RSS feedsHas the government lost its way when it comes to helping small businesses? More and more lobby groups are starting to believe so, while others question whether ministers ever had a road map in the first place.
That’s why last month’s decision to overhaul the Small Business Service was widely welcomed and not surprising. This isn’t the first reform of the SBS. Established with a brief to ‘make the UK the best place in the world to start and grow a business’, and backed to the tune of £80m, it has been overhauled every year since 2001.
The service changed course most significantly in 2003, when it shifted from being a service deliverer to ‘an expert policy unit on small business issues’ throughout Whitehall. At that point, SBS shifted from being a potential rival to accountancy firms to being more of a potential partner.
This latest makeover means that from April 2007, the SBS’ expert position will be enhanced further. Operating within the DTI’s Enterprise and Business Group, there will be a key team of 50 providing a ‘sharper policy focus’ on simplifying the business environment, stimulating enterprise culture and providing advice across government on how policies can become more business-friendly. An additional 50-strong team will work on key projects, including the Business Support Simplification Programme, which aims to reduce 3,000 publicly funded support schemes to 100 by 2010.
Whenever this government announces reform of an institution, it always – somewhat paradoxically – highlights its successes. So last month the DTI pointed to research that stressed how every pound spent by the SBS had delivered a return to the economy of more than £2, and how it had secured £85m of annual admin cost savings to business.
Critics adopt a similarly paradoxical position, celebrating the bravery of the government in reforming the service, rather than condemning it for pursuing a failing policy for so long.
So the Federation for Small Business welcomed proposals to streamline the service and give it more powers, though it did express concern about funding cuts.
‘Small businesses need an SBS that has more clout in central government and is more responsive to the needs of small firms,’ said Clive Davenport, FSB trade and industry chairman. ‘However, we do need to ask the government where the money saved from these changes will go.’
The Tories denounced the reform plan. More interesting, though, will be the results of the party’s review of state support for small businesses, led by ex Dragons’ Den panelist Doug Richard.
The CBI went further, welcoming the news, but questioning the SBS’ relevance. Steve Sharratt, chairman of its SME council, said: ‘The CBI argues that many of the policies which impact small businesses fall outside the direct powers of the SBS and DTI and that the remodelled SBS must be given the power to audit the work of other government departments to ensure they are enterprise-friendly.’
The SBS’ travails may highlight a deeper problem at the heart of government – its commitment to business. The DTI has been home to six secretaries of state since Labour came to power nine years ago. The CBI says that, while the total number of businesses has increased during the SBS’ life, few are growing and only 28% employ any staff.
For accountants, one thing is sure: the SBS must be effective to ensure a reliable pipeline of future clients.
Requirements for SBS
In August, the British Chambers of Commerce set out what it wanted from a state-run business advisory service and the degree to which the SBS would have to improve.
• Building an enterprise culture: 83% of businesses have seen no improvement and 24% have seen a decline in the UK’s enterprise environment.
• Encouraging a more dynamic start-up market: 90% of businesses do not believe a more dynamic start-up market has been encouraged. Of these, one-third say it has worsened.
• Building the capability for small business growth: more than half of businesses believe the capability for small business growth has stayed the same, while one-third say it has worsened.
• Improving access to finance for small business growth: more than 80% businesses do not believe it has got easier for small businesses to access finance. One-third say it is more difficult.
• Encouraging more enterprise in disadvantaged groups: 30% of firms believe enterprise among under-represented groups has been encouraged.
• Improving small businesses’ experience of government services: 90% of businesses see no improvement in their use of government services and 42% say their experience has worsened.
• Developing better regulation and policy: 93% of businesses sees no improvement in regulation and policy and more than half believe it has deteriorated.
