Grants: A road to nowhere?
Public money and business are often uneasy bedfellows. Stimulating a healthy economy is a core function for government as no-one can prosper without a sound business base, at least in a capitalist society (I’ll leave the debate about whether we should be capitalists to those far more knowledgeable than me). Governments use legislation and the tax system to promote activity they believe will contribute to a healthy society (such as job creation), and to discourage activity they consider unhealthy (such as making people redundant or polluting the environment). The public purse spends billions of pounds each year acquiring products and services from the private sector, and can use this spending to promote positive business behaviour too, although in practice this seldom seems to happen. In comparison with legislation, taxation, and public spending, grants represent a minuscule amount of money.
Yet I believe that grants can have an incredibly toxic effect on businesses – especially small and startup businesses. If small businesses were irrelevant to the economy as a whole then perhaps this wouldn’t matter, but small businesses are not irrelevant. Small businesses (collectively) employ a huge number of people, contribute a massive proportion of job creation, and are the big businesses of tomorrow. Governments claim to have support for small business right at the forefront of their agenda.
Here are some of the dangers of grants for businesses – and I believe I have seen businesses fail as a result of these. My comments come largely from my perspective as a someone working mostly with Scottish technology companies, however I believe many of my observations have wider applicability.
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