Government pulls funding for Enterprise UK

The Department for Business, Innovation and Skills (BIS) has withdrawn funding for Enterprise UK, the organisation behind Global Entrepreneurship Week. 

The not-for-profit organisation, set up by the Institute of Directors, Federation of Small Businesses, British Chambers of Commerce and Confederation of British Industry in 2004 and chaired by Dragons' Den investor Peter Jones, had its 2010 funding cut from £5.4m to £3.8m but the latest move to entirely withdraw financial backing has surprised experts.

The announcement comes a few weeks after the successful conclusion of Global Entrepreneurship Week, an initiative started by Enterprise UK in Britain which expanded to over 100 countries in 2008. The 2010 launch was attended by business secretary Vince Cable and his enterprise minister Mark Prisk.

Enterprise UK chief executive Tom Bewick told the Financial Times that he was "extremely positive" that the organisation had a future independent of public subsidy.

"Philosophically I am on the same side as the government in that we don't want them to fund quangos," he said. "We have got a fantastic track record and assets, such as Global Entrepreneurship Week and Make Your Mark With a Tenner."

UPDATE (07/12/10):

Tom Bewick, Enterprise UK chief executive, has sent a letter to the organisation's stakeholders confirming that funding has been pulled. Here is the letter in full:

"As a key stakeholder, partner or friend of Enterprise UK, I am writing to confirm that the government intends to withdraw grant-in-aid funding from the charity from April 2011. You may have seen recent press articles about the government’s decision.

"I want to say at the outset that while this news is disappointing to us in the context of the discussions we were having with BIS in the run up to the Spending Review, it did not come as wholly a surprise given the financial pressures on BIS, in particular, as a Whitehall department that has to make some of the deepest cuts to its future support.

"Since coming into the role as chief executive in April, I remain convinced that the funding model and relationship with BIS that is no longer fit for purpose for a business-led, independent charitable body, that purports to support and nurture a more entrepreneurial culture in the UK. In short, we have to be the change we want to see, and being so reliant on state funding is clearly not the way to go. The best way to achieve a more entrepreneurial culture is to be more self-reliant and innovative ourselves.  
 
"I was very encouraged recently by the most successful Global Entrepreneurship Week ever. On a fraction of the amount of the government funding we received in previous years we were able to pull in support from big brand sponsors such as Google, Virgin Media and Regus. We have some first rate staff who have not only great access to private sector and entrepreneurial networks but considerable knowledge of what works in this space. As you would expect, I am personally committed to building on and securing a lasting legacy for the organisation.

"We will continue to operate, inspire and support the community in our current form until at least April 2011. For example, our Tenner campaign, which will loan 30,000 students £10 each to start and run a business, will launch in January.  In terms of what happens after that, I will be in a position to write to you again in the New Year with further news once I have completed an internal consultation process with both staff and trustees as to the options about our future. I’d also be very interested, of course, in your views as a valued stakeholder of the organisation.

"In the meantime, I hope you will continue to give us your full support.

"Please do not hesitate to get in touch if you have any questions about the challenges we are currently addressing as consequence of this news."