Start-up fund slow off mark

Click to follow
The Independent Online

A £30m Government enterprise fund to help start-up businesses in deprived areas last year has made just one investment - for only £100,000.

The Phoenix fund was set up by Trade and Industry Secretary Stephen Byers last year as part of a much-trumpeted £245m package for helping small businesses.

The money was intended for lending, or in some cases giving, to people "banks consider too risky for reasons such as lack of business experience or bad credit ratings" as part of Tony Blair's personally endorsed action plan to tackle social exclusion.

As Mr Byers put it at the time of the launch last autumn: "Due to lack of support, advice and access to finance, entrepreneurs in disadvantaged areas experience even greater difficulties in launching their ideas than somebody starting a new enterprise generally faces."

But Mr Byers' efforts to overturn "poverty of ambition" in these areas has had a sluggish start even though the fund is due to run for only three years.

Although guidelines on how to apply to the fund were due in November, they are now expected only this month, according to answers tabled to questions from Conservative MP Christopher Chope.

And the only organisation which has successfully applied for money so far is not a business at all but a Government offshoot - the Business Volunteer Mentoring Association, which is run by the National Federation of Enterprise Agencies, which in turn is supported by the Department of Trade and Industry.

The Mentoring Association's aim is to attract 1,000 volunteers, drawn from all sections of the business community, to provide mentoring support to pre- and early-start-up businesses.

The £100,000 been paid by the Phoenix fund will cover set-up costs, Mr Byers revealed.

The Phoenix fund has already been criticised by the Commons Trade and Industry select committee - which last week also took Mr Byers to task over the Rover fiasco.

The all-party committee, chaired by Labour MP Martin O'Neill, noted: "Perhaps because of the haste (in preparing the fund) there has been no formal consultation document or consultative process on what the Phoenix Fund should be doing, how it should be run and by whom.

"The 'guidance for applicants' referred to four months ago is yet to appear," the report continued, warning that it was hard to see how the fund could be implemented swiftly.

Mr Chope, a Tory member of the committee, accused Mr Byers of "announcing too many initiatives in support of business without ultimately delivering them".