Government 'failing to help small businesses'

Aug 14 2005 by Brian Amble Print This Article

Despite all the political rhetoric talking up Britain's enterprise culture, the government has failed to hit the majority of its own targets to stimulate the development of small businesses, according to a report from the country's largest employers group.

Instead, according to the Confederation of British Industry (CBI), the government has presided over "increasing regulation and uncoordinated delivery of government support".

The Small Business Service (SBS) comes in for particular criticism, missing four of the seven targets set as a central pillar of the government's pledge to make the UK the best place in the world to start and grow a business by 2005.

"The government was right to set up the Small Business Service and right to set it clear targets," said Sir Digby Jones, director- general of the CBI.

"But with more than half the targets missed it is clear more effort and co-ordination is needed across government - especially to ensure that the work of the SBS is not undermined by other departments in Whitehall.

"The SBS is not to blame for these results. How can an enterprise economy break through when the government presides over stifling red tape, a discredited planning regime and a society that becomes more politically correct and risk-averse by the day?"

The SBS has failed to build an enterprise culture, failed to encourage entrepreneurs in disadvantaged areas and among under-represented groups, failed to improve regulation and failed to create a positive environment for small-business growth, the CBI says.

But it acknowledges that on improving access to funding, making it easier to start a business and making government more accessible and helpful., the SBS has been m ore successful.

However the report also highlights the fact that while the number of small firms has grown from 3.7m to 4.1m since 1999, those employing staff has dropped from 1.35m to 1.23m, largely as a result of concern about employment legislation.

Other research into Britain's small business sector has revealed that red tape is the biggest single dampener on growth, with one survey suggesting that a quarter of businesses have purposely avoided expansion to avoid the impact of regulation.

Even the Department of Trade and Industry acknowledged last year that red tape has discouraged 200,000 businesses from creating jobs.

Partly as a result of this burden of regulation, the CBI report found fewer adults and young people consider going into business now than in 2000 with the numbers of woman, black or Asian entrepreneurs increasing at a slower rate than the national average.

Indeed last month, the 2005 Sage Heartbeat Survey found that four out of 10 of Britain's company bosses say they would be unlikely to set up in business if the opportunity arose again, a figure which rose to half of female business owners.

However a third of Britons also told the CBI survey that they would not start their own business because of fear of failure, compared to one in five in the US.

"The UK has a proud entrepreneurial tradition," said Digby Jones. "The next Richard Branson or Martha Lane Fox is out there, but they must be encouraged and supported as they take risks, and set up and grow their businesses."