Business Minister Mark Prisk hosts a Summit for Small Business to clarify how measures being implemented across government will help Britain’s five million small and medium companies grow out of recession.
Small and medium sized businesses (SMBs) account for 60% of UK employment and half of GDP, in the manufacturing sector the percentage of SMBs is even great accounting for approximately 99% of UK manufacturing enterprise. Showing that government has recognised the importance that this significant business segment will have in achieving economic recovery and stability Prisk today assured SMB leaders that government would aid them with regards to access to finance, partnership with public sector and start-up enterprise.
The Department for Business Innovation and Skills (BIS) has identified that 60% of SMBs aspire to growth over the next three years. However it highlights a shortfall in the labour needed to achieve this as only 20% of these ambitious enterprises expand their workforce year-on-year.
While some of this economy in workforce scale will be supported by lean principles and the imperative of doing more with less, ultimately growth will require job creation. To help translate SMB aspirations into action representatives from BIS, Cabinet Office, Treasury and local government today revealed broad ranging initiatives to ease the path to growth and show that they understand the challenges being faced by companies across the country. Prisk stated at the event today: “As a former small business owner I know how important our SMEs are to the growth of this country. I entered government with the goal of making this the most entrepreneurial decade in our history and I’m confident today’s announcements will help make that a reality.”
On the issue of easing access to credit Government has stated its intent to ensure that there are a wide range of finance options available to small business looking to expand. In July the consultation green paper, Financing a Private Sector Recovery, was launched and received over 180 submissions. Today this information and advice elicited the following responses from Business Secretary Vince Cable and Chancellor George Osborne:
•We will continue the successful Enterprise Finance Guarantee (EFG) for the next four years, making around £2bn available to viable small companies without a credit history or collateral. This will provide support to 6,000 SMEs a year. We will also make it easier for small and specialist lenders, such as Community Development Finance Institutions to lend under EFG, supporting companies in disadvantaged communities.
•The government will commit a further £200m to Enterprise Capital Funds supporting equity investments in the highest growth potential businesses over four years, and it’s anticipated the first of the new funds will be investing early in the New Year.
•To encourage ‘business angel’ investments government welcomes the joint bid of business angels and the Government’s SME investment arm, Capital for Enterprise, for a co-investment fund as part of the Regional Growth Fund to support angel investments into high growth potential early stage SMEs, particularly in areas worst affected by public spending cuts.
•The government will also work with banks on several areas launched in their response to the green paper, the Business Finance Taskforce. This includes the £1.5bn Business Growth Fund, mentoring and a new lending code.
Identifying the potential of public sector to boost SME growth through providing more opportunities for involvement with public sector contracts the government has committed to a goal of awarding 25% of government contracts to SMEs by the end of its first term and to increase the rate of SME procurement for public sector projects year on year.
To further facilitate this intention government will introduce a standardised Pre-Qualification Questionnaire by December this year. This document will be developed in close co-operation with SMEs through the Federation of Small Businesses. The use of the questionnaire will be mandatory across central government and government hopes to further augment its relationship with and understanding of industry by embarking on an industry-sponsored lean study which will use lessons from manufacturing to speed up the procurement process. This lean study will report in December.
To make involvement in government contracts more attractive to SMEs government has also reaffirmed a commitment that 80% of prime contractors are paid with 5 working days. All Government contractors will be required to pay their suppliers with 30 days if they wish to benefit from departments’ procurement.
Today’s business summit also makes provision for start-up companies and the support of emerging enterprise, however as many of the commitments in this area pertain to allowing businesses to start up from home premises it is unlikely that there will be much impact on the manufacturing and engineering sector. One are which will provide support however and do much to encourage a spirit of innovation in industry is the provision of £3m from the Intellectual Property Office to support and protect the growth of IP in 300 companies.