI, can be an eligible expenditure for some grants, though a balance is struck to ensure it doesn't come at the expense of workforce development.

The group concluded by discussing potential recommendations for the Cabinet Member. These included exploring ways to make the business support landscape easier to navigate, considering the need for hand-holding support, ensuring the integrity of business advisors, and highlighting the proactive work on digital technology and AI. The issue of stage payments for grants and the possibility of offering interest-free loans to bridge the gap before reimbursement was also discussed. The group expressed concern about the first come, first served allocation of grants and suggested exploring alternative assessment methods. They also recommended seeking more detailed feedback from businesses, including unsuccessful applicants, and praised the Business Swansea team for their work, particularly in supporting digital technologies. The potential for a training session on AI for the group members was also raised.