Budget for Northern Ireland's business start-up programme slashed

By Niall McCracken

THE latest programme designed to deliver a lifeline to Northern Ireland’s struggling entrepreneurs is being run at almost a third of the cost of its predecessor contract from three years ago, The Detail can reveal.

Under its ‘Go For It’ brand, Invest NI contracts out the implementation of business start-up schemes. However figures obtained by The Detail show a dramatic drop in the budget of the programme in its various forms in recent years.

From 2009-11 the scheme was called the Enterprise Development Programme (EDP) and had an annual budget of £3.5m. Now the scheme in its current incarnation, the Regional Start Initiative (RSI), is running on a budget of £1m a year.

Invest NI says older versions of the programme provided additional services and that competitive tendering has resulted in more “cost effective delivery.”

Meanwhile The Detail has learnt that Invest NI has spent £95,000 on advertising the Go For It brand in the first four months of the Regional Start Initiative’s life span.

And we can reveal that figures reflecting the performance of the new start-up programme show that the scheme is failing to meet projected targets for the number of business plans it has approved in its first four months.

THE START-UP PROGRAMME WHICH NEVER GOT GOING

The Go For It brand was designed to promote entrepreneurship in Northern Ireland – it deals primarily with the implementation of business start up schemes. Invest NI says the campaign aims to “encourage entrepreneurship, inform on the support available to assist in new business ventures, provide signposting information to relevant support and make starting a business a real and viable possibility for potential entrepreneurs.”

However, the latest figures show the scheme is struggling, especially in the wake of a bruising row between Invest NI and the current contract holders, Enterprise Northern Ireland, which lasted from September 2011 to April 2012, a dispute which put most start-up work on ice for a year.

Enterprise Northern Ireland was the original holders of the contract, then known as the Enterprise Development Programme (EDP), but lost the contract in September 2011.

A consortium made up of accountancy firm KPMG and Scottish-based The Go Group achieved the highest overall score in the tendering process for the replacement programme. They were to run the contract under the name The Business Start Programme (BSP), commencing in September 2011, with a reduced annual budget of £2m a year. But a legal challenge over the legitimacy of the tendering process meant the contract was never implemented.

As previously reported by The Detail, in April 2012 this case was settled and a new scheme was retendered under the banner The Regional Start Initiative (RSI). This contract was awarded back to Enterprise NI in October 2012. None of the evidence from the court case was made public and both sides agreed to keep it all confidential.

However, during a meeting of the Enterprise Committee in February 2013, Invest NI officials confirmed that it paid out £95,000 contesting the challenge and then agreed to pay a further £14,000 of Enterprise NI’s costs on settling the case. A further £14,000 was paid by Central Procurement Directorate (CPD) towards Enterprise NI’s legal costs.

BUDGETS

Invest NI confirmed to The Detail that the Enterprise Development Programme, the contract that Enterprise NI ran from 2009/11 prior to the court case, had an annual budget of £3.5m.

Enterprise NI (ENI) would subsequently issue legal proceedings against Invest NI after losing out on winning the replacement contract, the Business Start Programme (BSP). However, FOI documents obtained by The Detail reveal that the annual running costs for this programme were to be significantly reduced.

The procurement process report from August 2011 outlines that the contract for the BSP was to commence in September 2011 for a period of one year with an option to extend for a further year, with a budget requirement of just £4m over two years (£2m per annum).

The report states that the tender offer received from the Go Group attained the highest overall score, with the winning tender from the Go Group running at a cost of £3.5m over two years.

As a result of the legal proceedings, the BSP contract was never implemented and Enterprise NI would eventually win the new contract under the brand new banner of the Regional Start Initiative (RSI), which was operational from October 2012.

However, during the Enterprise committee meeting in February this year, Invest NI officials confirmed that the annual budget for the latest Regional Start Initiative (RSI) contract worked out at just £1m per annum, £2.5m cheaper than the annual running costs of the original EDP contract. Invest NI officials told the committe that it was competitive tendering that resulted in more cost effective delivery, not a reduction in budget.

In a statement to The Detail Invest NI pointed out that the Enterprise Development Programme (2009-11) provided a pre-start element for businesses as well as additional training workshops including “employing staff, IT and market research and a monitoring agent role”, that isn’t available under the new RSI contract. Invest NI also said that local councils would be playing a greater supporting role in the implementation of the RSI contracts across Northern Ireland.

However, despite a difference of £1m in annual budget costs, Invest NI did confirm that there is no difference in the services that would have been provided by the Business Start Programme (BSP) before it was subject to a legal challenge and its current incarnation, the Regional Start Initiative (RSI).

COMMITTEE SCRUTINY

When questioned by members of the Enterprise Committee in February 2013, Invest NI officials outlined that with a normal business start up scheme it would usually expect to see 3,000 business plans approved over a 12-month period. However the figures provided by Invest NI show that during the interim service run during the legal case (October 2011- October 2012), there were only 1,118 (37%) business plans approved. Officials acknowledged that there was “no doubt that Invest NI being prevented from operating such a service had a significant impact on these figures.”

Invest NI says it put in place arrangements to ensure that those individuals with an interest in starting their own business were still able to access “relevant advice and guidance.”

In a statement to The Detail, Invest NI said that any costs incurred during this period were taken from its “existing budget.” We asked for an exact financial cost but Invest NI said it was unable to provide this.

The new contract for the Regional Start Initiative was awarded to Enterprise NI for a period of two years, with a target of 6,500 business plans approvals (BPAs), working out at an average of 270 BPAs a month. However, figures initially released to The Detail by Invest NI revealed that there had only been 352 plans approved from the end of October 2012 to the end of January 2013, at a cost of £100,000.

Using Invest NI’s own projected targets, this worked out at less than half (43%) of the business plans that were expected to be approved during the first three months of the contract.

Invest NI says it is a ‘payment on outputs based contract’ and the associated costs of £100,000 are paid only on the basis of Business Plans Approved and not on any other activity.

However, the latest figures released by Invest NI show that February 2013 has been the Regional Start Initiatives (RSI) busiest and most expensive month to date. In the space of just one month a further 286 business plans were approved at a cost of £75,000, bringing the overall figure to 638 business plans approved since late October 2011 at a cost of £175,000. However, this still works out at only 60% of Invest NI’s projected targets for the programme’s first four months.

In a previous story from February 2012, The Detail discovered that Invest NI had spent a quarter of a million pounds advertising the Go For It brand during the first six months of the legal challenge when it was only running an interim service. Updated figures show that Invest NI spent a further £79,000 between June and August 2012, bringing the total cost of advertising the Go For It brand during the legal challenge to over £300,000.

The latest figures provided by Invest NI also show that the advertising costs for the Go For It brand during the first four months of the current Regional Start Initiative (RSI) programme currently stand at almost £95,000, with the majority of the spend going on TV advertising.

The Regional Start Initiative (RSI) contract is due to end in October 2014, with an option of extending it for a further year. Invest NI says it will continue to monitor Enterprise NI’s performance across the five regional areas that the programme operates in.

Invest NI confirmed that it could re-tender the Regional Start Initiative (RSI) contract for any of the regions if it became concerned about the performance of the scheme at any stage.