hertfordshire growth hub review

Report

April 2020

Hertfordshire Growth Hub Review

Steer Economic Development has prepared this material for Hertfordshire LEP. This material may only be used within the context and scope for which Steer Economic Development has prepared it and may not be relied upon in part or whole by any third party or be used for any other purpose. Any person choosing to use any part of this material without the express and written permission of Steer Economic Development shall be deemed to confirm their agreement to indemnify Steer Economic Development for all loss or damage resulting therefrom. Steer Economic Development has prepared this material using professional practices and procedures using information available to it at the time and as such any new information could alter the validity of the results and conclusions made.

Report

April 2020

Hertfordshire Growth Hub Review

Prepared by:

Prepared for:

Steer Economic Development

61 Mosley Street

Manchester M2 3HZ

Hertfordshire LEP

One Garden City

Letchworth Garden City SG6 3BF

+44 (0)161 261 9154

www.steer-ed.com

Hertfordshire Growth Hub Review | Report

April 2020

Contents

1 Introduction .............................................................................................................. 1

Purpose of study ................................................................................................................. 1

Methodology ...................................................................................................................... 1

2 Context, Rationale, Objectives & Options .................................................................. 3

Context for the provision of the Hertfordshire Growth Hub ............................................. 3

Rationale for provision of Hertfordshire Growth Hub ....................................................... 3

Objectives ........................................................................................................................... 3

Options for delivery ............................................................................................................ 5

Comparator LEPs ................................................................................................................ 6

Conclusion ........................................................................................................................ 10

3 Inputs ..................................................................................................................... 12

Financial resources ........................................................................................................... 12

Personnel .......................................................................................................................... 13

Governance ...................................................................................................................... 14

Comparison with other LEPs ............................................................................................ 15

Conclusion ........................................................................................................................ 15

4 Activities ................................................................................................................. 17

Services to business .......................................................................................................... 17

Networking and development of the business support ecosystem ................................. 19

Conclusion ........................................................................................................................ 20

5 Outputs .................................................................................................................. 22

Introduction ...................................................................................................................... 22

Monitoring arrangements and data availability ............................................................... 22

Conclusion ........................................................................................................................ 22

6 Outcomes and Impacts ............................................................................................ 23

Introduction ...................................................................................................................... 23

Data availability ................................................................................................................ 23

Assumption-based impact modelling ............................................................................... 23

Insight from user consultations ........................................................................................ 25


April 2020

Evidence of impact from other Growth Hub evaluations and surveys ............................ 27

Conclusions ....................................................................................................................... 27

7 Conclusions and Recommendations ......................................................................... 29

Appendices

A Impact Matrix


1

Purpose of study

Steer Economic Development (Steer-ED) was commissioned by Hertfordshire Local Enterprise

Partnership (LEP) to conduct an independent review of the current contract and service model

of the Hertfordshire Growth Hub (HGH).1

Hertfordshire LEP currently uses an outsourcing model for Growth Hub provision in

Hertfordshire. In October 2018, it awarded a two-year contract to Exemplas Limited, which

leads a consortium that includes the University of Hertfordshire and Hertfordshire Chamber of

Commerce. The contract includes an option to extend arrangements for up to a further two

years, from 1st October 2020.

This Review was commissioned to inform Hertfordshire LEP Board’s approach to future

provision of Growth Hub services in Hertfordshire, including the advisability of:

Retaining the outsourcing model and renewing the existing contract for a further two

years; and

Retaining the outsourcing model but holding a new procurement exercise in 2020; or

Adopting an alternative delivery model, based on lessons from elsewhere, e.g. in-house

provision.

The Review was asked to form judgements on:

The effectiveness of the current programme in terms of performance against KPIs and

delivery of company-level impact;

Perceptions of HGH amongst account-managed clients, and stakeholders and other

business support providers within Hertfordshire’s business support ecosystem;

Whether the current delivery model and service delivery are realising the LEP’s ambition

for the Growth Hub programme; and

The relative effectiveness of the current delivery model, taking account of the approaches

adopted in comparable LEPs, namely, Worcestershire, Buckinghamshire Thames Valley

and Cheshire & Warrington.

Methodology

The Review undertook the following tasks over the period January-February 2020:

A desk-based review of ‘Perfectly Placed for Business: The refreshed Strategic Economic

Plan: 2017–2030 July 2017’, BEIS Growth Hub monitoring and Evaluation Framework 2019-

20, the HGH Consortium Board Terms of Reference, HGH Board papers (including Progress

1 The work on this Review was undertaken prior to the impact of Covid-19.

1 Introduction


2

Report Oct 2018 – March 2019 and July – September 2019), the HGH Annual Report 2018-

19), HGH Customer Satisfaction Survey, and ‘Get Growing ERDF Evaluation’ report;

Analysis of data provided by Exemplas in the form of the LEP’s Impact Matrix (Appendix A)

which provides data on 34 companies, plus firm-level data for firms receiving ‘intensive

support’ (of 12 hours or more); and

Consultations with: LEP Deputy Chair; LEP Enterprise and Innovation Programme Board

Chair; Hertfordshire LEP client-side staff; Exemplas Limited; Chief Executive Hertfordshire

Chamber of Commerce, Director of Client Services WENTA, Chair of Hertfordshire

Economic Development Officers (EDOs), Manufacturing Growth Programme; Business

Relationship Director Santander; three comparator LEPs (Worcestershire,

Buckinghamshire Thames Valley, and Cheshire and Warrington); account-managed

businesses.

The logic-model approach

This Review follows a logic model approach (Figure 1-1). The logic model provides a best-

practice approach to programme evaluation. It takes a step-by-step approach to develop an

understanding of how interventions lead to change (Impacts) by covering the following issues:

Context – outlines the background to an intervention, e.g. the need to support businesses

to improve UK productivity;

Rationale – identifies the market and/or institutional failures being addressed – e.g.

information and coordination failures adversely local businesses’ ability grow;

Objectives – identifies key targets, in this instance, the annual contract targets as agreed

with BEIS: 115 ‘high intensity’ interventions; 660 ‘medium intensity’ interventions; 2,700

‘light intensity’ interventions; 100 Jobs created; and 3,000 unique clients supported;

Options for intervention – identifies options to deliver priorities and the preferred option,

based on defined criteria, in this instance: what is the preferred model to deliver Growth

Hub services in Hertfordshire, e.g. in-house, out-sourced or hybrid?

Inputs – The resources available to deliver the activities, including, financial resources,

leveraged investment, key personnel, and knowledge;

Activities – the business support activities provided;

Outputs – the number of business supported by type of activity;

Outcomes – e.g. employment and GVA impact;

Impacts – wider net additional impacts, e.g. in the development of the business support

ecosystem.

Figure 1-1: Logic model framework

Source: Steer-ED

This report follows the structure of a logic model before outlining findings and

recommendations in relation to the questions posed in the brief.


3

Context for the provision of the Hertfordshire Growth Hub

In line with the UK Governments ambitions to promote strong, sustainable and balanced

economic growth, the Department for Business, Energy and Industrial strategy (BEIS) provides

grant funding available to LEPs to deliver Growth Hubs. The Government’s vision for Growth

Hubs is that they should provide a single access point to impartial and high-quality business

support that brings together national and local schemes so that businesses can access

everything they need, including both public and private sector support, in once place.

Rationale for provision of Hertfordshire Growth Hub

The rationale for public sector provision of business support is driven primarily by the

existence of information and coordination failures, in particular, the view that businesses lack

sufficient information about the costs and benefits of different business support services to

make informed choices, which means that there is a risk that their use of advice and support is

not optimised. This in turn limits economic growth. Furthermore, firms often find that the

business support ecosystem is difficult to navigate with offers that duplicate or compete with

each other.

Objectives

The Growth Hub’s operations are framed by national objectives set by BEIS and local

objectives as set by Hertfordshire LEP, these are summarised below.

BEIS objectives

BEIS Principles

BEIS has established a set of principles to guide the LEP’s approach to delivery of Growth Hub

services:

Principle 1: Providing strategic co-ordination and building inclusive partnerships with local

stakeholders, the private sector and government.

Principle 2: Maintaining robust governance arrangements to oversee Growth Hub activity

and ensure ongoing alignment with the LEPs Strategic Economic Plan.

Principle 3: Developing a strategic approach to local business growth to enable ambitious

businesses to maximise their growth potential and scale-up.

Principle 4: Offer a triage, diagnostic and signposting service that joins up national and

local business support (public and private), simplifying the support on offer for businesses.

Principle 5 - Ensuring plans for Growth Hubs are deliverable and sustainable beyond

March 2018 when the current round of Government funding ends, ensuring that core

services continue to remain free to business at first point of contact.

2 Context, Rationale, Objectives & Options


4

Principle 6: Applying the common metrics and evaluation framework to produce high-level

impact data in bi-annual and end of year reporting and provide BEIS unrestricted access to

firm level data for the purpose of research and analysis. 2

Key Performance Indicators

A set of Key Performance Indicators (KPIs) are agreed by BEIS and the LEP as part of funding

arrangements. These KPI targets are broadly the same year-on-year. The KPIs targets for

2019/20 are detailed in Table 2-1.

The critical minimum targets reflect a threshold below which the LEP would consider the

contract with Exemplas to be in ‘non-performance default’. The contract targets are also

referred to as the ‘performance expectations’ and reflect the practical or operational delivery

target. The ‘stretch target’ sets an ambitious target for the Growth Hub to work towards. KPI

targets are set for High, Medium and Light intensity interventions (see Table 2-2 for

definitions), in terms of the logic model, these are measures of input and activity. As well as

the number of unique clients supported, the KPIs also include jobs created, which in terms of

this Review are outputs which lead to GVA outcomes.

Table 2-1: Growth Hub LEP/BEIS KPI targets (2019/20)

KPI Descriptor Critical Minimum Contract Target Stretch

High intensity – 12 hours support 80 115 170

Medium intensity – 1 hour plus 250 660 935

Light intensity – less than 1 hour 800 2700 4050

Unique clients supported 1600 3000 4500

Jobs created 75 100 100

Source: GROWTH HUB FUNDING TO LOCAL ENTERPRISE PARTNERSHIPS (LEPs), SCHEDULE 3 - PRINCIPLES OF FUNDING (2020-2021)

Table 2-2: Definitions of different levels of intervention

“Light touch” interventions

Transactional interactions that do not consumes significant dedicated resource. E.g. telephone enquiries and basic signposting; active web-based interactions (e.g. live chat or diagnostic tools but not passive actions like views of a webpage; event attendance etc.

“Medium intensity” interventions

Interactions which use moderate Growth Hub resources (c. 1 hour plus). E.g. business diagnostic with Growth Hub advisor; attendance at a workshop; referral to a scheme etc.

“High intensity” interventions

Sustained support using significant Growth Hub resource E.g. businesses with managed accounts; services/ support provided directly by Growth Hub.

Source: Monitoring and Evaluation Framework for Growth Hubs – 2019-20203

2 Identified in: GROWTH HUB FUNDING TO LOCAL ENTERPRISE PARTNERSHIPS (LEPs) , SCHEDULE 3 - PRINCIPLES OF FUNDING (2020-2021)

3 Monitoring and Evaluation Framework for Growth Hubs – 2019-2020


5

Strategic Added Value indicators

Alongside the quantitative KPI targets, the LEP has agreed a number of qualitative ‘Strategic

Added Value indicators’ with BEIS. For 2019/20 these are:

The establishment of a central resource providing access to the principal business support

providers in Hertfordshire;

The establishment of an online platform and telephone service to ensure local SMEs can

access the support they need quickly and easily;

Co-ordination and management of peer-to-peer networks and/or communities of interest

to encourage the dissemination of best practise;

The establishment of Growth Account Managers to help growth-potential businesses to

scale up quickly; and

The marketing and promotion of activities to channel SME demand for external advice,

whether or not it is free of charge.

LEP objectives

In June 2017, Hertfordshire LEP published its refreshed Strategic Economic Plan (SEP) for

Hertfordshire 2017-2030. The SEP sets out the LEP’s four main priorities which are aligned to

the four main drivers of economic growth in Hertfordshire:

Priority 1: Maintaining global excellence in science and technology;

Priority 2: Harnessing our relationships with London and elsewhere;

Priority 3: Reinvigorating our places for the 21st Century; and

Priority 4: Foundations of growth.

The refreshed SEP considers both wider macro-economic and political impacts as well as

common factors affecting local economic growth. For example, it seeks to respond to the

impact of the UK’s departure from the EU, opportunities provided by Hertfordshire’s proximity

to London, and changing working patterns enabled by digital connectivity. The SEP also states

clear alignment to the Government’s Industrial Strategy.

The Growth Hub’s activities are particularly important to the delivery of Priority 1 and Priority

4 of the SEP. Harnessing the innovative ideas of SMEs and pre-start businesses in the Science

and Technology sector is “imperative” to delivering Priority 1. Supporting growth-propensity

SMEs to realise their economic potential is seen as key to delivering Priority 4.

Options for delivery

BEIS guidance, indicates that a LEP should ensure that a Growth Hub:

Remains under its direct leadership and governance and under the oversight of the LEP’s

Accountable Body;

Abides by branding guidelines;

Complies with funding requirements;

Is embedded in its Local Industrial Strategy;

Complies with the data collection and reporting requirements set down in the new

‘Metrics & Evaluation Framework’, including firm-level data; and

Operates using locally agreed KPIs. 4

4 GROWTH HUB FUNDING TO LOCAL ENTERPRISE PARTNERSHIPS (LEPs) , SCHEDULE 3 - PRINCIPLES OF FUNDING (2020-2021)


6

The guidance also requires the LEP and any external providers and partners to ‘work

proactively together to leverage additional sources of public and private sector funding and

other resources to demonstrate coordination, alignment of business and enterprise support to

add value and further enhance the Growth Hub offer’.

The BEIS guidance is neutral in relation to the ‘delivery model’ by which a Growth Hub is to be

provided – LEPs may respond in relation to local circumstances.

The ‘models’ for Growth Hub delivery can be broadly characterised as:

In-house, i.e. the LEP provides the Growth Hub service;

Outsourced to a third-party provider, e.g. a Chamber of Commerce, University, social

enterprise or for-profit company; or

Hybrid model with some services provided in-house while others are outsourced.

To date, Hertfordshire LEP has chosen to outsource its Growth Hub provision – with ongoing

partnership working and input from the LEP team. Exemplas Limited, which is owned by the

University of Hertfordshire and provides business support services to a number of significant

public sector clients, has provided the Growth Hub service in Hertfordshire since 2015. It won

a competitive tender process in 2018 to operate the Growth Hub for a further two years (with

an option to extend the contract for a further two years).

Comparator LEPs

This Review looked at the Growth Hub models operated in three LEP areas of a similar size and

or facing similar issues to Hertfordshire, namely Worcestershire, Buckinghamshire Thames

Valley, and Cheshire & Warrington. The key characteristics of the different models, based on a

review of publicly available information and telephone consultations in each of the LEP areas,

are summarised below.

Worcestershire Business Central, Worcestershire Growth Hub – outsourced

Worcestershire has around 37,005 VAT-registered businesses5 and the LEP receives around

£205,000 a year (equivalent to £5.53 per business) from BEIS for its Growth Hub service,

Worcestershire Business Central (WBC).

Worcestershire LEP does not operate programme boards. It operates a Finance, Audit and Risk

Committee which carries out the scrutiny function, and Worcestershire County Council (which

is the Accountable Body for the LEP) operates Transport and Further Education programmes.

The LEP Board focuses on strategy.

Worcestershire LEP uses one-half of its BEIS Growth Hub funding to match-fund European

Regional Development Fund (ERDF) activity. This means that it attracts around £100,000 a

year in additional EU funding, while retaining the flexibility to carry out activities that do not

meet ERDF funding criteria and/or output requirements. In practice this provides flexibility on

sectors supported and the size of firm assisted.

WBC is operated by the Hereford and Worcester Chamber of Commerce, which has well-

established IT and client management systems, works with a range of partners, and has

secured additional ERDF funding to 2022.

5 https://www.nomisweb.co.uk/reports/lmp/lep/1925185567/report.aspx#tabidbr

https://www.nomisweb.co.uk/reports/lmp/lep/1925185567/report.aspx#tabidbr


7

In terms of staff resource, WBC has a manager, plus three advisors who operate on the basis

of geography and its key sectors: IT/Digital, Manufacturing, and Agri-Food. The telephone

service is provided by the County Council.

WBC operates a diagnostic tool, which can be used in face-to-face meetings between a

business and an advisor or over the telephone. In a similar fashion to Exemplas, the Chamber

also provides trade advice services for the Department for International Trade, which

facilitates cross-referrals and provides added value to Growth Hub services. Worcestershire

LEP operates the Inward Investment service in the area.

WBC focuses on scale-ups and growth-oriented businesses; as scale-ups are judged to give a

higher return on resources invested than start-ups. A complementary ERDF start-up

programme is run by the District Councils in the county.

WBC was originally tasked to reach around 5,000 businesses (15%, i.e. 750 of which were to be

face-to-face visits the rest by telephone). These targets generated ‘perverse incentives’, as

resources were used to hit the target number of contacts irrespective of a firm’s growth

potential. In response to this situation, the targets were reduced to 3,000 contacts a year, of

which 500 had to be visits and 2,500 had to be by phone. In addition to these changes, the LEP

and the Chamber of Commerce worked together to identify high-growth businesses in the

area using data on patents, business growth grants, and exports. This research identified

between 600 and 700 target companies, some of which were already known to the Chamber

and the LEP, and some of which were not. This research-based approach led to greater

alignment between Growth Hub activity and stated objectives, as it facilitated a targeted

approach that focused on firms with growth potential.

Some issues to be noted regarding the outsourcing Growth Hub activity to a Chamber of

Commerce, include the perception among some businesses that the Chamber, which is a

membership organisation and a provider of services, may not be seen as an independent

source of information and advice. Furthermore, there may be issues associated with data

sharing with the LEP and wider partnership. For example, once the high-growth firms were

identified as part of the re-framing of the Growth Hub contract, the Chamber was reluctant to

share findings more widely as the list was commercially useful.

Worcestershire LEP has not undertaken an evaluation of WBC, but it is aware of alternative

models, including in-house provision and outsourced provision delivered by a university. It has

also considered the pros and cons of operating a place-based model with advice and support

being provided from one or more hubs in the area – as opposed to the current model which

uses the telephone, website, and mobile Business Advisors. It has identified a number of issues

to consider in relation to revising its arrangements, including but not limited to, the resource

implications of bringing the Growth Hub in-house (e.g. the costs of IT and CRM systems), the

disruption of relations with the Chamber (who is a key partner), and the uncertainty in relation

to the Government’s view on the future of LEPs and Growth Hubs. So on balance,

Worcestershire LEP’s judgement is that now is not the time for it to decide to change

arrangements for delivery of Growth Hub services, so the LEP has no current plans to change

its Growth Hub arrangements.


8

Buckinghamshire Business First, Buckinghamshire’s Growth Hub – outsourced

The Buckinghamshire Thames Valley LEP area has around 31,150 VAT-registered businesses.6

The LEP receives funding from BEIS of around £328,000 (equivalent to £10.52 per business) a

year for its Growth Hub Service, Buckinghamshire Business First (BBF).7 All of this funding goes

to BBF to cover the costs of finance, marketing, events, and business support services etc.

Buckinghamshire Thames Valley LEP does not use the Growth Hub’s core funding to match

ERDF – of which there is only £10m in the Buckinghamshire Thames Valley LEP area. But it has

provided support to partners who bid for ERDF, including the delivery arm of the Growth Hub.

The County Council provides support to the Growth Hub that is worth around £400,000 and

BBF also generates income and grants.

The Growth Hub in Buckinghamshire Thames Valley has around 12 staff – and BBF has around

50 staff in total.

A Growth Hub Management Board meets four times a year and there are regular

update/progress reports to the LEP Board; the annual submission to BEIS is reviewed by the

LEP Board prior to submission. The core teams of the LEP and the Growth Hub meet on a

weekly basis.

BBF is a membership organisation which predates the establishment of the LEP. It was

established in 2011 when 10 local entrepreneurs and business leaders met to discuss how to

encourage business growth in Buckinghamshire. BBF argued for the LEP to be established and

provided the LEP’s Board members in its early years, although the private sector members of

the LEP Board are now drawn from a wider group. BBF was established as there were no

strong business membership organisations to represent business in in the County.

BBF has around 12,000 members (membership operates at four levels: free, stakeholder,

partners and ambassador). Around 2,000 of BBF’s members pay fees, which generate around

£50,000 a year. BBF’s membership covers around 75% of Buckinghamshire’s workforce.

BBF’s offer works through provision of integrated services include skills, enterprise, growth

tourism/visitor economy, rural/LEADER programme and broadband, plus growth grants of

around £5,000 and support of around £5,000 for low-carbon workspaces. The Growth Hub

focuses on scale-ups and the wider business support ecosystem addresses the needs of start-

ups and micro-businesses; while, recently steps have been taken to align Growth and Skills

Hub activity. As a membership organisation, BBF seeks to facilitate business-to-business

activity; it operates an annual Business Festival and the website provides a directory and

marketplace where members can do business with each other.

Buckinghamshire Thames Valley LEP and BBF worked together to establish Visit

Buckinghamshire, a Destination Marketing Organisation (DMO) to promote the County’s

visitor offer. The LEP provided £150,000 (50% grant and 50% loan) to add this feature to the

business support ecosystem.

For 2018/19, BBF reports around 30,000 business contacts, and around £2.5m public sector

funds (including ERDF and HS2), along with approximately £6m of private sector match


7 Up from £287,000 in 2018/19.



9

funding, generating around 580 jobs and supporting 114 businesses to introduce new products

and services.

In terms of plans for the future, the LEP procures Growth Hub services on an annual basis, to

reflect the funding position. The Local Industrial Strategy has been developed as part of the

Oxford-Cambridge Arc, it is therefore likely that, in future, some Growth Hub services will

operate across a larger area to reflect this federated approach – which will build on the

approach taken to deliver Brexit readiness activity. The local context and history of BBF and

Buckinghamshire LEP means that BBF provides significant added value as an anchor body in

the local business support ecosystem.

Cheshire & Warrington Growth Hub – in-house

Cheshire & Warrington LEP, known as 871 after the 871 square miles that it covers, contains

around 43,325 VAT-registered businesses.8 The LEP receives around £287,000 (equivalent to

£6.62 per business) a year funding from BEIS.

The Growth Hub service used to be outsourced to Blue Orchid. Under these arrangements, the

Growth Hub matched core funding to ERDF and was therefore limited to providing ERDF-

eligible activities and delivering ERDF-eligible outputs.9 The service met BEIS requirements and

contractual KPIS, however, on 1st October 2018, the Cheshire and Warrington Growth Hub

service transferred from ‘Blue Orchid’ to LEP in-house delivery. This was the result of a

strategic decision of the LEP Board which sought additional activity over and above that linked

to BEIS and ERDF KPIs. A specialist team was recruited to staff the Growth Hub with the aim of

supporting the growth of the local business community and attracting new investment from

established and new businesses. The Hub is integrated with the LEP’s strategy function and

has moved to provide an integrated skills offer for businesses. The Growth Hub Director also

leads the LEP’s work on inward investment, working alongside local authorities, and seeks to

ensure good access for local businesses to angel investors and venture capital funds.

The Growth Hub consists of a director, a business intelligence officer who links to other

programmes in the area, including ERDF and ESF projects; two full-time business brokers who

operate diagnostics to match firms with the most appropriate support – whether from public

or private sectors. The team focuses on intensive assists (of at least 12 hours) to provide

effective signposting using an account management approach – which includes Key Account

Management of inward investors. The team has developed its own diagnostic approach,

rather than procure a third-party diagnostic tool. Furthermore, it does not undertake the

direct delivery of business support, rather it seeks to build and develop the local business

support ecosystem so that firms are able to access the support they require. Next year the

team will, however, undertake some direct delivery in relation to skills support.

In terms of working with key partners, e.g. Chamber, local authorities, and Higher Education

sector, the Hub operates memoranda of understanding, which set out the roles of key

partners and how these partners will interact with and add value to each other’s services.

There are also a number of stakeholder forums to maintain links and that ensure clients are

referred to the right place/service. Given the existence of local Chambers, plus other local


9 This is particularly important to the LEP, as it wishes to work with larger companies and with businesses involved in agriculture, which ERDF eligibility criteria exclude.



10

business networks, such as Warrington Works, the Growth Hub works with existing business

networks, rather than seeking to establish and maintain new ones. Chester University provides

incubator and start-up support in the area, but to date it has not focused on promoting

research-led innovation, for this kind of activity the LEP and Growth Hub have to date worked

with universities from elsewhere in the North West – but this may change in future given

changes in leadership at Chester University. In terms of export support, the Department for

International Trade Advisors, who are part of a separate team, work with the Growth Hub on

export promotion, and the Growth Hub team also works with the trade teams in local

Chambers of Commerce to provide export support to businesses.

Prior to the LEP taking the Growth Hub in-house, Blue Orchid ran the Growth Hub website and

operated a Client Relationship Management System (Microsoft Dynamics). When the LEP took

the Growth Hub in-house it reached an agreement with Blue Orchid to take over the website

and the CRM. The cost of the CRM system to the LEP is currently around £15,000 a year. The

LEP, however, is planning to enhance its CRM system as part of wider improvements to the

LEP’s systems. This will lead to higher costs. The LEP is also planning to launch a new website.

This will address basic signposting needs and help to achieve the volume required by BEIS –

currently around 1,000 engagements a year.

Some key lessons from the transition from outsourced provision to an in-house service

include, maintenance of good relations with the provider to ensure that handover of data and

systems is smooth; establish staff’s intentions in terms of remaining with their existing

employer or moving to the LEP to continue to deliver the Growth Hub service – in practice

Growth Hub staff did not move to join the LEP, which left the Growth Hub short of staff in its

initial stages. This latter issue could have been addressed if an agreed transition period had

been in place to enable a smooth handover of Growth Hub services.

In terms of performance, in 2018/19, the Cheshire & Warrington Growth Hub supported

around 530 businesses (including start-ups) and dealt with almost 900 referrals. The area

attracted around £88m of inward investment in five projects, which created 258 jobs. The

team anticipates that it will achieve 1,000 engagements, but the focus is on delivering

outcomes related to exports and new products and processes, rather than headline ‘output’

figures. The focus of activity for 2020/21 will be exports and productivity. The Growth Hub

team also seeks to target scale-up businesses, but has sought to identify and develop the

business support offer that will be available to these business prior to proactively contacting

them, as these businesses require more sophisticated support than can be provided by

traditional ERDF business support projects. The Scale-up Institute has identified 600 scale-ups

in the area, the business intelligence officer will undertake research to identify 200 where

support is likely to add value, to inform proactive activity.

Conclusion

The rationale for Growth Hub provision and BEIS guidance on the objectives and operation of

Growth Hubs are common across England, but there is scope for significant variation in the

practical arrangements that LEPs put in place to deliver Growth Hub services. Our review of

arrangements in comparator LEPs reflects the diversity of options available and the

importance of local context in determining how business support services are provided in a

given LEP area. Arrangements in Worcestershire reflect the established capacity and

capabilities of the local Chamber of Commerce, and there are no current plans to change

these arrangements given wider uncertainty over the role of LEPs and Growth Hubs. While

arrangements in Buckinghamshire reflect the self-organising capacity of local businesses,


11

which have developed a tiered membership/subscription model. And arrangements in

Cheshire & Warrington reflect an evolution of Growth Hub delivery arrangements that

respond to changes in the LEP’s strategic priorities. .

Consultees in the comparator LEP areas highlighted the contingent nature of BEIS funding and

the uncertainties that this entailed. Consultees also noted the pros and cons of using BEIS

funding as match funding for ERDF. With some LEPs, Buckinghamshire Thames Valley and

Cheshire & Warrington, choosing to keep their core funding free from ERDF eligibility criteria –

thereby forgoing additional resource in favour of greater flexibility in terms of the types of

businesses and sectors with which they can work. While, Worcestershire has opted for a

middle way, by matching one-half of its budget to ERDF finance, thereby leaving the other half

of its funding free of ERDF constraints. In this matter, Hertfordshire’s arrangements, can be

seen to maximise resources to the Growth Hub but limit the scope of support to activities

which meet ERDF eligibility criteria and output requirements.


12

Financial resources

The Hertfordshire Growth Hub operates a ‘shared-resources model of delivery’ by which

Exemplas may pool resources across a number of contracts to lever in additional resources,

such as ERDF.

LEP Funding

Hertfordshire LEP receives core funding of c. £287,000 a year from BEIS to deliver a Growth

Hub service. Under the existing delivery contract Exemplas receives £251,050 a year to run

HGH. The LEP draws down c. £71,750 of this funding per quarter.

Financial Leverage

Alongside this LEP funding, HGH has leveraged additional funding, primarily through the ERDF-

financed ‘Get Growing’ project. The key sources of leverage are:

ERDF ‘Get Growing’- This project provides access to structured business support

services as well as grants of up to £3,000 to access external expertise with Growth Hub

Account Managers monitoring progress and proving ongoing support.

Private sector match through the ‘Get Growing’ project (FY 2018/19) – an extension

to project enabled HGH to provide grants of up to £3,000 (against 50% match funding)

for use on consultancy services that support business growth and resilience. These

grants have leveraged £97,553 of private sector investment.

University of Hertfordshire/Exec group funding (FY 2018/19) – recognising the

additional costs and resources required to deliver HGH Hertfordshire University

invests additional resources annually. This funding supplements Growth Hub project

staff resources and enabled Exemplas to absorb a proportion of overhead costs. The

total additional investment, including website development is a six-figure sum.

Digital platform – Exemplas and University of Hertfordshire have invested in the

development and licensing of a digital platform to streamline business support

services and increase the number of light touch interventions. This has been available

in the beta form since January 2019, and subject to ongoing development. The existing

website will be taken down following the consumer launch, after which the URL

www.hertsgrowthhub.com will take users straight into the platform.

Events – Exemplas often leverages the resources to deliver some of its events

including venue and catering costs.

A breakdown of the leveraged funding is presented in Table 3-1. In addition to these external

funds, the University of Hertfordshire invested in a digital business support platform which will

benefit the Hertfordshire LEP area, and overhead and running costs of the HGH – estimated to

be worth around £450,000. Furthermore, HGH benefits from the colocation of Innovate to

Succeed (funded by ERDF and Innovate UK), and the DIT-funded export advice services. Finally,

HGH also received an additional £110,000 for Resilience work with businesses. In addition to

3 Inputs

http://www.hertsgrowthhub.com/


13

these specific funding sources, Hertfordshire LEP also supported the ongoing operation of the

Growth Hub through leadership and coordination activity, including working with BEIS and

other elements in the wider business support ecosystem.

Table 3-1: HGH Financial Leverage

Source Value Activity

Period April 2018 – September 2018

ERDF £ 182,860.00 HGH Get Growing Project – with support from the LEP

SMEs £ 97,553.00 HGH Get Growing Grant Projects, Private Sector Leverage

UH/EXE Group

£ 94,000.00 Contribution to salaries and overhead costs

Period October 2018 to date (Feb 2020)

UH Bus Dev

£ 7,000.00 Venue and catering costs for ALTHYCG event - March 19

OPSS, BEIS £ 10,000.00 Marketing budget to support Growth Hub/HCC PA pilot

HCC, HS2, Align

£ 11,000.00 Venue and catering costs for ATHYCG Supply Chain & Procurement event

ERDF £ 361,701.00 Get Growing 2 Project, additional £1million committed for next 2 years

SMEs £ 26,666.29 HGH Get Growing Grant Projects, Private Sector Leverage

Total £ 798,780 +a further £1m ERDF to be drawn down Sept ‘21

Source: Exemplas Ltd, 2020

Personnel

The majority of the costs associated with running the Growth Hub relate to staff. At present

the Growth Hub is staffed by a dedicated team of 11.5 FTEs of which 4.5 are funded by core

funding from BEIS. This team works across both LEP and BEIS funded projects. The Team is led

by Sian Ryan, Head of Service who holds overall responsibility for HGH. A breakdown of HGH’s

personnel, including those funded by the LEP and those funded through other sources, is

provided in Table 3-2. There are 4.8 FTE Business Advisors, including an Online Growth

Account Manager (1 FTE), a Lead Growth Account Manager (0.8 FTE) and Growth Account

Managers (3 FTEs), of which 2.5 FTEs are funded using BEIS core funding. It should be noted

that HGH had one Growth Account Manager, vacancy from January 2020, with a recruit

identified to take-up the role in April 2020.

In addition, HGH employed a small temporary team to deliver the Business Resilience project

from December 2019 to March 2020. Staff for this project included: two FTE Business

Resilience Advisors; one FTE Marketing Executive; one FTE Event Executive. These roles are for

a fixed term with contracts due to terminate at the end of March 2020.


14

Table 3-2: HGH Personnel by funding source

Role Total FTEs Of which LEP/BEIS funded

Of which ERDF/Exe Group funded

Head of Service 1 1 0

Online Growth Account Manager 1 1 0

Events Manager 1 1 0

Growth Account Managers 3* 0.5 2.5

Lead Growth Account Manager 0.8 0 0.8

MI & Data Analysis Executive 1 0.5 0.5

Senior Marketing Executive 1 0.5 0.5

Business and Strategic Dev Manager 1 0 1

ERDF Project Executive 0.6 0 0.6

ERDF Contract Manager 0.1 0 0.1

ERDF Operations Manager 1 0 1

11.5 4.5 7

Source: Exemplas Ltd, 2020

Governance

The Growth Hub Board

The Hub currently operates under contract between Hertfordshire County Council (as

Accountable Body for the LEP) and Exemplas Ltd.

The Hertfordshire Growth Hub reports to Hertfordshire LEP in two ways. It has an operational

board with two LEP board members (Adrian Hawkins and Nitin Dahad) and the Pro-vice

Chancellor – Enterprise, at the University of Hertfordshire. It also reports quarterly to the

LEP’s Enterprise and Innovation programme board, which comprises both private and public

sector stakeholders. The LEP’s governance structure in relation to Growth Hub is illustrated in

Figure 3-1.


15

Figure 3-1: HGH Governance Structure

Source: Source: GROWTH HUB FUNDING TO LOCAL ENTERPRISE PARTNERSHIPS (LEPs), SCHEDULE 3 - PRINCIPLES OF FUNDING (2020-2021)

Comparison with other LEPs

Funding

Table 3-3 summarises the business populations, core funding and Growth Hub staffing for

Hertfordshire LEP and the three comparators.

Table 3-3: Comparator LEPs business populations and BEIS Growth Hub funding and staffing

Local Enterprise Partnership

VAT-registered business 2019

Annual Growth Hub Funding £

Funding per business p.a.

Full-time equivalent Growth Hub staff

Hertfordshire LEP 65,640 £287,000 £4.37 11.5 (4 funded by BEIS grant)

Worcestershire LEP 27,005 £205,000 £5.53 4

Buckinghamshire Thames Valley LEP

31,150 £328,000 £10.52 12 (4 business advisers)

Cheshire and Warrington

43,325 £287,000 £6.62 4

Source: Steer-EDAs noted in Section 2, Worcestershire LEP matches 50% of its core Growth Hub funding with ERDF and Buckinghamshire and Cheshire & Warrington LEPs do not use the Growth Hub’s core funding directly to match ERDF.

Hertfordshire LEP’s approach maximises ERDF funding to the Growth Hub by matching 100%

of its core Growth Hub funding to ERDF, and leveraging further private sector funding as part

of an ERDF-funded grants programme. This approach, however, means that Growth Hub

activities in Hertfordshire have to meet ERDF criteria, which reduces operational flexibility

relative to comparator LEPs, for example, ERDF funding criteria does not permit a firm to

receive more than one intervention, whereas BEIS funding criteria permit this.

Conclusion

Thus, Hertfordshire Growth Hub’s staffing levels based on core BEIS finding are in line with the

comparator LEP areas, and the use of ERDF funding has allowed the Hub to achieve a larger


16

staff than other areas. This reflects different approaches to Growth Hub provision – with

comparator LEPs choosing not to confine operations to ERDF eligibility criteria and output

targets.


17

HGH’s service model is centred on account management and signposting through the

ecosystem, i.e. Business Advisors engage with clients to develop ‘roadmaps for growth’ that

utilise all available business support and funding opportunities. The aim is for Business

Advisors to develop meaningful relationships with clients in order to co-produce growth-

enabling solutions. The face-to-face service is augmented by online support services, plus

events and briefings.

To make the most effective use of limited resources, HGH focuses its business advisers’

activities on scaling-up existing SMEs (estimated to be around 2,000 in the Hertfordshire LEP

area), while the HGH website serves the wider business population.

HGH forms part of a wider business support ecosystem. The key partners, University of

Hertfordshire, Hertfordshire Chamber of Commerce, and Exemplas hold regular meetings to

ensure there is joint branding across the three organisations and maintain clear referral

agreements. The business support ecosystem also serves the needs of start-ups and micro-

businesses, with WENTA providing enterprise support via the Get Enterprising programme.

There is also start-up and incubator support in specific locations, e.g. Rothamsted Research,

BRE in Watford, as well as the University of Hertfordshire’s Incubator facility. This ecosystem

sees Hertfordshire achieving the highest start-up rate per capita outside London of any LEP

area.

Services to business

Hertfordshire Growth Hub provides a number of signposting services via the website

https://www.hertsgrowthhub.com/ and business support services, in particular Growth

Account Managers (GAM) who operate as generalists and manage clients on their growth

journeys.

Barriers to growth

In terms of understanding the HGH offer relative to business need, it is useful to understand the barriers to growth that businesses in the area highlight. HGH conducted a customer satisfaction survey in 2019. The survey asked firms to identify the biggest barriers to their growth.

Table 4-1 summaries the results (from a relatively small sample), which show the largest area

of concern was Sales, Marketing, Digital barriers, followed by Planning, Operations and

Infrastructure; with People, Training and Development; and Finance, Funding and Investment

equal third. This provides an indication of firms’ current priorities – although as changes due

to the UK’s departure from the EU emerge, there may be an increase in demand for support

on legal and regulatory issues.

4 Activities

https://www.hertsgrowthhub.com/


18

Table 4-1: Key barriers to growth

Barrier to growth Proportion selecting (of 12 respondents)

Planning, Operations, Infrastructure 55% (6)

Finance, Funding, Investment 46% (5)

People, Training, Development 46% (5)

Sales, Marketing, Digital 82% (9)

Legal, Regulatory, Compliance 9% (1)

Source: Exemplas Ltd Customer Satisfaction Survey, 2018

Service delivery

The Growth Hub reports regularly on its activities, evidence provided to this Review covering

the period October to December 2019, illustrates the proportion of businesses accessing

different HGH services (Figure 4-1). It shows Finance, Funding and Investment is the most

common service accessed, with Planning, Operations and Infrastructure; Sales, Marketing and

Digital, and People Training and Development trailing some way behind. Given the limited

data, it is not possible to form a judgement on whether there is a need to rebalance support to

Sales, Marketing and Digital. Furthermore, it is possible that some of the support related to

Funding may have been used to address Sales, Marketing and Digital issues.

Figure 4-1: High intensity support business support areas (Oct-Dec 2019)

Support by sector

The SEP highlights the following key sectors: Life Sciences, Advanced Engineering/

Manufacturing, Agri-science and Agri-tech, Sustainable Construction, and Creative Industries

(film, TV, digital sectors). Table 4-2 provides a sector breakdown of supported businesses

(including three where data is missing). The sector most supported is ‘Professional, Scientific

and Technical Activities’ accounting for 33% of businesses with Information and


19

Communication and Manufacturing equal second. These are broadly in line with SEP sector

priorities, however, the next largest sector in terms of support is Wholesale and Retail, which

may not reflect LEP priorities.

Table 4-2: Sector breakdown of support businesses

Sector Count (n=141) Proportion

Accommodation and food service activities 8 6%

Administrative and Support Service Activities 10 7%

Agriculture, forestry and fishing 1 1%

Arts, Entertainment and Recreation 3 2%

Construction 6 4%

Data Missing 3 2%

Education 4 3%

Financial and insurance activities 4 3%

Human health and social work activities 4 3%

Information and Communication 14 10%

Manufacturing 14 10%

Other Service Activities 4 3%

Professional, Scientific and Technical Activities 46 33%

Real Estate Activities 3 2%

Transportation and storage 3 2%

Water Supply; Sewerage, Waste Management, Remediation 1 1%

Wholesale and retail trade 13 9%

Source: Exemplas Ltd Client Database Excerpt, April 2018-September 2019

Networking and development of the business support ecosystem

In addition to the provision of services to business, HGH is required to engage with and

support the development of Hertfordshire’s business support ecosystem – including provision

of an online platform plus networking events and groups. We undertook a series of

stakeholder consultations to gather views on HGH’s role in Hertfordshire’s business support

ecosystem.

Consultations indicated that the University of Hertfordshire and Exemplas developed a new

online platform to be launched in Hertfordshire and subsequently rolled out to other

areas/clients. Stakeholders anticipated an enhanced service from the new online platform

relative to the existing website. A number of consultees, however, commented that its

delayed launch had limited the development of the County’s broader business support

ecosystem, in particular a relative lack of ‘market place’ activity. Consultations confirmed that

the launch was delayed due to complications in the development stage, and a subsequent

opportunity to link the launch of the platform to a refresh the LEP’s Growth Hub brand.


20

In practical terms, a number of consultees reported improvements in HGH’s performance in

recent months, with more active engagement with stakeholders. One area for improvement in

partnership working may be in the relationship between HGH and local authorities – where

clarity on the restrictions HGH has to operate under in terms of data sharing and the uses to

which HGH data are put by local authorities may improve partnership working.

Consultees reported that HGH has established an effective signposting service for businesses

that works with the grain of the local business support ecosystem. And financial

intermediaries operating in the business support ecosystem valued HGH as an asset that could

add value to their own clients, e.g. by assisting business to access grants, and therefore added

value to their own services to clients.

Some consultees suggested that more could be done to coordinate, schedule, and promote

business events – with some consultees hoping that the new digital platform may help to

address the twin problems of effective programming of events between partners and raising

awareness of events. While others cited effective cooperation between themselves and HGH

in relation to attendance at business events, e.g. Manufacturing Growth programme (MGP)

attends HGH events, and provision of materials to help them to raise awareness of HGH.

Consultations also revealed a general sense that there was scope to increase the volume of

cross-referrals. The Review, was unable to explore the cause/s of these concerns in depth but

a number of potential explanations include, partners:

Do not fully understand each other’s offers, and therefore a fail to identify referral

opportunities when they arise;

Do not wish to refer businesses to other providers as they do not believe the offer/service

meets the needs of their client/s;

Operate in different ‘segments’ of the market and therefore have limited opportunity for

referral, e.g. those known for working with established businesses may be approached by

few start-ups and vice-versa; and

Partners often do not record the referrals that they make, which means they are unable to

provide evidence of a referral having been made, while clients may not always mention

how they were made aware of a service that they access.

The consultations found evidence for each of these explanations, with the latter explanation

being the most common.

Conclusion

Our review of evidence indicates that in terms of Strategic Added Value targets outlined in

paragraph 2.7, the HGH had:

Established a central resource providing access to the principal business support providers

in Hertfordshire;

Yet to fully establish a new online platform to improve local SMEs access to support

quickly and easily –while this has been subject to delays and will serve other areas the

scale of investment in the new platform represents significant additional resources

relative to BEIS core funding;

Undertaken some co-ordination and management of communities of interest to

encourage the dissemination of best practise and that coordination is likely to improve

flowing the launch of the new digital platform;


21

Established a cohort of Growth Account Managers to help growth-potential businesses to

scale up quickly – and that the scale of resource has been increased via ERDF due to the

ability of Exemplas and the University of Hertfordshire to undertake the risks associated

with large ERDF projects, which had to be of a scale that smaller organisations could not

undertake; and

Undertaken marketing and promotion of activities that channel SME demand for external

advice, whether or not it is free of charge, including taking on additional activity in relation

to Brexit Readiness and Resilience.


22

Introduction

This section of the report focuses on the short-term outputs that arise from activities and

which feed-in to outcomes and impact.

Monitoring arrangements and data availability

Exemplas provides the LEP with quarterly monitoring data against agreed KPIs. The LEP’s

contract year with Exemplas runs from October 1st. Data are therefore available for contract

year 2018/19 (running October 2018-October 2019) and October 2019-December 2019. This is

presented in Table 5-1. (Where actuals are below the contract targets these numbers are

highlighted in red where they meet or exceed target they are highlighted in green).

Based on Exemplas’ KPI data for the 2018/19 contract year, HGH’s performance against the

LEP/BEIS targets appears strong with reported ‘actual’ delivery of outputs meeting or

exceeding all KPIs other than ‘light intensity’. Given the over-delivery of high intensity support

we do not consider this shortfall to be problematic.

Data from Q1 of the 2019/20 contract year indicates strong performance, and suggests the

HGH is well on track to meet all but the Jobs KPI target (consultations indicate that this is

probably explained by the lag in employment creation following the provision of support and

is not necessarily a cause for concern).

Table 5-1: LEP KPI monitoring data

KPI Descriptor Contract target 2018/19

Actual 2018/19

Contract target 2019/20

Actual Q1 2019/20

High intensity – 12 hours support

115 650 115 58

Medium intensity – 1 hour plus

660 945 660 198

Light intensity – less than 1 hour

2700 2543 2700 1471

Unique clients supported

3000 4158 3000 1727

Jobs created 100 247 100 4.5

Source: HGH KPI Profile 2018-2021 (Data prepared by Hertfordshire LEP for quarterly Contract Review meetings)

Conclusion

Thus, we found significant progress has been and is being made in relation to performance

against contract.

5 Outputs


23

Introduction

The brief asked for our judgements on the effectiveness Growth Hub provision in terms of

performance against KPIs and delivery of company-level impact. Given the relatively short

time scale in which the current contract has operated, and the limited nature of outcomes and

impact data available, we have had to estimate the potential impact of Growth Hub support.

To sense check our estimates we assess other sources of information, including feedback from

account-managed businesses and project evaluations. Or approach and the constraints we

faced and the assumptions we made are explained below.

Data availability

The key difficulty in estimating the impact and value for money of the Growth Hub’s services

has been the lack of data. The data sources available were:

An ‘Impact’ data spreadsheet:

- Exemplas provided data in the Impacts Matrix established by Hertfordshire LEP

(Appendix A) for 34 businesses that had received support. This is smaller number than

originally hoped; Exemplas reported difficulties in engaging businesses to provide

these data.

- The spreadsheet includes anonymised firm-level projections of turnover (and jobs),

over four years, data were not provided for each of the four years – although all firms

provided estimates of turnover on Year Four following support. The Impacts Matrix

(Appendix A) does not contain information on the ‘counterfactual’, which means that

we were unable to ascertain the extent to which the increase in turnover forecast by

firms would have occurred in the absence of HGH support.

A ‘Business details’ spreadsheet was provided by Exemplas. This contained firm-level

details on 141 businesses which had received intensive support, including the number of

hours of support provided. This source indicated that the (mean) average of support was

24 hours (double the BEIS definition of intensive support). It should be noted, however,

that because the impact data on the 34 businesses were anonymised, it was not possible

to match the actual number of hours of support a business received to the actual turnover

forecasts of a specific firm.

Given these constraints, we applied high-level assumptions and impact modelling to estimate

the net GVA and employment impact likely to be achieved to date and then estimated a rate

of return per hour to the business support provided.

Assumption-based impact modelling

Given the data availability issues outlined above, we carried out an assumption-based impact

modelling exercise. This exercise drew on turnover data in the Impacts Matrix provided by 34

businesses and the (mean) average hours of business support provided per firm estimated.

Turnover forecasts were reported by the businesses themselves, the assumptions behind

6 Outcomes and Impacts


24

these forecasts have not been verified, but have been assumed reasonable for the purposes of

estimation.

Figure 6-1 illustrates our approach to estimating the GVA impact of HGH support. It uses firms’

own forecasts of additional annual turnover four years after receiving business support to

estimate the number of jobs created (based on national benchmarks of turnover per job). It

then uses benchmark GVA per worker figures to estimate additional GVA. Net employment

impact is then estimated by applying national guidance on deadweight, leakage, displacement,

substitution, and local multipliers. Average GVA per job figures are then used to estimate net

GVA, which is then calculated at Net Present Value (using HM Treasury guidance) to estimate

additional GVA per hour of support. In more detail:

Step 1: Future Turnover to Gross Jobs – Uses data provided by firms that identifies the

additional annual turnover in Year Four following intervention at £122m, an average

turnover per job figure (£131,37310) is applied to estimate gross jobs created by this

additional turnover at 347 jobs;

Step 2: Gross Jobs to Net Additional Jobs – Uses additionality assumptions are drawn

from HCA’s Additionality Guide11 to estimate net additional jobs (assuming a medium level

of leakage (25%), a medium level of displacement (50%) and deadweight in line with

assumption for sub-regional business activities (47.2%) to give 74 net additional jobs.

Step 3: Net Additional Jobs to Net Additional GVA – Estimates Net Additional GVA

created by applying an average GVA per job figure across all sectors of £56,84012 to the

net additional jobs figure to give additional GVA of £4.3m;

Step 4: Real GVA at Net Present Value: In line with HM Treasury Green Book best practice

an adjustment is then applied to reflect social time preference (i.e. discounting at 3.5% per

year) and inflation (at 2% per year), which gives a figure of £3.5m; and

Step 5: Impact per hour – Calculates the GVA impact per hour of support based on an

assumed 24 hours of support per firm, which gives an estimated net additional GVA of

£2,295 per hour of Business Advisor time.

Figure 6-1: Modelling Approach

Table 6-1 provides a summary of the calculations. The Total column reflects the sum across all

34 businesses that received high intensity support and completed the Impacts Matrix.

10 Business Population Estimates, ONS, 2018/19 11 Additionality Guide (Fourth Edition), Homes & Communities Agency, 2014 12 Regional Gross value added (balanced approach) in England, ONS 2016/17; Business Register and Employment Survey 2016/17

Future Turnover = £122m

Gross Jobs = 347

Net Additional Jobs = 74

GVA = £4.3m

Real GVA at NPV = £3.5m

Impact per hour = £2,295


25

Table 6-1: Modelling outputs for Year 413

Value for money

When appraising applications for LGF funding, Hertfordshire LEP applies a benchmark of

£28,700 per net additional job as the threshold for value for money. BEIS funding for HGH is

around £287,000, this implies a figure of 10 net additional jobs would need to be delivered in

order to be considered good value for money. The assumption-based impact modelling

suggests 76 net additional jobs as a result of HGH’s interventions to 34 businesses. As such,

HGH can be said to be delivering value for money in terms of job creation.

Insight from user consultations

In order to gain insight into the perceptions of HGH held by account-managed clients, the

Review sought to consult 10 firms which had received high-intensity (i.e. 12 hours +) support.

To do this the Review contacted 30 businesses. Each business received an initial introductory

email from Hertfordshire LEP to introduce Steer ED and the Review. If required, this was

followed by two emails which suggested potential times for a consultation. Table 6-2 provides

a breakdown of responses.

Table 6-2: Consultation engagement summary

Item Number (proportion)

Total number of businesses contacted 30 (100%)

Total number of businesses who responded to emails 9 (30%)

Total number of businesses who responded but declined to participate 6 (20%)

Total number of businesses who participated 3 (10%)

Source: Steer ED

Of the 30 businesses contacted nine responded, six of which declined to participate in the

survey. These six businesses provided a variety of reasons for their decision:

One stated that they did not wish to participate as they did not wish to spend more time

on HGH-related matters;

Two businesses stated they did not have time over the consultation period; and

13 ‘Extreme outlier values’ defined as businesses where GVA per hour of support indicated £15,000 or more were excluded from the final impact calculation.

Total (n= 34) Average per business

Current Turnover £76,806,900 £2,259,026

Turnover at Y4 £122,410,100 £3,600,297

Gross Jobs Uplift 347 10

Net Additional Jobs 76 2

Net Additional GVA in Year 4 £4,297,344 £126,392

Net Real GVA at NPV in Year 4 £3,459,697 £101,756

GVA per hour of support n/a £2,295


26

Three of the named consultees said that they had not or could not recall having received

support from HGH.

Feedback from the user consultations

Given the relatively small sample originally sought, the findings from our telephone

consultations were always likely to be illustrative rather than definitive. The responses of

three firms, therefore, should be treated with caution, however, for completeness, a summary

of the responses we received to our questions on awareness and access, impact, and areas for

improvement is presented below.

Awareness of and access to the Growth Hub

Of the three businesses consulted two approached the Growth Hub directly and one was

approached by HGH at a trade show. The two business that approached HGH had some

understanding of the business support landscape having used business support in the past.

One of the businesses, which knew which service it sought, said that it was “quite easy” to

access Growth Hub services. The other two businesses reported some initial difficulty in

accessing services, given the complexity of offers, but, said that Business Advisors helped to

resolve these issues.

The consultees had used a range of services, tailored to their needs as diagnosed by the

Business Advisors, including:

A website review;

Grant application support;

Business processes review; and

Advice on Client Relationship Management (CRM) and book-keeping procedures.

The businesses felt very positive about the Business Advisors and valued their inputs because

they had “real world” business experience and provided impartial advice.

Perceived impact

The business consultees reported that HGH support had made an impact on their business,

although they could not quantify it. The views of impact varied depending on the type of

support received:

Business A stated that without HGH’s support it would not have been able to access grant

funding. The grant funding enabled the business to attend an additional trade show where

it secured a new contract. The consultee thought that the firm may have attended the

trade show in the absence of the grant, but “having access to the grant, made it a lot

easier to get internal approval to go to the trade show.” In addition, Business A stated that

it learned a lot from a review of its website (e.g. around Sales Cycle Optimisation) but was

not able to quantify the impact of this.

Business B stated that the recommendations of the HGH business advisor (to replace a

staff member with someone more suited to the role) has saved the business 0.5 days per

week. The business thought that having the external input enabled it to make this difficult

decision. Business B thought it would have probably come to a “crunch point” when it had

to make the decision but the support of HGH enabled it to be proactive.

Business C stated that business advice (relating to its finance/ book-keeping systems and

approach to client engagement) had had a significant impact on profitability. Profit


27

increased by c. £5k (an increase of nearly 100%). Business C did not think this would have

occurred in the absence of Growth Hub support.

Ideas for improvement

Suggested areas of improvement included:

Business A thought free seminars to help people understand what the Growth Hub offers

and how it compares to the other services would be useful;

Business B suggested a more proactive approach; “if you ask a question, they will supply

the answer, but it would be better if they would be more proactive in supporting

businesses”; and

Business C wanted the Business Advisors to spend more time understanding the detail of

their business to inform a more tailored diagnosis of need.

Evidence of impact from other Growth Hub evaluations and surveys

2018 Customer satisfaction survey

As noted above, HGH undertook a ‘Customer Satisfaction Survey’ in October 2019 to

understand sentiment towards Growth Hub’s services by those receiving high-intensity assists;

27 businesses were contacted, and 11 businesses responded (a 40% response rate). The

results of this survey indicated that respondents’ sentiment towards HGH was very positive.

The key findings were as following:

All 11 businesses responded that they found it ‘Easy’ or ‘Very easy’ to access HGH services;

Almost all the businesses rated the knowledge and experience of their Growth Account

Manager highly with nine responding that it was ‘Excellent’; and

Nine businesses responded that the advice they received added ‘Excellent’ or ‘Good’ value

to their business.

‘Get Growing’ Evaluation

The Growth Hub delivered the ERDF funded Get Growing Programme, which was evaluated by

KADA research. The Get Growing programme aimed to enhance the competitiveness of SMEs

across the county by providing tailored Growth Plans to focus businesses on growth and help

to increase wealth reaction, innovation and job creation. It aimed to complement, streamline,

promote and add value to the services of the HGH. The Get Growing evaluation found:

The delivery model worked well; mixing diagnosis with in-depth interaction, workshops

and events;

Businesses supported experienced ‘tangible business improvements’;

High ratings for the knowledge and professionalism of advisors;

Targeting could have been more effective as some micro-businesses had been included;

The programme created 190 gross FTE jobs generating £12.2m GVA (at NPV); and

A cost per net job of £19,800 (within the expected range of £8,000 and £26,000).

Conclusions

There are limited data on the outcomes and impact achieved by HGH activity. We therefore

sought to estimate the potential economic impact of HGH activity. We estimate that an

additional GVA of £3.5m could be achieved from HGH activity, all other things remaining

equal, given businesses’ employment forecast and the application of standard benchmarks for

turnover and GVA per employee. This implies a forecast GVA uplift of over £2,000 per hour of


28

business support provided, assuming an average of 24 hours of business support and that

firms’ GVA forecasts are accurate.

The qualitative evidence gathered as part of the review is limited; a majority of beneficiaries

did not respond to our request for a consultation, and a number of those who did respond

declined to participate. The limited evidence points to positive impact for those receiving

support.


29

This Review was asked to form judgements on four issues. The findings are summarised below.

Is the current programme effective in terms of its performance against KPIs and the delivery

of company-level impact?

Based on the data provided, current performance indicates that HGH is on track to hit its KPIs

(Table 7-1).

Table 7-1: LEP KPI monitoring data

KPI Descriptor Contract target 2018/19

Actual 2018/19

Contract target 2019/20

Actual Q1 2019/20

High intensity – 12 hours support

115 650 115 58

Medium intensity – 1 hour plus

660 945 660 198

Light intensity – less than 1 hour

2700 2543 2700 1471

Unique clients supported

3000 4158 3000 1727

Jobs created 100 247 100 4.5

Source: HGH KPI Profile 2018-2021 (Data prepared by Hertfordshire LEP for quarterly Contract Review meetings)

In terms of the firm-level impact of HGH support, the available data are limited. The Review

estimated additional GVA generated as a result of HGH support to businesses at around

£3.5m, a twelve-fold return on the £287,000 of BEIS funding. It estimated the return on an

hour of Business Advisor support at £2,295. While subject to a number of caveats, in relation

to the accuracy of firms’ forecasts and the application of standard GVA per work benchmarks

these estimates represent value for money.

Thus, in terms of performance against BEIS KPIs (Table 7-1) and firm-level impact based on

forecasts, we judge the current Growth Hub arrangements to be effective in relation to the

delivery of outputs.

What are the perceptions of HGH among account-managed clients, stakeholders and other

business support providers in Hertfordshire’s business support ecosystem?

The Review undertook a limited number of stakeholder consultations. These reported:

Recent improvements in HGH’s engagement with partners;

Scope for more effective cross-referrals between stakeholders – or at least more effective

tracking of referrals between stakeholders;

Room for improvement in the coordination, scheduling, and promotion of business events

run by stakeholders, a situation that the new digital platform may address.

7 Conclusions and Recommendations


30

Thus, overall partnership working has improved in recent months, momentum is being

maintained, and delivery of the new digital platform should further improve coordination and

joint-working.

What is the effectiveness of the current Growth Hub model relative to comparators?

The Review gathered evidence on the delivery models used by comparator LEPs in

Worcestershire (outsourced to a Chamber of Commerce), Buckinghamshire Thames Valley

(outsourced to a local business membership organisation), and Cheshire & Warrington (in-

house provision). The evidence gathered was at a headline level and suggests that the HGH

model:

Maximises the resources available for Growth Hub services – by fully matching BEIS core

funding to ERDF – but in doing so it sacrifices operational flexibility relative to the

comparator LEPs, as ERDF funding criteria do not allow a firm to receive two interventions,

whereas BEIS guidance permits this;

Levers in additional partner resource to deliver Growth Hub services, in particular

resources from University of Hertfordshire and Exemplas, for the development of online

platform, which was delayed due to complications in the development stage and a

subsequent opportunity to link the launch of the platform to a refresh the LEP’s Growth

Hub brand;

Achieves a degree of integration in the provision of business support services, e.g.

colocation of trade advice service; and

Avoids the risk that advice is not perceived to be impartial, associated with outsourcing to

membership organisations that sell business support services.

Is the current delivery model and service delivery realising the LEP’s ambitions for the

Growth Hub programme?

As noted in paragraph 7.2, delivery of BEIS KPIs are on track. In relation to the Strategic Added

Value targets specified in the Growth Hub contract, we found HGH has:

Established a central resource providing access to the principal business support providers

in Hertfordshire;

Yet to establish a new online platform to improve local SMEs access to support quickly and

easily;

Undertaken some co-ordination and management of communities of interest to

encourage the dissemination of best practise and such coordination is likely to improve

following the launch of the new digital platform;

Established a cohort of Growth Account Managers to help growth-potential businesses to

scale up quickly – and that the scale of resource has been increased via ERDF due to the

ability of Exemplas and the University of Hertfordshire to lead a large ERDF projects, which

smaller organisations are often unable to lead due to the cashflow implications ; and

Undertaken marketing and promotion of activities that channel SME demand for external

advice, whether or not it is free of charge, including taking on additional (funded) activity

in relation to Brexit Readiness and Resilience.

With regard to the adoption of an alternative delivery model, we found that where a LEP

Board has ambitions which reach beyond those stated in BEIS and/or ERDF funding

arrangements, a switch to an in-house model may be appropriate, as was the case in relation

to Cheshire & Warrington. In this case, we identified a number of lessons for managing the

transition, including:


31

Develop an understanding of the resource implications of bringing the Growth Hub in-

house (e.g. the costs of IT and CRM systems);

Have a plan to manage disruption of relations with a key partner who is the current

provider; and

Agree transition arrangements, including establishing staff members’ intentions to stay

with their current employer or to move with the service, to ensure continuity of service to

businesses.


32

A.1 The LEP Board wished to assess HGH’s impact on businesses and the wider economy. Data

collected to meet BEIS reporting requirements did not meet this goal. Thus, an Impacts Matrix

was developed to collect firm-level data that would allow an assessment of impact.

A.2 The Impacts Matrix (Table A-2) was developed collaboratively between the LEP and Exemplas.

It was finalised in Summer 2019, and since then HGH Advisors have been contacting

businesses which have used HGH services to collect impact data. This has not been a

straightforward task because: (a) businesses are being contacted retrospectively for data they

were not anticipating would be required; and (b) impacts take time to be realised and data

may not be available when HGH requires it.

A.3 The Impacts Matrix provides a clear improvement on the existing data collection method;

however, it also does not provide sufficient evidence to assess net impact, to do this we

recommend the following adjustments:

Estimating deadweight: The current Impacts Matrix does not provide a means of

estimating the deadweight of the intervention for a particular business. In other words, it

does not show what would have happened in a ‘business as usual’ scenario. It is the

difference between BAU and the reported performance that is the genuine impact of

support. It is recommended that a revised Impacts Matrix collect a ‘best guess’ estimate

from businesses of what would have happened without assistance from HGH. Where the

additional outputs/impact is claimed to be more than 47.2% (additionality guide

deadweight benchmark for business support interventions) it should be treated with

caution.

Total hours of support by type: A meaningful impact assessment should be contextualised

with an understanding of the amount of support businesses actually received as well as

the type of support. Without this any assessment of impact by hour of support will always

have significant potential for error. It is therefore recommended that data is provided

alongside an understanding of the type and quantum of support provided.

Cumulative planned investment: The present layout of the Impacts Matrix provides

forecasts at intervals (12 months, 2 years and 4 years). As such the data on planned

investments, which will be useful to contextualise HGH’s business support cannot be used

to calculate the cumulative total of that planned investment. We therefore recommend

that future looking data is reported at yearly intervals.

Forecast skills shortages: At present the Impacts Matrix includes a forecast of future skills

shortages at different skill levels. It is difficult for firms to accurately forecast these – the

LEP may wish to consider removing this field

A.4 A spreadsheet including these recommended adjustments is provided as a separate Appendix

B

A Impacts Matrix


33

Table A-2: Impacts Matrix

Measure / Data Point Current Forecast – 12 months Forecast – 2 years Forecast 4 years

Turnover Profitability

£ £

£ £

£ £

£ £

Export Value Import Value

£ £

£ £

£ £

£ £

Employee numbers: Low (low skills) Medium (Medium level technical kills, Middle Management) High (High technical skills/senior management)

F/T P/T Total: No: No: No:




Skills Shortage: Low (low skills) Medium (Medium level technical kills, Middle Management) High (High technical skills/senior management)

Overall: No: No: No:




Planned financial investment in skills development:

£ £ £ £

Planned financial investment in Technology:

£ £ £ £

Note: Consideration to be given to Sector Benchmarking and comparison to IHS Market data.

Aggregated data to be provided for all businesses receiving support from the HGH Growth Account Managers, expected to reach High Intensity

throughout the contract period.

www.steer-ed.com

We are a boutique economic development consultancy firm. We don’t just offer strategies for economic development, we change the way our clients think about it. Bringing together a wealth of experience, we deliver a bold, rigorous, integrated vision of the future. We challenge assumptions, and leave our clients with the knowledge and capabilities to succeed.

Progressive thinking No time for business as usual

Our offices Manchester 61 Mosley Street Manchester, M2 3HZ +44 (0)161 261 9140 Leeds 67 Albion Street Leeds, LS1 5AA +44 (0)113 389 6400 London 28-32 Upper Ground London, SE1 9PD +44 (0)20 7910 5000

hertfordshire growth hub review

Documents