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Helping SMEs grow should be top devolution priority – think tank

Giving cities greater control over the needs of local small and medium-sized businesses (SMEs) should be a top priority in the government’s devolution agenda, think tank Centre for Cities has said today (19 October).

As part of an in-depth analysis into the recent growth of SMEs, the organisation said that small firms have a big impact on the wider city economy through increased demand and jobs.

According to its report, the top 10 UK cities with the highest concentrations of ‘new work’ SMEs (highly-skilled, innovative firms in sectors such as the creative, digital and professional industries) are amongst the most successful places in terms of overall productivity, wages and job worth.

Because of the role SMEs can play in the wider economy, the think tank called on Whitehall to prioritise helping these firms to grow – particularly in its efforts to create a Northern Powerhouse.

Alexandra Jones, its chief executive, said: “For places to prosper and grow, they need to consider how they can build on their existing strengths to support the kinds of highly-skilled and agile firms found in creative and professional industries, as well as the tradition focus on attracting inward investment from big businesses and multinationals.

“The government needs to give cities greater control over skills, infrastructure and spending, to help them become more responsive to the needs of local businesses.”

Jones commended Whitehall’s recent decision to devolve business rates as a positive step towards giving cities more flexibility to support local businesses, and urged local leaders to use these powers to create a better environment for SMEs to thrive in.

“That means, for example, improving digital infrastructure, tackling skill gaps in the workforce, and helping local businesses to trade internationally.

“By doing so, cities can ensure they are in the strongest position to support the kinds of businesses which offer the best route to long-term growth and prosperity,” she said.

The organisation’s call comes after a string of positive news for SMEs, with Cabinet Office minister Matt Hancock recently announcing new targets to get more small firms working on central government contracts and becoming suppliers to Whitehall by upping investment.

This also closely followed a move by the European Regional Development Fund to open its doors to local firms in a major shift to more localised spending.