Monday, May 29

Business Barrier Agencies

There are many more hurdles to overcome in business in Britain now than at any time in the past.
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The Government's Small Business Service (SBS) is a complete waste of money, that was the conclusion of the National Audit Office two weeks ago.
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As Martin Vander Weyer (Business Editor of The Spectator) reports in The Sunday Telegraph (ST) the news will have not have surprised those that actually run a small business whether in Martin's rural North Yorkshire village of Helmsley or indeed sixty miles north in urban coastal Hartlepool.
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Founded six years ago with the objective of making Britain "the best place in the world to start and grow a business'', the SBS is allocated
a £2.6 billion annual budget for small business initiatives that has produced remarkably few measurable benefits
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According to the National Audit Office (NAO), it has failed to set any agenda for small business issues and failed to bring any clarity to an overlapping multiplicity of support schemes at national, regional and local level - more than 3,000 of them at the last count.
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As Martin Vander Weyer states in his piece, the SBS has gained little influence with the 15 Government departments that compete to control the fate of small businesses. Most importantly, it has failed in the one, shining goal that might have endeared it to struggling entrepreneurs everywhere: to cut the red tape that is the bane of their lives, forcing them to spend an average of 28 hours a month filling in forms when they could be developing their businesses. Though in fairness, it has to said that there is little in practise that the SBS could achieve. It was from the very beginning a 'bribe' to businesses.
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Nothing can be said in defence of this apparently useless quango, which has already been reorganised several times in its short, unhappy life. Its Business Link network of small business advisers, complete with "award-winning website", used to be praised in some quarters - not on this blog - until it was taken away from SBS to become the responsibility of the even more wasteful, unaccountable and quite useless "regional development agencies".

Matthew Knowles, of The Federation of Small Businesses said in the ST (27 May): "Only 4 per cent of our [196,000] members have ever accessed any advice from any Government agency. The problem is that there are just so many different programmes; people don't know where to start and don't have time to find out. We have become cynically accustomed to gaps between New Labour rhetoric and delivery in every aspect of government, but this one yawns wider than most".
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Gordon Brown has waxed lyrical about encouraging enterprise in 10 successive Budget speeches, yet statistics tell us that the huge burden of tax and regulation has had precisely the opposite effect.
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The most recent measure of business investment in Britain showed that it had fallen to a record low of 9 per cent of gross domestic product, from a peak of more than 14 per cent in the 1980's. The net number of businesses registered for VAT, a useful indication of the health of the seedling layer of the private-sector economy, actually fell between 2000 and 2004, and only flickered upwards again in 2005 as a result of more vigorous VAT enforcement by HM Revenue & Customs.
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As Dr Richard North (left) stated at a fringe meeting to the FSB conference in March; '' Small businesses are in danger, long term, of going the way of the dodo. Like the unfortunate flightless bird British business people are not collectively aware that they are in danger.'' Perhaps the reason why is the acceptance of the short term bribery and propaganda that is dished out to the representatives of the smaller business community.
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Martin's piece stresses the point made by most businessmen and women, when asked what would really encourage them to invest more and work harder, is that this Government has not just erected one barrier to enterprise but, as Mr Knowles says, "a huge pile of them".
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What business people do not want is bribery from government agencies whose consultants often give the impression of not knowing the difference between cash flow and profitability yet serve their political masters faithfully.
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Amongst the barriers to survival are impenetrable and constantly changing VAT rules which represent one tiny corner of a vast regulatory assault course. The recent inflation-busting rise in the minimum wage to £5.35 an hour, coupled with "Dispute Resolution Regulations" that make it close to impossible to sack unsatisfactory workers, are enough to put many businesses off any thought of expansion.
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New rules on compulsory pension contributions by employers will be yet another deterrent, as will the lengthening of statutory maternity leave - and, now, paternity leave. For others, the demands of health, safety, hygiene and disability discrimination rules (originating in Brussels) make the cost of setting up even the smallest business difficult.
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The plain fact is that the small business sector never did need 3,000 Government support schemes, Regional Development Agencies, still less does it need an "executive agency" with a meaningless mission statement.
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Hard-pressed start-up entrepreneurs do not want advice from civil servants who have never run a business - or from the kind of second-rate management consultants who make a fat living out of contract work for so called government support agencies.
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What they really want is simple: to pay less tax; to have flexibility to take on staff at market rates and get rid of them again - on fair terms - if they don't do a good job or trade doesn't flourish; to have more time in the working day, free of form-filling, to go out and find new customers.
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The SBS and the RDA's should be abolished tomorrow, and their bloated budgets should be redistributed as tax relief for entrepreneurs. Now that really would be a service. Since HM Loyal opposition is unwilling to seriously take the government to task, I truly hope the Federation of Small Businesses (which is the UK's largest member owned and managed business organisation)
voices that really simple point to those that actually rule this glorious realm.

2 comments:

Small Business Person said...

Some very intresting points on this article. But SMEs do need help from the government! We can be left with out help. The FSB does work with Busines Links and the RDAs - it can only get better.

By the way for those of us that did not learn Latin at our state schools what does 'Fide et amore mean' ? Is it something to do with loving your dog ?

Peter Troy said...

If as is suggested in the peice the billions that is spent and wasted by business support agiencies is given to smallers businesses in the form of tax relief SME's would get a better deal.

Fide et amore = With faith and love.