Michelle Rodger: A little give and take could help curb the grant greed culture

Published on Saturday 27 February 2010 14:39

GRANT greed. It is an insidious culture that appears to be festering among Scottish small and medium-sized enterprises.

I've written recently about the issue of business and tourism relying on other parties – government, public agencies, quangos et al – to support them, plus business people complaining they can't grow their companies because they can't get funding. It's a worrying trend.

Professor Russel Griggs, chairman of the CBI's smaller firms national council, cites an example of a businessman looking for grant funding to help with a manufacturing problem. The agency he approached agreed there was a problem but said there was no applicable grant. He complained, to be told the only money available was for a website – so he took that instead.

Sad, says Griggs, but true. That's not to say the business didn't benefit from the funding for a website, but it demonstrates the grant greed culture – the need to get something, anything, for nothing.

I'm not talking about grants for jobs, apprenticeships or cutting-edge research & development, for example, which are essential. It's the growing trend for funding requests for training, marketing, a new website, a social media strategy, for old rope. The begging bowl is constantly jangling under the noses of funding bodies.

What's interesting is why businesses have become so reliant on grant funding.

There's a school of thought that says reliance on grant funding and state handouts stems from the Sixties and Seventies, when the steelworks, shipyards and mines all needed significant ongoing support. There's a suggestion the current increasing individual reliance on benefits such as incapacity and dole feeds that culture, but it's anecdote and opinion rather than hard facts that supports this particular theory.

Back in the Sixties and Seventies, however, the enterprise agencies and business support organisations all started life as company-saving not company-growing operations. The focus was on supporting public companies and local communities as many of these industries contracted, plants closed and thousands of jobs were lost.

Now clearly about helping growth companies, the mindset around awarding grants and state support needs to change.

We need to be more considered over a grant award. Is it for growth? Is it to prop up or save a business that wouldn't otherwise survive? And what will the government – and taxpayer – get in return for that investment? Put simply, when you are awarded a grant, the government invests in your business. Is it wrong for it to expect a return? If a business benefits and increases profit then should they pay back the grant in proportion to that increase?

It's a model that finds favour with Griggs, a Scottish Enterprise board member.

"If somebody puts their hand out for a grant, you should probably shake it and ask 'what will you give back in return?'" says Griggs. "Government and business need to work in partnership together and part of that has to be the realisation that, if the government spends public money, it needs to get a return.

"Industry is at fault for perhaps wanting money without thinking this is the taxpayers' money, what am I going to give back to the country and the economy?"

America evaluates business support programmes by measuring the tax take. It's a sensible model. If the amount a business pays in corporation tax increases after grant funding then that's seen as the measure of success.

But here there isn't the same kind of measurement, which could be key to calculating just how much return the government could expect, and which type of grants work and which don't.

It's not just reliance on grants that's potentially damaging to business. The length of time the application process takes and the distraction factor can hinder progress.

David Flint, a partner at MacRoberts, says the complexities of the process and the other major demands on time mean many firms either do not bother or give up.

Entrepreneur Scott Allison agrees. He has taken the time and jumped through the hoops to secure grants, but isn't convinced it's always the best way.

"When you should be fleet of foot and getting on with building your business you are dealing with public servants filling out forms and producing plans and forecasts.

"You could be delaying success by months to get something part-funded; it should be down to thinking more creatively, with more ambition and determination."

Griggs agrees. If a seemingly ambitious business lets something like lack of a grant stand in its way, then perhaps it isn't such an ambitious business and, perhaps, doesn't merit state support.

After all, they say if you want something bad enough you will find a way. If you don't, you will find an excuse.