The Department for Business, Energy and Industrial Strategy is unable to say which of its £2.4bn-a-year portfolio of business-support programmes offer the best value for money because of a lack of metrics and evaluation criteria, the National Audit Office has warned.
According to the public spending watchdog, the lack of data on what works best for business assistance means that the pressing need to replace EU-level support post-Brexit will result in decisions being made without lessons being learned from existing programmes.
The NAO also said that some of BEIS’ business support programmes were not necessarily aligned with its own industrial strategy, which it said had “yet to have a significant impact on the department’s support for businesses”.
Its report said the government currently spent £17bn on business support, £2.3bn of which came from the European Union. Of the total, £11.5bn is spent in the form of tax relief to encourage investment in areas designed to bolster the economy, such as research and development, via HM Treasury and HM Revenue and Customs.
The NAO said there were more than 100 business-support programmes across government that spent the remaining funding, of which BEIS was responsible for 47 – many of them “relatively small” with annual costs of less than £50m each.
The watchdog said that although there were around 1,500 metrics used by BEIS to track its support schemes, an analysis of 10 of the programmes found only four had “measureable and time-bound objectives” while only one had been “robustly evaluated” to measure its impact.
The NAO said the lack of measurable objectives had implications for their effectiveness, but also noted that BEIS had previously asserted that having measurable objectives could be “too prescriptive” for schemes that aimed to support innovation.
It said two of the schemes it looked at started before 2010mand that seven of the other eight programmes had not been subjected to cost-and-benefit analysis prior to being selected from shortlisted options.
“Consequently, the department may have discarded options that would have provided better value for money,” the NAO said.
“The department consulted on most schemes in our sample in some way, but the range of stakeholders that it engaged with varied and it could not demonstrate how these consultation findings had informed schemes’ design.
“This creates a risk of launching schemes that businesses do not need or that businesses find difficult to access.”
NAO head Gareth Davies said BEIS and the Treasury knew there was work do to improve the support offered to UK business.
“Government understands the importance of better co-ordination and coherence across the schemes it provides to business, but it still has some way to go before all the dots are joined up,” he said.
“More thorough evaluation of which schemes work best will help government plan and prioritise its support going forward.”
The NAO called on BEIS to ensure that all new support programmes had clear objectives in place from the outset that would allow their progress to be assessed and considered alternative ways of delivering objectives “including a meaningful estimate of the value for money of viable alternatives”.
It also told BEIS to develop standard metrics across schemes with broadly similar aims to enable better comparison of their effectiveness by May; and to review its current schemes to determine their strategic fit with the Industrial Strategy by July.
BEIS said the NAO had “rightly recognised” schemes to support business needed to be co-ordinated and communicated well to be most effective.
“We will study its recommendations carefully,” a spokesperson said.
A linked NAO report on the British Business Bank, set up by BEIS predecessor the Department for Business, Innovation and Skills in 2014, said the institution was showing “positive signs to date”.
However it noted that the bank needed to develop further evidence on both performance and costs and make sure its financial management and governance arrangements were robust and ensure it demonstrated value for money over time.
“The bank’s costs have risen significantly as it has grown; while there is evidence that they are comparable with other organisations overall, there is limited information on the cost-effectiveness of its activities,” the NAO cautioned.
BEIS said the British Business Bank was currently supporting more than 91,000 SMEs with £7bn of finance.
Davies said the bank had performed well against its objectives and urged ministers to look at ways it could develop to meet the nation’s post-Brexit needs.
“Government now needs to think carefully about the role it wants the Bank to play in the future, particularly after the UK leaves the European Union,” he said.