Page last updated at 09:11 GMT, Monday, 26 October 2009

Small businesses 'not posh enough'

By Hannah Barnes
Donal MacIntyre show, BBC Radio 5 live

To Let sign
Business parks around the country are lying empty years after completion

"We had in place approximately two and a quarter million pounds to invest which would have secured jobs and allowed us to expand. We were ready to go."

To most developers, David Price's situation would be a dream come true: a successful local businessman wanting to invest millions of pounds to build new premises on a cutting-edge business park.

However, the owners of the Morlands Enterprise Park, near Glastonbury in Somerset, felt differently.

The taxpayer-funded South West Regional Development Agency (SWRDA) deemed David Price's company, Foot Shop, to be unsuitable and turned him down.

"I think basically we weren't posh enough," says Mr Price.

"We trade locally as Cosyfeet and I had the feeling that they thought that all we would do is put slippers in boxes.

"They were looking for posh people, like aerospace, biotech companies, media, design - a whole list of them."

The right decision

In 2005, at the time of Mr Price's initial approach to set up shop, the Morlands Business Park had already sat empty for four years.


It's not a question of not being posh enough, but certainly they weren't part of the sectors we were looking to encourage at the site
James Harper, SWRDA

Despite spending £20m on the development, the site in Glastonbury has now lain dormant for over eight years, failing to attract the desired tenants even when the British economy was booming.

Still, the South West Regional Development Agency is unrepentant about turning businesses away.

"It's not a question of not being posh enough, but certainly they weren't part of the sectors we were looking to encourage at the site," says James Harper, head of communications at SWRDA.

"We wanted Morlands to be a model of employment in sectors that were going to be new and important to the South West economy for the years ahead."

The nine Regional Development Agencies (RDAs) receive more than £2bn a year between them from the government.

Their aim is to create local jobs, support local business and promote the long-term development of the regional economies.

Unrealistic goals

Despite this remit, the charge levelled at the RDAs from small businesses is that they are too ambitious in their projects, which are often geared towards attracting large international corporations.

Microchip
Development agencies want to attract blue chip firms from hi-tech industries

Critics say such a goal is often unrealistic and development agencies should focus more on serving the existing smaller businesses in the local community.

Stephen Alambritis from the Federation of Small Businesses says: "There is this imbalance between the expectations of the Regional Development Agencies wanting to 'pick winners' and most of the applications coming from local, small businesses that want a new place in which to expand.

"What we want the RDAs to do is to be more humble, be more modest. There has to be a mixture in any business park of blue-chip companies and normal small businesses that are the engine room of the economy for the UK."

But the Regional Development Agencies insist they are good value for money, and have created thousands of jobs since they were set up ten years ago.

Mick Laverty, chief executive of Advantage West Midlands, who chairs the English RDA group, says: "This is not the Regional Development Agencies being arrogant, this is the RDAs being ambitious for their regions.

"There are many other sites where there have been big successes. We're here to make the biggest bang for the taxpayers' buck and we make no apologies about that."

Waste of money

It is not just in England that taxpayers' money is allegedly being wasted on unsuitable business projects.

The BBC has been told that in Wales too, the Welsh Assembly Government is using both domestic and European Union funding to build new business parks, even when existing developments are at best half-full, and at worst, completely empty.

Bryn Cegin
The Bryn Cegin development in north Wales is still to find its first tenant

Bryn Cegin is a business park on the outskirts of Bangor that has received £9.5m of public subsidy.

"Local businesses think it's a waste of money," says Simon Simcox, a chartered surveyor practicing in North West Wales.

"They think it's a waste of money because it's empty.

"They think it's a waste of money because it's been empty ever since it was built and they think it's a waste of money because it's not for them."

Twenty miles away in Holyhead, new roads, roundabouts and a high speed broadband internet network have been put in place at another new site - Parc Cybi.

This time, more than £17m has been spent. Neither park has a single company signed up wanting to move in.

"It's perfectly understandable that there should be a political aim to bring high-grade employment to a university town like Bangor. The problem is that's been the aim for the last 50 years and it's never worked.

"Can we just look at what the local market is, instead of dreaming of a large spaceship coming here from Japan and giving us some hi-tech employment."

Economic opportunity

A spokesman for the Welsh Assembly government said: "Both these business parks provide valuable assets that will help the attraction and growth of high-value businesses as we lead Wales out of recession.

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"The decision to develop both these sites was based on detailed research which demonstrated that there was no suitable alternative space to accommodate both new and expanding businesses within north-west Wales."

Back in Glastonbury, it appears that the first tenants of Morlands Enterprise Park could be moving in next year.

Ironically, the company behind the construction of a new factory on the site were turned down by the South West Regional Development Agency in 2005 for being unsuitable.

But while things have worked out for them, the same cannot be said for David Price and his online footwear retail company.

"We're stumped for growth by inability to find good buildings locally. I'm trying to run a 21st Century business in buildings that were out of date by the beginning of the 20th Century. There's no question it's hindered us enormously and cost jobs."


Listen to the Donal MacIntyre programme on 5 live every Sunday at 1930 GMT or download the free podcast. Contact the programme by emailing donal@bbc.co.uk



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