In April 2019, Warwick Economics & Development Ltd undertook an external evaluation of the Manufacturing Growth Programme, delivered by Economic Growth Solutions between October 2016 and April 2019.
To view the full report, click here.
The Manufacturing Growth Programme (MGP) has been designed to overcome some of the market failures and constraints facing SMEs in manufacturing. These failures include constraints in the ability of SMEs to access best practice advice, along with a lack of awareness of the benefits of such advice, and limited or no access to affordable best practice advice.
The assistance offered by MGP provides businesses with a comprehensive package of support to help them make improvements to their manufacturing processes and enhance their competitiveness. MGP assists businesses by providing locally-focused front-line teams consisting of highly experienced Manufacturing Growth Managers (MGMs) who are close to manufacturers and have local knowledge and understanding that businesses can trust.
The design of the programme was informed by early government reports and programmes, such as the Manufacturing Advisory Service (MAS) and was aligned with ERDF Priority Axis 3 – Enhancing the Competitiveness of small and medium sized enterprises (and specifically, Investment Priority 3c ‘supporting the creation and extension of advanced capacities for products, services and development’). MGP’s main focus has been to support SMEs in manufacturing that were left without any major government funded support programmes following the closure of the Business Growth Service (BGS) in March 2016.
ERDF funding for MGP between October 2016 and September 2019 totals £10,461,995 across the 15 LEP local areas the programme is delivered. This funding represents 52% of the total funding into the programme (approximately £20M), with the remaining provided by SMEs.
The summative assessment of the programme represents a statutory requirement (ERDF grant funding agreements place a requirement on all grant recipients to undertake a summative assessment of their projects). The assessment presents external stakeholders with an independent review of the achievements of the programme. It also provides EGS with background reference material in making the case for particular delivery approaches and funding in the future.
Overall, the combined qualitative and quantitative evidence suggests that the programme is effective, efficient and is targeting its intended audience. Furthermore, the evidence gathered to date suggests that MGP is addressing the market failures that it intended to remedy in the first place. In summary:
- MGP has speeded up business support intervention rates compared to previous programmes.
- The programme has simplified the process of getting support to businesses.
- It has helped businesses prioritise their needs and engage with appropriate expertise.
- MGP has generated both short- and long-term benefits for businesses within a relatively short period of time. Short-term tangible benefits are exemplified by helping gain accreditations like ISO quality standards. Long-term impact on businesses is exemplified by the effect on business diversification and export strategies.
- The programme has delivered lasting benefits – for approximately 40% of the surveyed businesses, improvements made as a result of the programme are expected to last for more than five years.
- MGP has complemented and increased the demand for other business support programmes. Substantial cross referral activity by MGP has been evidenced including referrals to Growth Hubs, HEIs, local authorities and other training, mentoring, innovation and financial training.
In particular, MGP is addressing significant market failures related to the engagement of SMEs with business support. For example:
- The programme is entirely focused on SMEs – having supported 2,064 businesses to March 2019 (with this number increasing to 2,263 by the end of the programme).
- A survey of businesses supported by MGP indicates that for 11% of businesses supported, MGP is the only business support they have accessed – this highlights the ability of the programme to reach those SMEs that do not tend to seek business support advice.
- The vast majority of businesses responding to the survey (92%) reported that the outcomes from the support had either met or exceeded their expectations (63% and 29% respectively), and 99% would recommend MGP to other All surveyed businesses reported that the MGP support was at least as good or better than other support received previously.
- The survey indicates that the competence and support of MGMs is one of two most valued aspects of the programme (86% of businesses responding to the survey indicated that they were highly satisfied with the support and competence of the MGMs).
- The survey results also indicate that the positive experience from the support received by MGP has made 72% of the businesses more likely to use external advice or support again in the future, and no businesses reported being less likely to do so.
The focused approach of the programme and the manufacturing capabilities, impartiality and local knowledge of MGMs are at the centre of its success. The programme is built on a highly targeted intervention, a lean delivery and management model, and financial co-investment by businesses in their business improvement. All these are supported by a well-defined set of Management and Financial Information systems and processes.
The evaluation has shown that this approach has led to efficient and effective delivery. For example, although this is a relatively short intervention focusing on diagnostic needs assessment, provision of a relatively small grant and advice to be taken forward and implemented by an SME at its own pace, the programme is delivering substantial economic benefits.
It is estimated that MGP contributes to the economy 1,872 net jobs resulting in £135,944,640 GVA – this is well above the originally anticipated GVA increase of over £40M across all regions over the programme’s lifespan. Of these benefits, £122,582,560 GVA (i.e. 90% of estimated GVA) and 1,688 jobs (i.e. 90% of all net jobs) have been already delivered (to March 2019); the rest is expected to be delivered with the completion of the programme by September 2019.
Other economic and wider benefits reported by businesses that have received MGP support include:
- Improved turnover (for 61% of survey respondents).
- Improved productivity (for 68% of survey respondents).
- Nearly half the survey respondents have seen sales increasing and new markets have opened up for a quarter. For one in four (28%), the programme has led to new product development. This is a particularly important outcome of the programme in the light of the results of the 2018-19 Q2 National Manufacturing Barometer report, according to which the proportion of UK SME manufacturers expecting their sales turnover to increase in the next six months is 13% less than last quarter, continuing a downward trend seen over the last year and at a level not seen for six years in the UK.
- Introduction of green technologies. Examples of these technologies include the reduction of carbon levy, reuse of scrap material, and natural product ranges, alongside future goals such as stopping single use packaging by the end of 2019.
The approach adopted for the delivery of the programme and its outcomes have resulted in relatively high Value for Money (VfM). It is estimated that every £1 allocated to supporting businesses through MGP is expected to generate approximately around £13 for the ERDF investment and approximately £7 when all investment is considered within the contract period. As with all estimates, any conclusions in relation to these calculations will need to be drawn with consideration of the key assumptions that underline these.