Advice team faces axe in shock closure move

The Business Growth Service, which includes the Manufacturing Advisory Service and the Growth Accelerator programme, was shut down without warning shortly after the Budget. It provided small businesses with subsidised support and mentoring to help them grow.

A statement on the BGS website says: "As part of the Spending Review settlement the government has decided to wind down the national delivery of the Business Growth Service."

The BGS closed to new applicants on November 30 but will honour all existing commitments as long as they are completed by March 31 next year.

The service in the region is operated under contract by Pera Consulting and has 34 staff based at the Wolverhampton Science Park who are now in a formal consultation period over their jobs which are at risk of redundancy.

It is understood there was no prior warning of the announcement.

There was also no mention of the closure in the spending review and autumn statement – commonly known as the 'blue book' – of detailed Budget proposals. It shutdown comes as the region launches the Midland Engine project, aiming to boost jobs and manufacturing growth, and is reeling from the collapse of Oldbury-based engineering giant Caparo Industries.

More than 300 jobs have been lost since Caparo went into administration last month. The future of the remaining parts of the business employing around 700, which remain under the control of administrators from PwC, are still in the balance.

Pera chief executive John Collier said: 'We were shocked to receive the news about the closure of the Business Growth Service. We have supported over 4,000 businesses in the West Midlands over the last three and a half years which has directly contributed to helping to create over 12,000 jobs and generate over £2bn of GVA for the local economy.

"Our focus now is working with local partners in the West Midlands around this agenda to try and ensure that as much of this capacity as possible is preserved so that we can continue to provide this valuable support to businesses going forward at a time when productivity in the Midlands region has recently been reported at 10 per cent below the national average."

Reacting to the closure, Larry Joyce, chairman of Kimber Drop Forgings in Cradley Heath, said: "In my opinion the Manufacturing Advisory Service has been the first Government service that has offered manufacturing businesses a co-ordinated approach to realistic assistance that worked.The department contains individuals who are pro-active and have the right contacts to 'make things happen'.

"It is a terrible indictment of the Government that they are risking the regeneration of industry, which is still in its infancy. With businesses now being asked to fund more healthcare and pensions, we find ourselves seriously considering our planned investment for Kimber Drop Forgings…even more so now there is no dedicated support offer that can guide manufacturers through their growth journeys."

The Government says winding down the Business Growth Service will save £84 million a year, and argues that it its investing in 39 Growth Hubs to connect businesses with support and advice in their local areas. Small Business Minister Anna Soubry said: "The most important way we can help small businesses is to continue to secure a strong, growing economy and that's exactly what this government is doing. We'll keep cutting red tape and have extended small business rate relief for an extra year, freeing up small firms to do what they do best."

Pera, based in Melton Mowbray, dates back to the Production Engineering Research Association, formed to support British manufacturing industry in 1946. It has been running the manufacturing advice service in the region since 2002.