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Digital grant scheme well-intentioned but poorly targeted, experts tell MPs

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Representatives from the accountancy, tech and small business world told a committee of MPs that due to restrictive criteria the government’s Help to Grow: Digital scheme was underdelivering.

19th May 2022
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In a session on the effectiveness of both the Help to Grow digital and management training and grant schemes, the Business, Energy and Industrial Strategy (BEIS) Commons Select Committee heard from a range of witnesses that to make the digital programme a success, a broader set of eligibility criteria needed to be applied.

The scheme, which opened in January, aims to boost digital skills and technology adoption by offering discounts of up to £5,000 for small businesses looking to adopt digital accounting or customer relationship management (CRM) tools for the first time. 

However, its narrow eligibility criteria and lack of software choice meant the initiative was “likely to fail to address the UK’s digital shortfall in any meaningful way”.

Adam Harper, director of professional standards at the Association of Accounting Technicians (AAT), stated that amongst its 5,000 practitioners there had been initial enthusiasm for the scheme, but because of its restrictive eligibility criteria that had now been tempered with frustration.

Eligible businesses can apply for a one-time discount of up to 50% on the costs of buying approved software product ‘core costs’, but this is only open to companies that are a year old or more and employ between five and 249 people.

Harper added that the AAT had raised concerns with the minister for small business about the continued refusal to change the restrictive criteria, and told committee chair Darren Jones that it currently was a “missed opportunity for a well-intentioned scheme that’s under-delivering”. 

Honing in on the accounting software available, Harper commented that the scheme only had three providers available, while HMRC lists more than 500 vendors under MTD criteria. 

Committee witnesses put this vendor shortage down to a number of factors. Neil Ross, associate director of policy at technology trade association techUK, said that unless firms have a software type and onboarding scheme that matches the government’s criteria it was unlikely it would be considered.

“Where a price is listed with a clear subscription fee and is relatively light to implement then it would be ‘perfect’ for Help to Grow: Digital. It can be added to the platform, claimed and the voucher can be put back against it,” said Ross. 

“The difficulty comes when a company has software options that don’t fit into the scheme’s buckets or they don’t have straight pricing structures that involve a quote or discussion with the SME itself,” he added. “Then these are ruled out of the eligibility criteria.” 

Ross added that due to the uncertainty around the take-up of the scheme, many software companies had also decided to “wait and see how it goes” before committing to it. No data has yet been made available by the government in terms of how many people have used Help to Grow: Digital.

Criteria conundrum

techUK’s Neil Ross said that those administering the future of the fund had a choice to make: whether to broaden the criteria of the scheme and focus on smaller businesses or seek to help larger firms scale. Given the capacity of the business department, he added, they may have to pick one or the other.

“To get to the larger end of the SME spectrum, the cost of software is very high: on average ranging from £25k to £100k – a £5k voucher doesn’t cut it,” said Ross. “They need to choose whether to focus on ‘S’ of the SME market and cut the limit down to, say, two, or address the M through more targeted grants or something similar to R&D tax credits.”

If the government does choose to focus its help on smaller businesses, Ross stated that the scheme needs to be more inclusive, broadening the minimum employee criteria to two and opening it to multiple purchases or bundles (for example accounting and ecommerce). For medium-sized businesses, an increased level of voucher and factoring in a more sophisticated buying journey were top priorities.

Tina McKenzie, policy and advocacy chair, Federation of Small Businesses (FSB) argued that the criteria should be expanded from ‘core costs’, stating that for many businesses the major costs of software adoption were implementation-based, not the cost of the licence itself. 

AAT’s Adam Harper also pointed out that currently resellers and partner networks are excluded, but they could bring valuable experience to the area. “There are an army of potential recruiters for the scheme,” he said. “But we need to broaden the range of costs covered to enhance the scheme’s effectiveness, including not only licensing costs but installation and consultation."

Scottish comparisons

The committee spent time discussing the differences between the Help to Grow: Digital scheme in England and its Scottish counterpart, the DigitalBoost Development Grant. Now closed due to an ‘exceptional’ response, the £10m fund was available to all small businesses, regardless of employee numbers, and compared to Help to Grow: Digital was distributed with a light touch set of criteria

The FSB’s Tina McKenzie told MPs her organisation felt the scheme was working better in Scotland as it was open to a wider number of people.

Ross commented that the schemes are “trying to achieve the same thing but with different destinations”. Under the Scottish scheme if businesses could make a business case then they would be listened to, with the authorities taking evidence after the fact. The English scheme had picked three categories of software the department felt could drive productivity the most and could then work to expand the scheme based on the take-up and reaction.

Replies (2)

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By ireallyshouldknowthisbut
19th May 2022 10:01

I thought it was designed at the outset to sound impressive but deliver little, and thus not cost too much?

It seems to be a standard operating process of the past 10+ years to announce lots of schemes for a short term political capital but not worry about the delivery.

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Replying to ireallyshouldknowthisbut:
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By Hugo Fair
19th May 2022 12:39

Also, not obvious why making the scheme "more inclusive" would be any kind of improvement. Like BBLs or EOTHO or ...?

I can't think of any examples (with any stripe of UK government) where a subsidy scheme has resulted in the stated objectives ... either they undershoot (per most insulation-type schemes) or only benefit cowboy suppliers (who are quicker on their feet than govt processes).

This particular scheme looked like what dogs sometimes leave on the pavement from the day of its announcement ... so I presumed was never intended to deliver anything - just enable the claim, pre-MTD collapsing, that "we" did everything possible!

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