The government's much criticised Small Business Service (SBS) is to be radically downsized, trade and industry secretary Alistair Darling has revealed.
According to Darling, the government's main agency for supporting small firms, which has been condemned by many groups for failing to deliver, will be restructured to make it "smaller and more focused on what it can do".
A recent report by the National Audit Office warned that the SBS lacks significant influence across Whitehall, while a study by the British Chambers of Commerce showed that the majority of SME bosses believe the agency has failed on six of the government's seven targets for supporting small businesses.
Speaking to the 'Financial Times', Darling said: "[The SBS] will have a much smaller policy focus and a much closer tie-up with the Treasury, so the Treasury is more tied into business concerns."
He added that a "lot of" the £150m in business support funding currently administered by the SBS will be transferred to regional development agencies.
The move represents the latest effort by the government at simplifying the system of business support services provided by various government agencies.
"The totality of support needs to remain but a lot of it is needlessly complex," Darling said. "You've got to ask what do [the schemes] add to the greater good and the answer is often 'not a lot'."
Responding to news of the agency's overhaul, Richard Lambert, Confederation of British Industry (CBI) director-general, said the SBS should be given the power to audit the policies of all government departments which affect entrepreneurial activity.
"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," he added. "This should be the aim for government."