The SBS, part of the Department of Trade and Industry, is responsible for co-ordinating the Government's efforts towards enterprise and encouraging small businesses. Despite an annual budget of £2.6 billion a year, it has come in for considerabe criticism as being ineffective and lacking in purpose.

Now the CBI has said that the SBS should be given the authority to promote the needs of smaller firms to policy-makers, including the power to audit policies affecting entrepreneurial activity, the CBI says today.

It should be a powerful advocate for small business, similar to the United States' Small Business Administration in its heyday, and invested with real authority in Whitehall. This should include the ability to audit other departments' work to examine their business-friendliness and to insert liaison officers across government to build pro-enterprise policies outside the DTI.

The CBI is urging the Secretary of State for Trade & Industry, Alistair Darling, to adopt these firm policy recommendations in the restructuring of the SBS which he is expected to announce in the coming days.

Enterprise White Paper
Mr Darling should also ask his department to frame an enterprise white paper with the dual purpose of focusing policy-makers' minds on their attitudes to entrepreneurial activity, and producing a public policy document against which to measure future business-related government activity and legislation.

CBI Director-General Richard Lambert said: "The Government knows that successful small businesses are vital to the UK's long-term prosperity, but this means they need their voices to be heard so they can help shape an environment which is conducive to growth."

The Small Business Service should have the power to audit the work of other government departments which have an impact on small and growing business, and mechanisms should be developed to link it more formally with government beyond the DTI.

CBI's vision
Mr Lambert said: "The CBI's vision of the SBS has always been built on the success of the US's Small Business Administration in its heyday when it was a powerful advocate for enterprise, with a chief executive able to speak out with authority on behalf of small business. This should be the aim for Government."

Mr Lambert's views have been conveyed to Mr Darling in a letter and coincides with a new CBI report on boosting small business growth.

It is the sixth in a series of papers analysing the SBS's mixed performance in 'making the UK the best place in the world to start and grow a business'.The CBI believes far more attention should be paid to boosting the growth of small firms - perhaps the most important driver of wider economic productivity and growth - as well as promoting start-ups.

According to the SBS's own statistics, since 1999 the number of businesses in the UK has swelled by 600,000 to 4.3 million - but the proportion with employees has dropped from 37 to 28 per cent. According to the CBI, although more people are willing to take the risk of starting a business, too few are growing them to a point where they need to take on staff, and this needs to be overcome.

CBI's recommendations
In the CBI report, "Encouraging Small Business Growth", entrepreneurs cite regulation, taxation, a shortage of skilled staff and poor infrastructure as the main obstacles to growth.

To tackle these the CBI has a series of recommendations including:

• The Department for Education and Skills should ensure the workforce is equipped with basic skills, and give employers an obvious point-of-contact with training providers who, in turn, are focused on delivering skills needed by business.


• The Treasury should work with the private sector to make sure that finance is available to companies who wish to grow, as well as those starting up.


• The DTI could also provide a spur to growth by raising and simplifying the tax and allowances thresholds which apply to smaller firms.


• The Small Business Service, in its remodelled form, ought to have a far more prominent voice in Whitehall to act as an advocate for enterprise. It should also ensure that its current culling of conflicting business support schemes and quangos continues.

UK Trade & Investment, a government organisation which helps UK firms to do business overseas, is disproportionately focused on the very smallest of businesses and needs to give better support to medium-sized businesses.

• Government should reduce the administrative burden of regulation by 25 per cent, using work it has commissioned from PriceWaterhouseCoopers, to match the ambitions of the Dutch government to achieve such cuts within four years.


• Regulation has a disproportionate impact on smaller firms which do not have large compliance and human resources departments.

Further information
Related articles:

• Downsizing of the Small Business Service - Hardhatter, Sept 2006
• Tories review small business schemes - Hardhatter, Sept 2006
• Axes should fall on SBS - Shout99, Aug 2006
• SBS was set up to fail - Shout99, May 2006
• Small firms agency misses the mark (NAO) - Shout99, May 2006