The third competitiveness white paper promises to simplify the muddle in support for SMEs which together still employ half the workers in Britain. Large companies, often keen to help, are left wondering who created the confusion in the first place.
COMPETITIVE CONSULTATION
A package of some 30 measures to help small firms was put out to consultation on June 13 as part of the government’s third competitiveness white paper. The package includes:
reducing the 200 separate support programmes into 20 broad headings, with funding brought together in a £200 million Local Competitiveness Budget, mainly spent by TECs and Business Links;
combining other cross-departmental support programmes into a £40 million Sector Challenge Budget;
reduced red-tape on VAT, national insurance and PAYE with a single national helpline.
The 230 page white paper, Competitiveness: creating the enterprise centre of Europe (ISBN 0 10 1333002 2, £20) follows earlier papers in May 1994 and May 1995. It stresses partnership between government and business for regional development, inward investment and certain industry sectors, and also confirms previously announced plans in education and training. For a copy of the small business consultation, contact Cabinet Office Publications on 01277 262200; for the main white paper contact HMSO on 0171 873 9090
LATE PAYMENT CONSULTATION
The government has confirmed its 1994 decision not to legislate for interest on overdue commercial invoices, but has issued a consultation paper on whether large companies can be forced to report their speed in paying bills. Reporting payment policy is already required by law, but these proposals, published on June 27, would require actual practice to be made public. The paper looks at a method of calculating and presenting the figures. Comments are requested by September 27.
Research for the DTI by the University of Bradford, released on June 13, found that two fifths of smaller firms do not agree written payments terms in advance with big customers and more than eight in ten themselves pay their suppliers late. Meanwhile figures for payment on time by all central government departments were published in July, ranging from 83% in the Ministry of Agriculture, Fisheries and Food to 100% in some smaller departments. Contact Trish Worsfold, DTI, on 0171 215 0232
BIG CASH PROBLEMS FOR SMALL FIRMS
Cash flow problems and an inability to secure adequate funding are the biggest barriers to growth among small companies, according to a survey of 162 firms carried in June by the Business Link network. Other factors are poor skills in the workforce and lack of time for managers to update their own skills. The final seven Business Links, in the East Lancashire area, won funding approval on June 5, completing the national network. Contact DTI Enquiries on 0171 215 5000 or the Business Link Signpost line on 0345 567765 for nearest local Link
PROMOTING GROWTH
The CBI has produced a small firms checklist for use by policy makers. Among the recommendations are:
increased take-up of the CBI Prompt Payers Code and the new British Standard (BS7890) on payment practice;
more management expertise through business mentors and Business Links;
inclusion of owner-management in careers guidance and Education Business Partnerships.
Published on July 22, the report, Generating Growth, stresses the role of government in creating the right climate, promoting entrepreneurship and not imposing burdens, and promises further work by the CBI in building partnerships between large and small firms. Contact Claire Craig, CBI, on 0171 379 7400
ENTERPRISING YOUTH
The Prince’s Youth Business Trust is expanding its lending to help young unemployed people aged 18-29 set up in business. Additional loan finance from Barclays, Midland, Lloyds-TSB and NatWest, totalling £6 million, is being matched by grants from the Department for Education and Employment, worth £1,200 over three years for each new business formed. Announced on July 19, the scheme will add to the 28,000 young people who have been helped since 1986. Contact Juliet Bailey, PYBT, on 0171 543 1382
Comment
Half of private sector employment is in firms of less than 100 staff. So it is right for the government to place small firms at the centre of their new proposals. But if the problem is the confusing clutter of support for SMEs, the government has only itself to blame. Who else introduced TECs and Business Links along side enterprise agencies, chambers of commerce and local authorities? Whatever the benefits of competition for funding (the so-called ‘challenge’ approach) – and there are some – the one thing it will not achieve is consistency and clarity. Either you let a thousand flowers bloom or you sort out the muddle from the centre.
Locally people are trying to make the arrangements work, with some success. But companies who continue to invest scarce resources, whether cash or increasingly in time from senior executives, first in enterprise agencies, then in TECs and now in Business Links can be forgiven if their patience is wearing thin. Brace yourselves. Business Link pump-priming money runs out in two to three years time. It does not need a crystal ball to work out in whose direction the begging bowls will be proffered.
COMMENTS