Evaluation of the North East Growth Hub

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Evaluation of the North East Growth Hub

Introduction

An evaluation of the North East Growth Hub and its associated programmes was completed in 2022. Its purpose was to assess performance and effectiveness of delivery to inform the current delivery model and to inform future priorities.

Design and delivery of Growth Hub

Resourcing

The North East Growth Hub launched in 2014/15, and is resourced via core funding from BEIS plus consortium financial contributions and in-kind support from a range of local partners. Core Growth Hub funding totalled £3.3m between 2015/16 and 2020/21, plus £0.4m in additional uplift funding across 2019/20-2020/21. The North East Growth Hub received £0.5m in Brexit readiness and transition grants between 2019/20-2020/21, and additional funding as the regional Growth Hub cluster lead. This level of resourcing places the North East within the top ten highest-funded Growth Hubs over the period in terms of both core and total funding^[1].

Types of support offered

The North East Growth Hub is characterised by in-house resourcing with a degree of specialism in key policy or thematic areas^[2]. In-house resource includes: a dedicated triage team to receive and prioritise enquiries, a communications team to design campaigns and targeting of business support, specialist ‘connectors’ that serve as advisers, account and relationship managers for businesses,^[3] and programme and partnership managers that oversee contractual arrangements and areas of in-house delivery as well as development of thematic areas linked to core policy priorities.

Available support is catalogued and presented on the Growth Hub, with dedicated pages curated to ease businesses in finding and accessing appropriate advice and funding. Core to the Growth Hub is a human-centred approach to assessing and delivering support, delivered via the triage team and connectors. These two support structures are central to ensuring enquiries are handled appropriately and via the development and maintenance of relationships. Some connectors conduct broader policy-facing activities too, such as the development (or refresh) of sectoral strategies.

The Growth Hub directly delivers a number of nationally-funded business support mechanisms, such as the Peer Networks programme and conducts other functions, including business identification and engagement (outreach, events), beneficiary tracking, and curation and management of the North East provider network (including ongoing communication and monthly activity updates, and partnering and investor relations), and provision of business intelligence and data to government departments and agencies. Outside of these duties, the Growth Hub plays a significant role in ecosystem development, including participation in and coordination of the regional Growth Hub cluster, and broader practice sharing and development at the Northern Powerhouse level.

^{^}For the period, average core funding across the network is £2.4m, and average total funding is £3.1m.
^{^}This was quadrant 1 of the typology of Growth Hubs developed for the national evaluation, contrasted with out-sourced and generalist delivery models.
^{^}From the website, incoming calls, or referrals from other areas of the business support ecosystem

Business characteristics

The conditions of Growth Hub funding stress the importance of providing impartial support to all businesses in the corresponding LEP area, and that the Growth Hub provides the front end to access support. Analysis of monitoring data was conducted to understand engagement with and uptake of support.

The Growth Hub website provides an important point of access for businesses. It catalogues all available support, meaning that both first time and return users may come to the website as a first point of access. Between April 2021 and March 2022, the website received 288,592 pageviews from 74,340 unique users, a 16% increase in pageviews and 11% increase in new users when compared to the last year pre-pandemic (2019). This large volume of traffic resulted in 20,228 referrals to available business support and funding schemes in the financial year 2021/22.

Looking at business support uptake via the Growth Hub, data is collected and segmented against three categories: light-touch (up to one hour of support), medium-intensity (up to three hours) and high-intensity (up to 12 hours). The Growth Hub has recorded 115,134 business engagements between April 2018 and March 2022, with a total of 24,105 in the financial year 2021/22.

The North East Growth Hub supported 2,602 individual unique businesses between April 2018 and March 2022 via medium and high intensity interactions. This ranges from private limited companies to social enterprises, public and third sector organisations, and sole traders, and represents 5% of all businesses in the North East. At the time of writing, the latest business count data (2021) from ONS states there was 54,810 businesses in the North East.

The majority of businesses supported via the Growth Hub are unique firms (70%). A fifth (19%) have been supported twice, and 7% have been supported three times.

Examining the breakdown of businesses accessing the Growth Hub support, comparing to a matched non-beneficiaries group shows that:

2602

24%

Meeting local priorities

In terms of addressing market failure, interviewed stakeholders were positive. The delivery model addresses the coordination failures (i.e. overcoming navigation and access challenges) and information inequality (i.e. lack of understanding of the value of business support). The Growth Hub activities have been designed in light of an ongoing evidence base developed first via the Independent Economic Review (2015) and updated through the North East Evidence Hub.

Stakeholders unanimously expressed that the person-oriented nature of the support is a key asset in helping businesses to understand what they need, and how to find it. The approach to communication (early engagement in design, packaging information and materials) was noted alongside the impartiality of the Growth Hub connectors.

Enabling factors and challenges in delivery

To examine which parts of delivery had worked well or less well, stakeholders and businesses were asked to offer examples of practice that addressed either aspect. Interviewees noted the following strengths:

Person-orientated support

is key to helping beneficiaries. Growth Hub is staffed by motivated individuals, continually improving the quality of the service.

Synergy between teams

Triage team and connectors work well together to support relationship management.

Clear model and vision

which is being consciously reviewed and improved, in line with the evidence-based approach of the Growth Hub.

Peer to peer element

provides a 'safe space' and opportunity to gain new perspectives between businesses.

Some stakeholders offered feedback on:

Quality of the Growth Hub website - some stakeholders noting that while the website is comprehensive, it can also be difficult to navigate
Frustration that some duplication exists in the business support ecosystem, with other actors (such as local authorities) performing some of the same functions as the Growth Hub
Funding-related uncertainty, which limits the ability to plan longer-term and retain resources
Information offered on eligibility and programme/support content, in order to help them better prepare for their uptake of services.

Effectiveness of the Growth Hub

£378k

£8.8k

Business outcomes

This section reviews the effectiveness of the Growth Hub support (and journey though it), including an overview of outputs, outcomes, and impacts, plus an assessment of business benefits, and a comparative view of performance between businesses that accessed the Growth Hub and others that did not.

Effectiveness of the business support 'journey' and impact on perceptions of advice

The first point of access for businesses in many cases is the Growth Hub website. Programme data suggests that a significant proportion of engagements (using financial year 2021/22 as a guide) may originate from the Growth Hub’s web presence. The communications team focuses on optimising this element of the customer journey through updating materials and information to maintain accuracy and relevance, and optimisation of the website’s usability. User statistics illustrate the success in this, making information quicker and easier to find resulting in reducing the bounce rate. 29% in 2022 compared to 45-50% in 2021) and increased session duration.

Stakeholders and businesses summarised the main motivations to seek business support. Stakeholders described access to finance as a primary reason for businesses to reach out to the Growth Hub, followed by help navigating difficult situations such as COVID-19 pandemic and EU exit, and diagnostic support to better understand their own needs.

Business consulted reported similar motivations, including receiving advice, whether on a specific topic (e.g., practical responses to COVID-19) or on generally ‘getting started’ or expanding a business.

While the business support landscape is complex, businesses can move through Growth Hub support and beyond with clarity. This is a result of continued reflection and iteration of the onboarding and support processes, and subsequently quality of the experience. Incoming enquiries are handled by the triage team, who identify the business needs and familiarise the client with next steps and timescales. Appointments with a connector are scheduled within 48 hours and clients are expected to prepare with a structured plan of their priorities.

The experience of the customer journey has generally positive effects on business perceptions of information and advice. The national evaluation conducted for BEIS found that the local presence of the Growth Hubs is essential to developing trust among local businesses and found the Growth Hubs characterised as ‘friendly insiders’. Businesses in the North East are similarly positive, and often reported in consultation that communication is usually targeted and support tailored.

Business benefits and resultant performance

At the highest level of business benefit, the national evaluation of the Growth Hubs found that, as locally owned and shaped organisations, Growth Hubs have an important role in addressing specific needs of local businesses, and delivering business benefit.

Consulted stakeholders reported that the Growth Hub’s signposting helps businesses to maximise their growth potential, or to at least reach a position of greater resilience. This was mirrored by interviewed businesses, who highlighted the value of the Growth Hub in further developing both known and unknown needs.

Examining immediate effects, outputs, outcomes, and impacts are in line with those set out in the theory of change. Consulted stakeholders were positive on the direct business benefits of the Growth Hub’s work. This view was caveated as being formed from only partial visibility and related to an overarching view of increasing business awareness and enabling businesses to further unlock their growth

Interviewed businesses reported similar outcomes, including increased awareness of opportunities around them, improved ability to navigate support services, and increased confidence in decision making, linked to improved skills and assurances that they were ‘doing things right’. Two beneficiaries also reported an increased number of employees and a new business plan/strategy. Those that had not experienced benefits by the time of reporting stated that they expected beneficial impacts to be realised in the near future.

Econometric Analysis

The econometric analysis compares three outcome variables (employment, turnover and productivity) between Growth Hub beneficiaries and a control group of non-beneficiaries (similar in terms of business characteristics e.g. industry, location, etc.). The analysis looks at the outcome variables since the baseline (i.e. two-year average before the first intervention). Results from this analysis show that the programme has:

Supported growth in employment:

One year after receiving support, beneficiaries show an average increase of two employees, while non-beneficiaries it stays close to zero (17% vs 4% increase). Annually, 41% experienced an increase in employment, compared to 28% of non-beneficiaries.
Beneficiaries aged five years or less experienced an 8% increase in employment relative to non-beneficiaries. Older businesses saw a smaller percentage increase of 3%, equivalent to 0.8 employees.
Small businesses with fewer than 50 employees saw a larger percentage increase in employment than larger businesses (5% vs 3%).

Supported strong growth in turnover:

One year after support, beneficiaries experienced an immediate average increase of £378k (22% increase), while non-beneficiaries experienced a much smaller average increase of £81k (6%).
64% saw an average annual increase in turnover over the three years since engaging with the Growth Hub, compared to 58% on non-beneficiaries. A third of beneficiaries saw an average annual increase in turnover equivalent to £100k or higher (19% for non-beneficiaries). The average benefit of support is about £75k (8.3%) for business aged five years or less and £288k (9.4%) for older businesses.
The programme has had a positive effect on performance of beneficiaries for small businesses with less than 50 employees (£117k, 9%) and larger businesses (£1m, 6%).
Beneficiary businesses in the manufacturing sector earn £291k more after support compared to what is expected they would have earned if they had not received support, similar increases for professional services (£234k) and wholesale and retail sector (£170k).

Had a positive effect on the performance:

Beneficiaries experienced an average increase of £8.8k per employee one year after support, compared to £0.3k for non-beneficiaries. Over a three-year period, the amount of turnover per employee among beneficiaries increased on average by £2.3k (in comparison with non-beneficiaries).
The value of turnover per employee is higher for older businesses than start-ups (6.5% vs -3.6%) and large sized businesses than smaller businesses (5.3% vs 3.4%).
The impact of receiving support on the value of turnover per employee is slightly higher for manufacturing companies (£3.6k), compared to wholesale and retail (£3.3k) or professional services (£2.5k) businesses.

Benchmarking of programme performance

The performance and effectiveness of the North East Growth Hub activities compares well to the overall performance of the network of Growth Hubs. While overall engagement as a proportion of the business base is a little lower in the North East (5%) than nationally (8%), the benefits of the mode are identical (e.g. a person-oriented approach), and the increased capacity and remit of the triage team may address this going forward. Effectiveness in terms of business growth also compares well between the North East and the national evaluation. In the North East:

Beneficiaries demonstrates an average increase of two employees (17%) compared to three employees nationally (14% increase) one year after first engagement In the North East beneficiaries show an average increase of £378k (22%) compared to £782k (19%) nationally one year after the first intervention
Beneficiaries show an average improvement of £8.8k turnover per employee (8%) compared to £5.4k (4.9%) nationally after one year of engagement

HomeEvaluation of the North East Growth Hub

Effects on policy and the broader ecosystem

This section focuses on how Growth Hub activities have contributed to the development of the local ecosystem and the delivery of strategic priorities.

Signposting and business support landscape simplification

Common with the network of Growth Hubs as a whole, the North East Growth Hub addresses the need for effective business support by simplifying the landscape and guiding businesses, including direct delivery of some programmes. There was a general positive view among consulted stakeholders that improvements had been made in this area, specifically the increased efforts on outreach and the proactive nature of contacting businesses and helping them in their wayfinding. One stakeholder voiced some concern about the effectiveness of Growth Hubs in simplifying the landscape for businesses, though this is in common with the findings of the national Growht Hub evaluation, and suggests that limitations relate to the nature of working in multi-level settings in which outside actors may operate unilaterally.

Interviewed delivery partners and external stakeholders agreed that the Growth Hub demonstrates a positive influence on the broader North East business support ecosystem, via the development and maintenance of the provider network and a number of programme-level collaborations. Stakeholders specifically mentioned the role of the Growth Hub in driving ongoing cross-regional communication and intelligence development. Consulted businesses positivitely viewed the Growth Hub as having opened opportunities or generally simplifying the ecosystem to them.

Appropriateness for addressing regional policy priorities

In addition to a clear evidence base for investment, the Growth Hub demonstrates clear alignment with regional strategic priorities through its portfolio of activities and the curation of the provider network. Furthermore, it develops differentiated approaches to business support, and has informed national policy design by acting as an ‘informer’ on the local system and business needs to government. This policy-facing role has been further substantiated by stakeholders, who described the ways in which the Growth Hub has designed and resourced programmes in an agile manner.

The econometric analysis substantiates the extent to which the support offered by the Growth Hub delivers on economic growth objectives such job creation and productivity.

Future considerations

There are a number of considerations to how Growth Hub support may be iterated in the future, whilst considering potential barriers to further scaling the support.

Analysis finds that the design and delivery model of the Growth Hub is appropriate in addressing the strategic regional and organisational priorities. The Growth Hub curates a broad support offer across a large provider network, mediated by a triage team and connectors ensuring that businesses find the support they need. Consultation suggests that this business customer journey is appropriate and effective.

Examining uptake, the Growth Hub demonstrates engagement with a higher proportion than the BEIS aspiration for engagement (2.5%), but lower than the average across all Growth Hubs (8%). The beneficiary population is fairly representative of the regional business population and therefore, increasing engagement would require a broad-based push across the business base. In line with the North East Growth Hub model, this would require additional resource for both triage and connector teams.

The results of consultation and econometric analysis shows that the Growth Hub:

Supports business growth as employment, turnover, and productivity are all higher for beneficiaries of the Growth Hub than seen among a comparable control group.
Delivers broader business benefits, from increased awareness and ability to access support, to improved skills and decision-making. Views on simplification of the business support landscape is more mixed, though this is sometimes out of the remit of the Growth Hub.

Overall, it is clear that there has already been significant planning and scoping to potential modifications to the delivery model, particularly in light of reduced funding and organisational scope. Where improvements could be made, e.g. in deepening and broadening engagement, and in working with other organisations on landscape simplification, this would require more resource which may not align with recent budgetary allocations form the government.