The Enterprise Directorate? What’s that?

01 09 2007 United Kingdom

In the shake-up announced by Gordon Brown last June the DTI became ‘BERR’ – the Department for Business, Enterprise and Regulatory Reform.

And now the Small Business Service (SBS) has been renamed the Enterprise Directorate.

You probably know the Department of Trade and Industry and you may have heard of its Small Business Service that ran the support services for start-ups and growing enterprises. But these familiar names have now disappeared.

What did the SBS do?

The SBS was launched in 2000 as an agency within the DTI to help make the UK the best place in the world to start and grow a business, a place where small businesses thrive and achieve their potential. It had three main goals –

To simplify and improve the quality of government support for small enterprises
To reduce the burden of red tape on small businesses and

To be a strong voice for small businesses in Whitehall.

It aimed to achieve these goals within five years.

’Small businesses’ means enterprises with less than 50 employees, which includes sole traders, partnerships, small companies and family firms that make up 99 per cent of the 4.5 million businesses in the UK.

The SBS ran a large number of schemes such as the Small Firms Loan Guarantee (SFLG) and grants to help small businesses make better use of technology and encourage them to invest in research and development.

The SBS also managed the Business Link network in England to support small firms and people trying to start-up and develop new businesses.

A new strategy for the SBS was launched in 2003 with the SBS moving away from delivering services on the ground. This was demonstrated with the running of Business Links being devolved to the Regional Development Agencies in 2004. The SBS remained responsible for managing the Business Link brand.

How well has it done?

The Small Business Council, axed by the DTI earlier this year, was formed to report to the Secretary of State for Trade and Industry on the effectiveness of the SBS and other government departments.

In its 2004 Annual Report, the Small Business Council called for a shake-up in the way that government departments deal with small businesses. It recommended the government take firm measures to prevent the rubber-stamping of new regulations and tackle the cost of compliance.

In 2005 a government report found that the SBS had missed half of the targets it was originally set. These included the increasing burden of red tape imposed by government departments and failing to improve small businesses’ experience of government services. Many owners of small businesses were unwilling to take on new staff because of the burden of employment law.

On the credit side, it was easier to start up a new business and improvements had been made for small firms seeking access to funding.

Government policy on small firms has often been criticised as favouring start-ups at the expense of the large majority of small businesses that are already established. In several industries, such as hairdressing and motor garages, it is well known that new start-ups often displace well established local firms.

The number of small businesses in the UK has grown from 3.7 million in 1999 to 4.5 million at the start of last year.

The SBS’s expenditure for 2005-06 was £213 million.

The new Enterprise Directorate

In July, Stephen Timms, Minister of State for Competitiveness at the DTI, announced the renaming of the Small Business Service as the Enterprise Directorate. This reflects the emphasis on enterprise and growth, he said.

The Enterprise Directorate continues as the expert policy unit on small business issues throughout Whitehall, with 50 staff. This is a big drop from 190 staff at the SBS in 2005.

Its reduced remit will cover business support policy, small business finance, specific enterprise policy issues including women and ethnic minorities, research, analysis and performance evaluation.

The Enterprise Directorate will aim to give a strong focus on simplifying the business environment, stimulating the enterprise culture and providing advice across government on how policies can be more business-friendly. One area of its work will be the Business Support Simplification Programme, which aims to reduce the 3,000 publicly funded business support schemes to 100 by 2010.

The name change at the DTI is seen as giving more emphasis to encouraging the growth of existing small businesses and a shift away from start-up enterprises.

It is also a move to reduce costs in support for small businesses. In response to an earlier DTI initiative, Clive Davenport, Trade and Industry Chairman at the Federation of Small Businesses, said:

“We do need to ask the Government where the money saved from these changes will go. Small firms will still be paying the same amount in taxes but may see a reduction in services.”

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