MD2624 Covid-19 Business Support Programme

Type of decision: 
Mayoral decision
Code: 
MD2624
Date signed: 
17 April 2020
Decision by: 
Sadiq Khan, Mayor of London

Executive summary

This decision seeks approval for GLA expenditure of £1m (and such other third party funding as is secured) to provide business support to London’s sole traders, micro-businesses, small and medium sized enterprises (SMEs) and social enterprises using budget currently secured (or which is secured) for activities delivered as part of the London Growth Hub, the Mayor’s business support initiative.

The activity will cover intelligence gathering and initial crisis management telephone support as well as more detailed online content to support business continuation and diversification. Once the impact of the current crisis has started to subside, the programme will move to provide support for business starts and recovery.

Decision

The Mayor:

1. approves expenditure of £1m of funding in 2020/21 from current and anticipated LEAP Core Funds and Growth Fund budgets to deliver a programme of support to businesses to London’s sole traders, micro-businesses and SMEs and social enterprises to navigate the challenges they face during and after the Covid-19 pandemic; and

2. delegates to the Executive Director, Good Growth to approve the seeking, receipt and expenditure of any external income that may be identified so as to expand this initiative. This delegation will be exercised without the need for further decision forms.

Part 1: Non-confidential facts and advice

Introduction and background

The current and emerging impact of Covid-19 has placed unprecedented pressure on businesses of all sizes, to which HM Government have responded with a package of financial measures. This has however not included any additional business support activity and the Mayor continues to lobby HM Government for further guidance and support for businesses looking to access financial help. In the interim, this report puts forward urgent crisis management support for London-based businesses looking to navigate the Government’s offer, as well as longer term support to complement any government funded activity.

Growth Hubs have been established across the country to act as the Government’s delivery partner for business support in each of England’s 38 Local Enterprise Partnership areas. This report seeks approval to allocate available Growth Hub and LEAP Core Fund money to support a phased approach to supporting businesses through the current crisis, and to help London’s small business eco-system recover once current restrictions have been lifted.

The impact of business closures is being felt more quickly in London, owing to the spread of the virus here being up to two weeks in advance of the rest of the UK. According to several lobby groups and the trades unions, many small firms and sole traders risk going under whilst waiting for any government relief to arrive. The Federation of Small Businesses has warned that the delay in wage supports - potentially until end of April - means many small firms still face "a potentially terminal cash flow crunch."

Whilst the London Growth Hub has repurposed existing resources to support the Covid-19 response, the scale of the challenge at hand requires a significant increase in current resources, and deployment of specific interventions as a matter of urgency.

Objectives and expected outcomes

The proposed funding will be used to focus on the following phased approach in order to support London’s businesses during and following the current crisis.

Phase 1 (immediate) - intelligence gathering and crisis management support

Immediate work will be undertaken in partnership with the GLA’s Intelligence team to capture and collate representative data on business needs. This will be achieved through an externally commissioned business survey and supported by ongoing engagement and intelligence gathering through GLA networks.

The current London Growth Hub telephone support for Covid-19 related enquiries is currently resourced by 5.5 business support advisers. This essential work to help businesses navigate support needs to be significantly scaled up as a matter of priority in order to meet anticipated demand. The precise delivery model and scale is currently being worked-up, including potential use of volunteers and specialist advisers.

Phase 2 (1-6 months) – business continuation and diversification support

Working with a coalition of business support partners, it is proposed that funding be used to deliver a coordinated and joined-up business support offer across London. The nature and scope of the programme will be informed by the aforementioned intelligence gathering activity and will be delivered through:

• ongoing information, diagnostic and triage support;

• a core programme of support targeted at the businesses most hit by a reduction in demand. This will include support to help businesses to ‘go digital’ through access to information on remote working, platforms and cloud computing, information on e-commerce, delivery, online payment and other platforms that will allow them to operate at-a-distance business;

• grant funding to partners to increase the existing delivery capacity for sectorally focused initiatives. This could include sector-specific telephone and webinars, podcasts and other online content; and

• directly commissioned online content, tools and awareness raising activity.

Phase 3 (6-12 months) – business starts and recovery

Once current restrictions are lifted there will be a great need to get the economy started again, and new or relaunched small businesses will need support to help get London back in business. Detailed metrics and support mechanisms will be developed once the full impact of the current crisis is assessed. This will be dependent on the pace and depth of the crisis as it unfolds over the coming weeks.

The decision seeks approval for the receipt and expenditure of additional funds that may be secured from third parties which may include new EU or HM Government funds, private investment and/or contributions from business support providers. Based on current unit costs measures for business support, £1m of funding committed to the project could provide light-touch support to an additional 1,600 businesses.

Equality comments

Under Section 149 of the Equality Act 2010, as a public authority, the Mayor of London must have due regard of the need to eliminate unlawful discrimination, harassment and victimisation as well as to advance equality of opportunity and foster good relations between people who have a protected characteristic and those who do not.

There is a significant risk that minority groups will be disproportionately impacted by the current crisis and many will face particular barriers to accessing support available from HM Government. The London Growth Hub will work with its delivery partners to ensure a significant level of engagement with community and faith groups in order to access harder to reach communities to avoid discrimination and make sure there is equality of opportunity.

The London Growth Hub will also work with its delivery partners to foster good relations between those with and without protected characteristics by providing support designed to overcome the specific barriers these groups may face. We will also use our extensive contacts within minority and women owned business networks to disseminate messaging and support available to these communities. This will include translation of materials and use of diverse communication channels.

We will learn from best practice in other cities and regions. For example, discussions are ongoing with cities facing similar problems such as New York, where the Commissioner for Small Business is leading work to engage these communities and deliver support in appropriate formats and using diverse communication channels.

Other considerations

Key risks and issues

The risks facing London’s small business community are unprecedented and potentially catastrophic for London’s economy. These proposals go some way in supporting businesses to survive the current climate, but without securing additional funding, the penetration levels across London’s 1.1m small businesses will remain low. This risk will be mitigated by continuing to lobby HM Government for further funding to support businesses and to ensure London’s business support eco-system is working in a joined-up and effective manner.

Ongoing and proactive risk management will be undertaken throughout delivery of the programme, with GLA corporate, HM Government and LEAP reporting as required.

Links to Mayoral strategies and priorities

The Mayor has been clear over his concerns on the impact to businesses if appropriate funding and support is not in place for business. This package of support therefore forms a key part of the Mayor’s response to support London’s economy through and beyond the current crisis. It also supports the priorities set out in the Mayor’s Economic Development Strategy to support enterprise and entrepreneurship in the capital.

Consultations and impact assessments

These proposals include an extensive consultation exercise with London businesses that will help inform and shape the subsequent programme of activity. All consultation activity will be actioned in line with the GLA’s requirements concerning the same including data protection requirements.

Financial comments

The initial £1m investment in this initiative will be funded by a combination of available funding streams, namely the 2020-21 Growth Hub (£400,000*) and LEAP Core Fund budgets (£200,000*) via BEIS grant and from the Strategic Investment Fund, specifically from the Micro and SME Business Support allocation (£400,000) as approved by MD2363.

In order to supplement the programme, external funding will be also be sought to increase the financial support for the programme. This may include new EU or HM Government funds, private investment and / or contributions from business support providers.

*Whilst it is anticipated that these sums will be contained within Government Growth and LEAP funding for the 2020-21 financial year the GLA has yet to receive grant offer letters in this regard (save for £100,000 of the £200,000 LEAP Core Fund which is already held).

Activity table

Activity

Timeline

Procurement of contract

From 1 April 2020

Announcement

Following approval

Delivery Start Date

1 April 2020

Final evaluation start and finish

April 2021

Delivery End Date

March 2020

Project Closure

June 2021


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