The way it works on paper is this: sometimes people with a good business idea can’t get access to credit or funding from a bank, and so the idea goes unrealised. Because of this, economic growth is stymied - especially in the crucial small business sector, from where a lot of innovation comes. The government therefore can step in and provide funding where the banks won’t. Furthermore, by targeting deprived areas, these grants can help stimulate economic activity in poorer areas.
What actually happens is this: good, profitable businesses and productive workers have money taken from them in the form of tax. This money is then channelled into bad, unprofitable businesses which go under anyway. All of this happens under an absurdly capricious and ill-informed bureaucracy which merely serves to make the whole thing more expensive.
Having discussed a case in point, Carpsio then sums up rather nicely...
So Business Link have taken your 5 grand and given it to a business that won’t last more than a couple of months and specified that the money should be spent on about the least relevant service. In addition, to administer this money we have to leap through hoops that they have set in terms of actions, reporting and timescales. Does any of this add up to extra efficiencies? In that £5000, a few hundred quid will go west in creating the ‘correct’ audit trail to fit their stupid fucking, box-ticking requirements.
The next time Gordon Brown stands in his pulpit to lecture us on the evils of unbridled free markets, bear in mind that billions of your money is pissed against the wall on clowns like this every single fucking year. Unaccountable, pointless, waste.
It's a massive pile of crap, to be sure. And nowhere in his post does Carpsio even point out that the largest Scottish agency for doling out these grants—Scottish Enterprise—has itself effectively gone bust at least twice in the last eight years...