Department for International Trade slashes tech SME funding

Government cuts in funding to support technology startups attending international events will undermine their ability to attract export revenue as the UK leaves the European Union, according to trade organisations.

The Department for International Trade (DIT) has cut its Trade Access Programme (TAP) funding – which supports SMEs wishing to exhibit at major international trade fairs – and will reduce it further in months to come, severely impairing the presence of SMEs in events such as Mobile World Congress (MWC) and the Consumer Electronics Show (CES).

DIT’s TAP funding for tech SMEs has decreased overall in the past two years by nearly a quarter and is set to reduce further, said TechUK chief executive Julian David.

There were 61 TAP grants for MWC – both the main show and the startup addition 4 Years From Now (4YFN) in 2019. According to David, this will be cut to 40 grants for MWC, with 4YFN being completely removed from the programme in 2020.

“We were told that [DIT] cannot add any further shows to its programme for funding. This means not being able to support shows in places in Asia and the Middle East, which could provide major opportunities in some of the biggest markets in the world,” he said.

In addition, David stressed that the government is making criteria changes, making it more difficult for SMEs to claim the TAP support.

This means that UK small businesses that have been exporting for more than a decade are now ineligible for support. According to TechUK, the number of grants a company can claim was reduced from 12 to six in late 2016.  

The UK has come a long way from 2017, David pointed out, when its SME presence was described as an “embarrassment” by show organisers, with the DIT increasing investment in 2018 for CES and for MWC, where the UK stand and ministerial presence matched that of other countries.

But these efforts have not been enough, the chief executive said, adding that the UK was only able to support 16 companies for CES this year, making it one of the smallest pavilions at the show.

“You might think that we have lost our British modesty and we are all set to compete with the rest of the world to sell cutting-edge tech startups and SMEs,” David said.

“Surely, we all said, as we leave the EU and embrace the global opportunity, we will invest more in programmes to support small British companies at these and other global showcases? Well, it seems we were wrong,” he added.

To illustrate his point, David analysed the international delegations at this year’s CES. According to the trade body, the French government supported 325 tech companies to showcase their wares, while the the Netherlands took 50 firms, Switzerland took 30 and Israel 22.

“Countries from around the world pump huge amounts of their budgets into national pavilions because they understand the importance of the exposure that these shows bring with them,” he said.

The government’s reluctance to support tech SMEs and its lack of commitment are “baffling”, Julian pointed out, calling for a more consistent approach as the UK prepares for Brexit.

“The government must commit to do more, rather than less, to support UK SMEs grow their export revenue as we leave the EU and compete on the world stage,” David said.

“And this must be a consistent approach over many years – it’s not possible to build a tech brand and establish trusted customer relationships by turning the TAP on and off,” he added.

Conflicting messages from government are undermining the internationalisation efforts from the industry, David said, leaving stakeholders struggling to see how such indecision fits within the wider global Britain agenda.

While TechUK welcomes efforts from across government to deliver for the tech industry, the trade body’s chief stressed there must be a continued commitment to supporting SMEs as they seek to export their offerings.

“So, come on ministers – give your teams and our businesses the commitment they need to grow exports, drive business success and support high-skilled jobs here in the UK,” David concluded.   

Computer Weekly has approached DIT for comment, but none had been received at the time of publication.