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CBI: What's the government done for small business?

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16th Aug 2005
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If this week's CBI report into the seven strategic themes to encourage small business growth had been an old-fashioned school report on government policy, the words "could do better" would have been scrawled across it.

The CBI has undertaken to publish a report on each theme over the next year, including recommendations for government action.

The seven themes, with the CBI's assessments, are:

  • to build an enterprise culture (failed)
  • to make it easier to start up a firm (achieved)
  • to encourage entrepreneurs in disadvantaged areas and by under-represented groups (failed)
  • to make Government more accessible and helpful (achieved)
  • to improve regulation (failed)
  • to improve access to funding (achieved)
  • to create a positive environment for growth (failed).

    Even the three successes have areas that could be improved. For instance, the measurements of improving small businesses' experience of government services did not include the stated aim of providing a service that was: 'more coherent, accessible and of better quality'. The report states the government has "rebranded, amalgamated or wound-up 200 business support schemes" ' but that still leaves nearly 3,000 programmes.

    The report has taken care to be scrupulously fair. The Business Link network, in particular, comes in for praise. Its customer satisfaction score of 91% is up 10% since 2001/2. The government was been praised for its efforts to reduce the burden of regulation ' common commencement dates, raising of the VAT threshold, removing the requirement for employer's liability insurance for some small businesses and the Better Regulation Commission are all cited.

    According to the World Bank, the UK is the seventh least regulated country in the world but over the past three years 86% of companies say they have had to increase resources to handle regulations. Employment legislation is considered to be the most burdensome.

    With much of the UK's regulation emanating from Europe and with the UK having an obligation to adopt regulations and directives, the CBI has been careful not to blame the Small Business Service (SBS) for missing the targets.

    Sir Digby Jones, director-general of the CBI, said: "The government was right to set up the SBS and right to set it clear targets. 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 systemic, stifling red tape, a discredited planning regime and a society that becomes more politically correct and risk-averse by the day?"

    A spokesman for the SBS declined to discuss the report in depth until the service had considered it in full but said: "The SBS welcomes the report and particularly the significant progress in improving access to finance for small business."

    Other findings from the report include the fear of failure being the reason why a third of people would not set up their own business. There seems to be a reluctance to employ people ' 71% of all businesses have no employees.

    Government statistics show that the number of businesses employing between 50 and 99 staff has fallen. There has been a slight increase in those employing more than 100 but this is through the growth of the not-for-profit sector.

    Although a lot of activity has been taking place to encourage women and ethnic minorities to become entrepreneurs, the rate of business start-ups among these groups is lower than the national average. In addition, although the VAT registration rate in 88 disadvantaged communities has risen, the national average has also risen, meaning the gap between the two has widened.

    A DTI spokeswoman said: "In March the government committed to one of the most ambitious programmes in the world to reduce regulation on business.

    "This includes simplifying regulatory structure, including merging 31 of the national regulators into seven and consulting on new measures to ensure that enforcement and penalty arrangements strike the right balance."

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    avatar
    By KB Limited
    23rd Aug 2005 12:00

    CBI - Government Puppet
    Does anyone in the CBI live in the real world and deal with small businesses, or do they just get fat on City lunches and dinners?

    Where is this access to Government - don't tell me it's the CONTINUALLY ENGAGED call centres!

    Get real everyone, this Government has "CANCELLED" as its aim for small businesses.

    Anyone disagree, then give me the facts please.

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    By dialm4accounts
    23rd Aug 2005 11:29

    Professor Umbridge eat your heart out...
    Anyone like me who's read the Harry Potter series may well be reminded of the Ministry-appointed teacher in Book 5, Professor Umbridge.

    She said in a very waffly way at the
    beginning of her first lesson "we are not going to do anything interesting".

    The government is using long sentences and vague terminology to disguise the fact that it's not going to take any real action.

    The way the 19% tax on dividends was designed has penalised the smallest businesses...

    That says it all as far as I'm concerned.

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    By AnonymousUser
    24th Aug 2005 10:13

    [***] the small business man
    Whilst also being accountants, we run a very small retail and restaurant business (2 partners and 1 16 yr old employee). Because the business is regarded as separate trades we have to render 2 P'ship Returns to the Revenue and keep two sets of accounts. We applied and got a restaurant licence last December - it cost about £1,000 because of all the requirements including being ripped off by the local paper because we had no option but to use them to publish the application . This licence runs out in 2007, or so we thought. But, no, we had to renew it at a cost of £195 in August because the government decided to bring in 24 hr drinking It does not affect us one bit so why the £195? Just another way of [***] a very small business.

    I have just received the renewal notice from the DPA - what am I going to get for my money? Just another turn of the screw.

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    By johnlarke
    19th Aug 2005 11:49

    Deregulation: will it happen?
    There seems to be an alarming difference in the perception of small businesses on one hand and the Government and its agencies on the other. Of course the latter are organisms with an intrinsic desire to grow and multiply, just like businesses; this is a golden rule we must always keep in mind when examining Government promises to reduce any part of itself. Given the history of Government growth, who believes this will really happen? Not without an almighty and sustained push (which will never come from within Government itself - no organism wilfully shrinks itself), or some cataclysm like a revolution or the collapse of the economy.

    Compare the problems highlighted by the CBI report with the comments quoted from the DTI spokeswoman. What is she actually saying? "...Simplifying regulatory structure, including merging 31 of the national regulators into seven..." Is this saying anything other than that regulation will continue, but it will just be more efficient from the Government's point of view? Will there actually be any reduction of the regulation itself at the receiving end, i.e. businesses? Keep the golden rule in mind. These regulatory bodies won't shrink in their totality: they will just reshuffle themselves ready for the next spurt of growth. And any space they leave will quickly be filled by other similar bodies.

    Then "...consulting on new measures to ensure that enforcement and penalty arrangements strike the right balance." Sounds very waffly. What does striking the right balance actually mean? Does it really mean any reduction? It might just as easily result in an increase, if somebody decides that the "balance" is not giving the Government everything it wants at present, so more enforcement and penalties are needed. How many examples are there of enforcement and penalties being reduced, in comparison with areas where they have been introduced or increased? Is that not a more meaningful measure?

    And this is "one of the most ambitious programmes in the world to reduce regulation on business"? Is there not a danger that it will become one of the most successful programmes in the world at giving the appearance of reducing regulation while under the surface it continues inexorably to increase? Remember: the organism must grow...

    According to the CBI, 71% of businesses do not employ anyone. I wonder why? In a truly entrepreneurial state, there would be real encouragement and incentive to employ people, not a climate of apprehension about what burdens it would bring to the business owners. You can certainly blame excessive regulation for this fear; in the current climate I wouldn't employ anyone either.

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    By User deleted
    17th Aug 2005 20:41

    Get Real
    I personally have not seen the slightest bit of effort from the Government in helping the small business. In fact this Government is anti small business bearing in mind all the regulations it is imposing eg IR 35, now the claming down of CIS, next the accounting profession, mining, service companies, all taxed to the hilt and suffocate them. What the Government wants are large conglomerates from day one and take in '000 of workers which just not possible. M&S started this way with 2 guys, like wise with Paul Riteman, Stanhope Properties etc....One of my client has been taxed 4 times the amount he has earned all because an inspector who adds everything back thinking that it was not an legimate business. Good job this inspector is abit of a nutcase, butbad for image as it has taken 4 years to crack this nut. During this time the business was strangled till it died, but the inspector still lives at HMRC in Croydon! Good for the Govt but BAD for small business.

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    By steve tees
    23rd Aug 2005 15:06

    Which Government?
    Ever since I left college at the beginning of the 1970s I've heard the same refrain. Can anyone tell me when ANY Government has done anything real for small business?

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    By carnmores
    16th Aug 2005 12:25

    the answer is basically
    [***] all


    more and more red tape, so much so that SMEs are strangling themselves.

    Thanks (0)