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Governments urged to support traditional firms

THE Westminster and Holyrood Governments may be holding back economic growth by focusing support on technology firms, when they could do more good by helping businesses in traditional sectors, a study by academics has found.

Researchers at the universities of St Andrews, Glasgow and Stirling concluded that both governments have been over-subsidising technology firms, many of which they claim are incapable of growing.

They say the policy results in the neglect of better prospects in industries such as brewing and services.

"Our research clearly shows that there is a mismatch between the nature of high growth firms and the policies that have been developed to support them," said Dr Ross Brown of the University of St Andrews.

"The vast majority of high-growth firms are in fact well-established firms from traditional business sectors and do not equate with the hypothetical 'techie' view of these firms."

He added: "The UK has some fabulous growth-oriented firms but in the main these tend to be in consumer-oriented or service industries, not research and development intensive sectors like life sciences. This is particularly the case for regions such as Northern Ireland and Scotland, which have less well developed high-tech sectors than the south of England".

Mr Brown cited Brewdog, the Scottish brewing business, as an example of a great company in the kind of sector that does not get as much support as technology.

Noting that high growth firms account for about half of all job creation the academics called for an overhaul of the enterprise support programmes on both sides of the Border.

They said enterprise spending should be focused on maximising the growth of existing small and medium sized enterprises, rather than on generating new start-ups.

Colin Borland, head of external affairs for the Federation of Small Businesses in Scotland said: "The FSB agrees that enterprise policy should be focused on the economy and businesses we have, not the ones policy makers would like us to have. We have long been sceptical of economic growth strategies that focus on a few hand-picked sectors."

A spokesperson for the Department of Business, Innovation and Skills, said: "GrowthAccelerator, a Government-backed high growth business coaching service, was designed to address many of the findings presented in this research."

The department said the scheme had already helped more than 11,000 businesses from a range of sectors, with most at least five years old.

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