In a sudden move, the government terminated the Business Growth Service with effect from Monday 30 November.
Including the GrowthAccelerator and the Manufacturing Advisory Service, the now defunct initiative was aimed exclusively at high-growth businesses moving into their next life-stage. This follows George Osborne's announcement in the Autumn Statement last week that Department for Business, Innovation and Skills' (BIS) budget is to be cut by 17%.
The government-backed scheme, which offered support to firms with up to 249 employees and with less than £40 million turnover a year, has been abolished as part of the Spending Review settlement, according to the website.
BIS has issued formal instructions to the scheme's providers, telling them not to enter into further contractual commitments with customers before midnight on Monday 30 November, but all commitments should be honoured, as long as the activity is completed by 31 March 2016.
The Guardian website reported that businesses are angered by the move with many now unable to access the service's match-funding, coaching or mentoring.
The newspaper spoke to the Stefan Richter, Co-founder of tech startup Membermeister, who was on the verge of finalising an agreement. Richter told The Guardian that his firm was about to sign up for advice and coaching services and called the news a "shock". He commented:
“Since we were due to sign the contract this week we are now in limbo – it looks likely that the project won’t go ahead. We’re absolutely gutted, and pulling the carpet from under our feet at a time when our startup is just gaining some traction is a real kick in the teeth for us.” Stefan Richter, Membermeister
Businesses that have benefited from the service in the past include Rosa's Thai Cafe, which saw a 100% increase in turnover in 1 year to £2.8 million. Having refused investment with tight terms, the co-owner, Alex Moore, turned to the GrowthAccelerator for help with growth planning and access to finance.
In the Autumn Statement, George Osborne also announced an extension to small business rate relief, 26 new Enterprise Zones, among other pro-SME measures.