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The Small Business Service (SBS) is responsible for leading Government actions for small business primarily through leading on a Government Action Plan. The NAO report claims that the SBS has delivered some successful projects itself, but to date it does not have measures to establish its overall impact, or the information it needs from other departments to establish the overall impact of wider Government support for small business.
Sir John Bourn, head of the NAO, said: “Government needs a better appreciation of its impact on small businesses, and simpler performance management arrangements, if it is to achieve its aim – to make the UK the best place in the world to start and grow a business.”
Complex
Part of the problem is the complex framework within Government to support small businesses. It coimprises the Government's stated aims, a PSA objective, three targets, seven strategic themes and 15 Departments with a total of 265 programmes to support small business. The Government has initiated a process to reduce the total number of programmes supporting small business at all levels of government from 3,000 to 100. The report says that this complex framework makes planning and monitoring a cost effective package of interventions difficult.
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Not enough clout
The CBI supported the criticism of the Government's approach and the effectiveness of the SBS. Sir Digby Jones, CBI Director-General, said: "The NAO's report highlights concerns about the Small Business Service repeatedly raised by the CBI. The SBS doesn't have enough clout with, or co-operation from, other parts of Government to properly deliver its objectives, and it has no credible system to evaluate its success, or otherwise, on behalf of small business.
"CBI analysis of the SBS’s performance shows that it has failed to meet most of its targets, and its claims to have delivered on deregulation or small business growth are unfounded and won't chime with the experience of the vast majority of businesses in this country.
"The Government set the objective of making the UK the best place in the world to start and grow a business. But that can never happen until the SBS improves its performance and the rest of government takes the needs of small and growing business more seriously."
Four areas
The NAO looked in more detail at SBS work in four important areas: regulation; access to finance; joining-up Government; and advisory services.
Regulation
SBS has helped in the development of new regulations and policies that affect small businesses but its involvement has often been limited because Departments do not involve SBS in a timely manner. SBS has not systematically measured its impact in improving regulations. It is now working with the Better Regulation Executive to reduce the burdens of regulation on business.
Access to finance
SBS has estimated that about 150,000 small businesses have difficulty in raising the external finance they need each year. The main Government scheme to help with debt financing – the Small Firms Loan Guarantee – annually helps around 6,000 small businesses access loans and stimulates net increases in employment and turnover. Default rates are almost nine times higher than for commercial lending, but SBS has introduced changes designed to reduce them. Displacement of existing business is also high: we question the extent of the evidence that suggests wider benefits resulting from the extra competition can offset the negative effects displacement has on value for money. Government has also set up a number of funds to fill a gap in the supply of equity funding for small businesses. It is too early to evaluate the impact of these schemes but the number of businesses helped is small.
Joined up action
The preparation of the Government Action Plan, the first time that Government policies and actions regarding small business had been brought together, was welcomed by the small business community. Government Departments and business organisations the NAO consulted respected SBS expertise in small business issues but stated that SBS may not have the necessary influence over other government departments to ensure delivery of the Action Plan.
Advisory services
The Business Link network which provides advice and guidance for small businesses, and which was managed by SBS until April 2005, has improved the quality and volume of services provided with constant funding – and so is better value now than in 2000. Similarly, the businesslink.gov website which SBS established in 2004 and allows businesses to access all sources of Central Government advice through one web portal has enjoyed higher volumes than expected and been widely welcomed.
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Susie Hughes, Editor © Shout99.com 2006
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