COMMONS

Government support for business is too vague and complex

24 February 2015

Businesses in the UK often face a complex and unclear support offer from Government, says the Business, Innovation and Skills (BIS) Select Committee in its new report. The Committee also finds that, nearly 7 years on from the banking crisis, British businesses still find it difficult to obtain access to finance, particularly SMEs (Small or Medium Enterprises).

The Committee’s inquiry into Government Support for Business—focussing on access to finance, support for exports, manufacturing and efforts to encourage local growth—finds the myriad of schemes on offer are often poorly communicated and difficult for businesses to access. The Committee found there are over 600 different publically-funded support schemes currently advertised on the Government’s website, many with different objectives, eligibility, funding and contact points.

Adrian Bailey, Chair of the BIS Committee, said:

"Creating the best possible conditions for British business, particularly SMEs, to thrive is vital to our country’s long-term economic prosperity. While the Government’s current approach is largely positive, we found businesses are not always clear about the support on offer, finding it poorly communicated, confusing and not focussed enough on business need. If the UK is going to become one of the best places in Europe to start, finance, and grow a business, then Government needs to do better at getting the word out so businesses know what support exists."

The Committee heard that too many businesses are still reporting difficulties in getting the financial support they need. The Committee recommends the Government do more to draw on the British Business Bank’s expertise and gain an overview of the lending environment faced by SMEs, including both traditional and alternative finance. It should feed this information into policies to improve businesses’ access to finance.

Adrian Bailey MP, Chair, said:

"For budding entrepreneurs, start-ups, or established businesses trying to grow, access to finance is vital. Yet, the experiences of SMEs trying to access finance from the banks is still mixed. The Government needs to tackle this lending problem by capitalising on the British Business Bank’s expertise and creating clear signposting so that businesses are aware of the alternative finance providers which could help them."

The Committee recognises the important role which the Green Investment Bank (GIB) has in supporting businesses to drive the UK’s transition to a low carbon economy. Building on the GIB’s positive start in providing investment to companies developing green infrastructure, and helping to bridge the gap in overall levels of green investment, the Committee recommends Government sets out clear plans to give the Green Investment Bank borrowing powers that it is likely to need in the future.

The Committee notes that one of the most ambitious Government trade objectives is for the UK to be exporting £1 trillion of goods and services per year by 2020. At present, UK exports are worth around £500 billion per year.

Adrian Bailey MP, Chair, said:

"UK Trade & Investment (UKTI) is charged with taking a leading role in meeting the Government’s £1trn annual target of exports by 2020. The success of UKTI needs to be judged on its impact in helping businesses to export and its efforts towards the £1trn exports goal. But if Government is really serious about meeting this ambitious target the buck can’t stop at UKTI. All of Government needs to get in on the act to help deliver this win for UK plc."

To monitor progress to the £1 trillion target, the Committee calls on the Government to provide projections of expected export growth over the next six years, given current predictions for the broader economy, and then report progress against these projections each year in its annual review. The Committee also stressed the need for Government to establish cross-party consensus for business support, providing consistent points of information about or access to the support available rather than engaging in continuous revolution of the system.

In addition to the British Business Bank, the Enterprise Finance Guarantee, and the Green Investment Bank, the Committee’s inquiry looked at the support offered to businesses involved in exports and manufacturing, including the work of UKTI and the Manufacturing Advisory Service (MAS). The Committee also examined the communication and coordination of Government support measures at a local and national level, including the introduction of the new Business Growth Service.

Further information

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