CBI report says red tape is stifling small business

Small to medium-sized enterprises are failing to grow due to a lack of Government support and advice, ‘stifling red tape’ and rising legislation. This is according to the latest report by the Confederation of British Industry, which claims that the Government has failed to meet the majority of its targets to stimulate and encourage the development of SMEs in the UK.

The report analyses the Small Business Service, a Government initiative set up five years ago with the aim of making the UK the ‘best place in the world’ to start to grow a business. The SBS outlined seven key objectives, but has not met four of its set targets, according to the CBI. These shortfalls include the failure to help build an enterprise culture, create a positive environment for growth, improve regulations for businesses and encourage entrepreneurs from under-represented and disadvantaged areas to develop their businesses.

In particular, the report found that businesses face problems of ‘access, duplication, confusion and inconsistency’ when seeking out some of the 3000 Government support programmes in existence. Fewer bosses are taking on employees – in part because of growing and complicated employment legislation – and businesses are struggling to find affordable and appropriate sources of capital.

‘Employment legislation is a nightmare, and the legal procedures SMEs need to go through on this are incredibly time-consuming,’ says Amanda Merron, partner at Willott Kingston Smith.

Caroline Hagen is managing director at design consultancy Reach and a member of the Design Business Association board. She set up the Bristol-based consultancy with Richard Evans in 1998 and, after following a ‘very clear’ expansion plan, the business has now grown to a 14-strong team.

Hagen believes there is an overall lack of Government advice and support. ‘You feel like you have to do it yourself and don’t know where to go for help,’ she explains. She encourages design consultancies to talk ‘business’ more frequently with their peers to help them understand good working practices. The DBA offers a range of training events and seminars to create a hub of advice for design consultancies, but it seems the Government must do more to help the SME sector in general.

The CBI is planning further studies into the problem. It will publish seven reports, the first of which is to analyse the start-up market. A final report will be published at the end of next year, summarising key recommendations and presenting the CBI’s vision for the enterprise community in the UK.

CBI REPORT – THE SMALL BUSINESS SERVICE: five YEARS ON

• CBI represents over 200 000 smaller businesses

• Small to medium-sized enterprises defined as businesses with up to 250 employees

• Third of Britons state they would not start own business because of fear of failure, compared to one in five in America

• Large regional discrepancies in business start-up rates remain. Rate in London is 62 per 10 000 people, compared to 21 in the North East and 29 in Wales, Scotland and Northern Ireland