Business Link's errors over handling of public contracts

The 35m-a-year company was forced to carry out an investigation this month after complaints were made about its procurement process.

The complaints are believed to have been made about the events programme, in which Business Link pays companies to deliver free courses on business improvement.

Helen West, the chief executive of Business Link, said the internal audit team looked into the complaints and found no evidence of wrongdoing or "a jobs-for-the-boys" culture.

But she added: "Looking back over the last 21 months, there are some areas where we have not followed our own processes as tightly as we should have done."

Simon Hill, of Yorkshire Forward, said: "Cronyism is putting it too strongly, but I think it's inevitable that anybody who's been working within any organisation for any length of time gets familiar with an established bunch of providers. We want to broaden that out."

He said Business Link's computer-based brokerage system would help strengthen the procurement process and he encouraged more private-sector firms to sign up as providers.

The comments were made during a series of interviews with the Yorkshire Post about the progress of Business Link since its launch, in April 2008, to replace four sub-regional services.

Business Link, which costs the taxpayer 95,000 a day in this region, has been hit with a series of problems, including a 1.4m computer system that didn't work properly, falling customer satisfaction levels, an inability to recruit suitable staff and the departure of two directors from the senior management team.

But Mr Hill, who is executive director of business at the regional development agency, said it has "turned the corner" in the last six months and is providing a better service for more customers with less funding.

It has maintained its position in the top three Business Links in the UK, he said.

Compared with the former system, Business Link is helping 40,000 companies, compared with 20,000, and is working intensively with 6,000 companies, as opposed to 5,000.

The cost of delivering four separate Business Links was around 50m a year, said Mr Hill. While these units ranked highly in terms of performance, he said, money was wasted by having multiple back-office functions. Yorkshire Forward had additional motives for wanting to create one regional service.

Mr Hill said: "One of my biggest personal goals in this was to get to a more independent, objective business advice service, because, effectively, what you had previously were Business Links that were owned by organisations which offered commercial business advice, chambers of commerce largely. Therefore, it was quite a circular, sometimes incestuous, relationship.

"If you are really going to get government-funded independent advice, it has to have that independence in the market place. It has to have no allegiance with any organisation that goes on to give you the delivery side of it."

Y&H IDB, a joint venture between recruitment firm Reed in Partnership and Exemplas Holdings, the trading arm of the University of Hertfordshire, won the contract to deliver the Business Link Yorkshire service until 2011.

The company moved into a business park on the outskirts of Barnsley and started providing business advice and support to SMEs from across the region on April 1 two years ago.

"We had to move very quickly to get core services in place across the region," said Ms West. "It was the first time there had ever been a regional information service."

She added: "People underestimated the enormity of bringing four organisations into one. To go from nothing to 270 employees overnight is just a huge task."

Front-line staff in the call centre use the Regional Knowledge System (RKS) to record information about businesses. The software, which was developed by Yorkshire Forward at a cost of 1.4m, went live on the same day.

Y&H IDB's annual report for the year ending March 2009 lists RKS as the top risk facing the company.

Ms West told the Yorkshire Post: "It was quite difficult to get a really solid picture of what we were delivering and what was happening. But things have been getting better throughout. Now we are able to report on performance, which we had difficulties with at first."

The inability to recruit suitable staff presented another big risk to the company, said the report. Ms West said there was a shortage of about 100 people at one point.

As Business Link grappled with these problems during its first months, the global financial crisis led to recession.

It responded by launching a major marketing campaign to raise awareness of its services. Chairman Tony Pedder said in an interview in February 2009 that no business should fail simply because they don't know where to go for help.

Inquiries rose from 200 to 750 a day and the information centre went 24-7 for a couple of months at the height of the financial crisis.

New leaflets were published for businesses, with information on restructuring finance, managing cash flow, getting paid on time and diversification, and Business Link "very quickly" produced a new events

programme, including big events such as Survive and Thrive and Meet the Buyer, said Ms West.

Staff also worked to develop relationships with bank managers across the region in an effort to provide more constructive advice to businesses.

Business Link launched the free financial health check service in December 2008, which allowed companies to claim up to 3,000 worth of advice from a choice of accountancy firms, with the taxpayer picking up the bill.

A year later, at least 1,300 checks had been carried out.

Mr Hill described the service as "one of our most important weapons in fighting the recession" and said they found a link between businesses which had accessed the service and the ability to attract commercial lending. I think it's one of the things we've done that we should be proudest of over the last 12 months. It's added more value to the economy than almost anything else we have done."

During its first year, Business Link took on extra responsibility for innovation and skills, which came with new funding and new pressures on a new organisation.

Towards the autumn of 2009, Business Link found itself under increasing pressure from Yorkshire Forward to improve its overall performance and "up its game", said Mr Hill.

He added: "There was a recognition that this is an organisation, like every public-sector body, that is going to come under increasing pressure to do more with less money. That requires management experience to go into that next phase."

This led to the departure of two directors – without enhanced terms – in October. Last month, Business Link announced the appointment of Kate McIntyre, who has held senior positions in the banking sector with particular experience of call centre management, as operations director and Paul Stevenson, a seasoned marketing executive with international experience, as director of partnerships and marketing.

They started work in January. Mr Stevenson said: "We want to be positioned as the knowledge centre for business information in Yorkshire and Humber."

Tony Pedder, the chairman of Business Link and a well-respected figure in the corporate world, told the Yorkshire Post that its performance has been "pretty good, but needs to be better".

He said: "Customer satisfaction has come to much better levels. Last quarter was the best yet."

Past critics include Gary Lumby, director of small business banking at Yorkshire Bank. He recently became a non-executive director at Business Link.

He said: "I wouldn't want to over-promise here, but what I will say is that the business advisers who we do send into businesses will have the right level of knowledge to understand what the business issues are, but also more importantly will know where to send the businesses for expert advice."

Yorkshire Forward is starting to see a strategic relationship develop with Business Link, said Mr Hill.

"What we always wanted was an organisation that could drive back into Yorkshire Forward the experience of what was happening at the coal face," he added.

"What are the things that's really challenging businesses for the next 12 months, is Yorkshire Forward doing the right things, are we spending our money in the right places, do we have the policies in place that are really going to help?

"I think that's what we are really starting to see from Business Link. They are driving some of the strategic debates within the region. That's part of what we went out to buy."

A helping hand for companies

Business Link Yorkshire receives around 100 email enquiries and 350-500 calls a day.

Half of those getting in touch ask about starting up a new business. Lots ring up to ask for grants, but, in reality, there is less money available than perceived, said the organisation.

At the initial point of contact, staff at Barnsley can either provide information on the spot or send out an information pack. Requests for help of a more complex nature will often result in one of Business Link's 160 advisers visiting a business.

The adviser will look at the company's problems and help write an action plan.

Business Link can also provide a list of suppliers who can provide more detailed advice through its brokerage system.

Suppliers, such as accountants or marketing consultants, charge for their advice, but some subsidy is available through Business Link's 4.2m innovation voucher system, for companies that want to invest in research and development.

The organisation employs around 400 people across the region.

It spent 8.5m on wages in its first year.

Have you ever used Business Link? If you have, tell us about your experience. Email [email protected] or write to Business Editor, PO Box 168, Wellington St, Leeds, LS1 1RF.