Examination of Witnesses (Questions 1
WEDNESDAY 2 MAY 2001
1. Good afternoon, Mr Irwin. I would like to
welcome you to the Committee. We realise your organisation has
been underway for some time now but we felt it would be better
to give you a chance to prove yourself or have a record that we
can examine before we had you in, so we are very pleased to welcome
you. Perhaps you could introduce your colleagues and then we will
(Mr Irwin) Thank you. On my right, Peter
Waller, who is my Deputy Chief Executive. On my left, Haf Merrifield,
who is responsible for our network development, which is largely
the Business Link network throughout England.
2. Thank you. Perhaps we can start with the
fundamentals, not quite pay and rations but rations anyway in
terms of Government funding. We now have the increased flexibility
afforded by three year financial planning. I suppose the downside
of that is that the annual funding did afford a degree of flexibility
and if something changed dramatically within the period of 12
months you could draw down resources by arguing the case, whereas
now it is over three years, and in some respects as a new organisation
you were really going on a wing and a prayer as far as what your
needs might be. How have you found the level of funding over the
experience of the first year? Have you been able to live within
(Mr Irwin) Perhaps I should also explain that I have
come in from an outside organisation, so not only is the organisation
new but I am new as well. I am not a civil servant, I have come
in from an Enterprise Agency, so I have been having to learn a
lot about both how the Civil Service works and how Government
funding works. For the first year I inherited a budget of a little
under £320 million, for programme expenditure, and it is
fair to say in the first year we did not spend everything we had,
partly because we were trying to ramp up some of the activity.
For the year we are just starting, I have a budget of about £370
million. We actually did quite well out of the Spending Review,
and in particular are able to put extra money into the Business
Link network which we thought was important after the demise of
the Training & Enterprise Councils. I am confident that the
money we have for programme expenditure will enable us to do the
things we would like to do over the next two or three years. There
are always more things we could be doing. We have no shortage
of ideas for extra things but we hope to do all the important
3. Have you seen additional priorities which
12 months ago you had not thought of and you are now saying, "Gosh,
if we had put in for that money we might have been able to spend
it on this because it is important"? Have you identified
any priorities which have emerged in the last period which you
feel additional funding would enable you to give proper treatment
(Mr Irwin) It may be helpful to talk about some of
the things we are intending to do rather than some of the things
we would like to do as extras, but yes, of course, there are extra
things we would like to do. One of the extras is to develop more
incubator work space. We were successful in some negotiations
prior to the publication of the White Paper to be able to set
up a fund to assist with the development of more incubator work
space. Some of the other areas where we have identified there
could be scope to do work are areas where we are hoping to work-up
ideas. It is not as if we want to suddenly spend tens of millions
on any programme, but we have no shortage of ideas for new things
which we would like to be considering because we think we could
have a role. One which is topical is the proposal from Ronnie
Cohen's Social Investment Task Force for community development
venture funds, intended to put some extra resources into disadvantaged
areas both to work directly with business but also provide support
4. We will perhaps come back to that in a minute.
Has the transition from the old Business Link system been a painful
(Mr Irwin) Haf is nodding, so it must have been.
5. I realise Ms Merrifield is here and she may
be able to comment as well. It is fair to say that the system
has had a lot of conflicting demands made of it over a comparatively
short period and in some respects the imposition of SBS is only
the last of manymaybe the latest of many. How has this
gone? We have looked at Business Links in the past.
(Mr Irwin) As you know, the Small Business Service
is about far more than just the Business Link network, but the
Business Link network has been an important part of our delivery
system, working with new and growing businesses throughout England.
Many of the decisions in terms of what was going to happen had
already been determined before the creation of the Small Business
Service, before I was in post, but it was a very necessary transition
to go through. Some Business Link operators were very good and
had a good reputation and their clients thought very highly of
them, but I think it is fair to say that some did not quite meet
those same standards of excellence. We were determined we should
use the opportunity to try to raise the quality. We also, with
the ending of the arrangements with the Training & Enterprise
Councils, wanted to reduce the numbers of Business Links, so we
moved from 81 to 45. We went through a two-stage process. We invited
all of the existing partners to bid for contracts without any
competitors but against a very tough set of criteria. We only
accepted 32 of those propositions. The other 13 went to open competition.
We now have a network to cover the entire country. It is fair
to say it has been a fairly traumatic process but we are determined
as a result, to raise the quality. We also think having a smaller
number will ensure we have less resource in the back office, as
it were,and far more happening in the front office, far greater
customer focus. We are doing our very best to encourage the Business
Link operators that they really must listen carefully to the customers
all the time. We are trying to give more flexibility so instead
of giving almost penny packets of funding to different programmes
we are agreeing to buy into a business plan, so that the Business
Link operators are telling us what they want to do and we are
agreeing with them and then giving a contribution towards that
6. I have some questions on Business Links.
How long are the franchises which you have given, the 45 franchises?
(Mr Irwin) They are three year rolling contracts.
Provided Business Link operators continue to meet our criteria,
they know they will have a contract on a rolling basis for the
next three years ahead.
7. You mentioned before with the Area Business
Links the service was patchy, are you going to come up with any
kind of benchmarking or standards monitoring, maybe an inspectorate,
to look at how they are running and ensuring they have a good
standard across the country?
(Mr Irwin) Yes, we are. We are doing a number of things.
Firstly, we are requiring that Business Link operators should
use the Excellence model to give them a framework for their quality
improvement and also they should be recognised as Investors in
People. Indeed many of the organisations with contracts are already
so recognised. Secondly, we have completely reviewed the standards
for both business advisers and the staff working directly with
clients, so they are now far more process-consultancy orientated.
We have also changed the way advisers work so they will act far
more as a facilitator with the client, far more as a process-consultant,
working with clients to look at long-term objectives, identifying
and putting together organisational development plans and bringing
in the most appropriate expertise from wherever that exists, rather
than necessarily trying to do everything directly themselves.
We are going to be for the first time assessing all the advisers
against those new standards and creating a corporate university,
if you like, a business school for business support, in an effort
to achieve a quantum leap in the quality of service which is being
(Ms Merrifield) The only other thing I would mention
is that we have for the first time got a team of full-time regional
managers recruited openly, the majority from the private sector,
who will be working with the network to make sure good practice
is exchanged between the different areas, but also to monitor
the delivery of the standards under the contract we have with
them and the business plans which we have agreed with each Business
Link as part of their contract.
8. What will your relationship be with the LSCs
now? You mentioned earlier the TECs have gone and the LSCs have
come back, how will your relationship be with them as opposed
to if the other system had continued?
(Mr Irwin) We are hoping there should be a very close
working relationship between the Business Link operators and the
local LSCs. They are already contracting with the Business Links
for the promotion of work force development in general and Business
Links will be delivering on their part the Investors in People
9. The British Chambers of Commerce have said
to us that there has been quite a lot of delay and confusion about
these contracts, that in some areas it is fairly inconsequential
but there are some more fundamental problems with some. Indeed
we are in a situation where some of the contracts remain to be
negotiated, in part at least. What have you learnt from all of
(Mr Irwin) I guess we have learnt that perhaps we
should have devoted a bit more time and started a bit earlier
with some of the contracting. I think a lot of the negotiations
have been the typical commercial negotiations you would expect.
We have not got a command and control system here, we have been
inviting what to all intents and purposes are independent, autonomous
organisations, albeit in almost every case not-for-profit organisations,
to be delivering work on our behalf. Of course you would expect
some fairly robust negotiations about the contracts.
10. Did you under-estimate the difficulty or
complexity and did you have too short a timetable allowed for
it, with the benefit of hindsight?
(Mr Irwin) One of the lessons is perhaps we should
have allowed more time. It is also fair to say that there were
some issues where the Business Links operators were particularly
asking us for extra help and we wanted to respond, we wanted to
provide that extra help, but that actually added to the complexity
of the contract. Perhaps, again in hindsight, we should have kept
the two issues separated.
11. Are you now considering the establishment
of a negotiating committee to represent the franchisees in these
(Mr Irwin) We have undertaken that we will continue
during the first quarter of the financial year to review the contract
and we are due to have the first meeting tomorrow afternoon.
(Ms Merrifield) In terms of the 45 operators coming
together in some sort of representative structure to negotiate
with us on behalf of the network, that is certainly something
which we have said throughout the process we would positively
encourage and be prepared to support. It has taken a little time
for them themselves to get key staff in place and develop those
relationships between themselves and decide how they want to take
that forward, but I believe they are now at the point of setting
a structure in place and we would be happy to support that.
12. It would be a much simpler way rather than
trying to have lots of separate and disparate negotiations.
(Mr Waller) I tried to facilitate a meeting with them
in September, something like that, but they were just not ready.
Some of these were new organisations which, particularly where
the boundaries have changed, only formally came into full operation
on 1st April, so they have had all the internal transition issues
to go through as well. So they were not ready for it earlier,
but in the future we will certainly end up with an ability to
negotiate through a central point I am sure.
13. You have probably suffered from the fact
they were pretty diverse in their structures, some very sophisticated
and others perhaps not quite as sophisticated.
(Mr Waller) I think that is fair, yes.
14. You have an Information and Advisory Service
which, as I understand it, is going to be the way in which you
are going to communicate with most small businesses. Is that right?
(Mr Irwin) We have a call centre and a website.
(Mr Irwin) I guess in sheer number terms, yes, that
would be the single biggest channel, but clearly the most intensive
support will be delivered through the Business Link network, through
one-to-one support and assistance.
16. What kind of feed-back have you had from
consumers as to how the website is working at the moment?
(Mr Irwin) We have been piloting the website over
the last year or so since we came into existence. We have been
running some focus groups, we have been inviting people to give
us feed-back, and on the whole the feed-back has been extremely
positive about the sort of information they have been able to
get. The new website, the all-singing, all-dancing version, if
you like, we expect to launch towards the end of this month. We
will not be launching everything all at once but we aim to include
discussion groups, because businesses tell us one of the best
ways they get advice is from the peer-to-peer network, so we want
to facilitate that through the website. We also want to have the
ability to provide a call-back facility, because no matter how
sophisticated we make the web service, there are inevitably occasions
when people want something more. So if you want someone to telephone
you, you will be able to click on that and as soon as the technology
allowsand hopefully it is not too far awaywe want
a talk-through facility so through the same communications line
you will be able to talk to someone at the other end if you want
17. Do people pay to access the internet through
you? How do you get any return from customers or do you not? Is
this an entirely free service?
(Mr Irwin) The web service we offer will be entirely
18. So you will have hit counters and try to
work out how many people have accessed it?
(Mr Irwin) We will. Actually we hope to be more sophisticated
than that because we are also establishing a national client data
base which will record information about all the clients who are
coming through the Business Link network, and the same data base
will record information about the people coming through the call
centre and the people coming through the web service. So we hope
to have a very comprehensive data base about the way in which
the service is being used, about the clientele, so we can use
that to develop services in the future, and also to offer other
added value services. One of the things I would like to do is
get more, if clients are willing to pay, financial information
from clients so we can feed-back to them financial ratio norms
so they can compare themselves against other businesses in the
same sector. That will help them to manage their own business
19. Is the call centre also free?
(Mr Irwin) Yes, it will be free. The aim of the call
centre and the web service is, on the whole, to give basic information,
to be part of our overall promotional activity and to encourage
businesses to consider a one-to-one conversation with a Business
Link adviser. Different Business Link operators will adopt slightly
different models but my expectation is that on the whole the first
couple of meetings will be free but after that we would expect
businesses to be paying a contribution towards the cost of the