Government failing small businesses

Five years after the Government proclaimed its desire to make 'the UK the best place in the world to start and grow a business by 2005', a third of Britons say they would not start a business for fear of failure.

And, although small businesses create roughly half of all UK jobs and gross domestic product, increased regulation and uncoordinated delivery of Government support means there are still barriers to starting up – despite the stable economic background.

These are some of the contentions from a new report from the Confederation of British Industry (CBI), which insists the Government has failed to achieve most of its targets to stimulate and encourage small businesses. Of the Small Business Service’s (SBS) seven key strategic themes, the CBI claims progress has been made on only three:

  • Building an enterprise culture – while people are positive about entrepreneurship, this has not led to more people considering becoming self-employed
  • Encouraging a more dynamic start-up market – an increase in the number of business start-ups in the UK has helped to raise the total number of UK businesses to four million
  • Encouraging more enterprise in disadvantaged communities and under-represented groups – the gap between the wider SME market and disadvantaged communities and under-represented groups has widened
  • Improving small businesses’ experience of Government services – changes have improved the experience of entrepreneurs with government services, but more work is required
  • Developing better regulation and policy – as the regulatory burden in the UK has increased, it has progressively become a major obstacle to business success
  • Improving access to finance for small businesses – significant progress has been made, but entrepreneurs continue to face difficulties in identifying and accessing finance
  • Building the capability for small business growth – Government-imposed barriers have reduced the capability for growth, with the number of small employers falling

‘The SBS is not to blame for these results,’ contends Sir Digby Jones, director general of the CBI. ‘How can an enterprise economy break through when the Government presides over systemic, stifling red tape, a discredited planning regime and a society that becomes more politically correct and risk-averse by the day?

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

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