Government policies towards

"This Government recognizes that enterprise is the lifeblood of our economy – boosting productivity, increasing competition and innovation, creating employment and prosperity, and revitalizing our communities. " (Tony Blair) Illustration 1: Tony Blair in "The Way Forward" 1 Since the Bolton Committee's report in 1971 on small firms Governments, Conservative and Labour, have implemented policies to support Small and Medium Enterprises (SMEs). Improving the availability of information and advice, the Government has established departments, agencies and services which can be accessed on the Internet.

The Department for Trade and Industry (DTI) has set up the websites "Small Business Service (SBS)"2. SBS was introduced in 2000 in order to implement and enforce the start up and growth of businesses in the UK. It is an "umbrella organisation which would promote and co-ordinate the wide range of help, information and advice available from many sources"3 The website "Business Link"4 is operated by SBS and therefore falls under this umbrella. It concentrates on helping and advising already existing businesses. The 7 Core Strategies

The Government together with SBS has developed a strategy how to encourage entrepreneurship and how to make sure that start-ups are able to succeed. A policy framework was implemented with 7 Core Strategies5: 1. Building an enterprise culture 2. Encourage a more dynamic start-up market 3. Building the capability for small business growth 4. Improving access to finance for small business 5. Encouraging more enterprise in disadvantaged communities and under represented groups 6. Improving small businesses' experience of Government services 7.

Developing better regulation and policy Illustration 2: The 7 Core Strategies Martin Griffiths, Chief Executive of SBS, explains that the policy framework aims are based on "Think Small first", delivery of information and services from Government departments and access to a wide range of advice. 1. Building an enterprise culture means that the Government encourages an environment for people to start up their own businesses. Some cultural factors are difficult to change, for example people's fear to fail. This can influence the desire to start and expand a business.

However, the Government has started to widen the awareness of possibilities in the SME sector and the knowledge of a potential culture. For example by offering sources to schools, so that young people receive basic knowledge about entrepreneurship and the surrounding environment. Another example is the contribution of SBS to the expenses of "Enterprise Insight"6 i?? 0. 7 million was provided in 2002 – 03. 2. The Government encourages a more dynamic start-up market. It helps starting up businesses to overcome entry barriers.

Several publications help to do so. Their aim is to make the regulatory requirements that apply to start-ups and the range of support that is available understandable. A Non-Nonsense Guide to Government rules for starting a business has been published. It explains regulations that apply to SMEs as well as Government services. Barclays Bank develops statistics of business start-ups and closures. In Quarter 1/03 it showed a rising trend in business start-ups. 107 000 start-ups were counted which is 12% more compared to the same period of the year before.

Closures rose by 4%7. 3. Small business growth can positively be influenced by giving good advice. In understanding where the impact on growth in SMEs lies the Government is able to implement policies and regulations. Key factors for growth can be good management skills, innovative ideas and workforce development. 4. and 5. The Phoenix Fund, launched by the Government, is an example of how to improve access to finance for entrepreneurs of existing businesses and start-ups in disadvantaged regions. In this Fund are integrated: – The Development Fund

Innovations and experimentation are encouraged as well as the identification and spread of best practice in deprived areas. Under the Development Fund also falls the Rural Development Fund. The fund aimes to promote non-farm business recovery from the affection of the foot and mouth outbreak. – The provision of capital, revenue and loan guarantee support to Community Development Finance Institutions (CDFIs). It gives assistance in finance and business to potential entrepreneurs and small firms that are mostly not able to access the financial help they require. – A national pilot network of volunteer mentors.

Several volunteers, coming from different businesses mentor pre and early stage businesses, including those in disadvantaged communities and under-represented, e. g. women and ethnic groups. On a press release from the SBS on the 27th of October 2003, a i?? 11 million funding for innovative schemes was announced. This funding should bring considerable investment to disadvantaged areas through the network of CDFIs. "Entrepreneurs play a crucial role in rebuilding Britain's disadvantaged communities, but in some parts of the country they're unable to get the finance they need from conventional sources.

Yet businesses operating in these areas need investment like all other businesses" (Nigel Griffiths) Illustration 38 6. The load of administrative demands on SMEs can be very confusing. Therefore SBS aims to improve small businesses' experience of Government service and aims to simplifiy its services. On the Business Link website9 information in response to issues raised by businesses is given. Further information to this can be received from Business Link Operators (BLOs) which provide a local network service. SBS plans to spend i?? 144 million in 2003 – 04 for the local service.  

Develop better regulation and policy. SBS represents SMEs in proposals for new regulations. The Government consults the SBS for information about how policies could have an impact on SMEs. SBS also has worked with Government departments to intensify the knowledge of regulations for SMEs in order to make administrative process easier and timesaving. Lack in Government policies The Government has set itself a timeframe till 2005 in which it wants to make the UK the leading place in the world to set up and grow a business. In general the Government has developed an SME friendly environment.

However the effectiveness can be questioned by the following10: – Lack ob objectiveness Small business policy is not given from the Government as a whole, but from different departments. The monitor of targets is not clearly defined. – Regional bias Most of the available schemes are accessible on a national base. Regional differences are not taken into account. As a result, the richer areas in the south of Britain have benefited more from financial support than northern regions. – Backing winners or losers Help for existing SMEs is extensively spread.

This hardly supports people who are unemployed to start up their own business and to be able to compete with existing businesses. However the Government has recognized this and moved to establish assistance for unemployed to set their own business by giving training and advice. – Confusion and overlap There is an enormous number of information available from the UK Government. It is hard for managers of businesses to determine all the help. To find the right assistance and information can get very time consuming and inefficient. Through the DTI, SBS and Businesslink the Government tries to solve some of these problems.