Ever since I arrived in the UK six years ago, the government has been heralding small to medium-sized businesses as the engine of growth for the economy.

Over the years it has developed many programmes to help – roughly three thousand, to be exact, at an annual cost of £12bn. By and large, this is a good thing. However, there is one inherent problem: no one really knows how effectively this money is being spent, which programmes are working and whether the increase in numbers of small businesses can be attributed to government support at all.

NO CLEAR STRUCTURE 

There are a number of issues tied to this lack of information. As the government has acknowledged, its business support services are complex. To address this, it has set up a Business Support Simplification Programme (BSSP) expected to implement a framework to cut the number of direct support schemes from around 3,000 to 100 by 2010. However, it is not in a position to do so since little or no attempt has been made to measure or monitor the effectiveness of the programmes in place.

That is why in September, the Conservative Party invited me to convene a Small Business Task Force to consider the government’s role in supporting small business, to review the effectiveness of current programmes and draw conclusions on what role, if any, government should play.

What has become clear is that over the last 25 years and several governments, an ad-hoc generation of schemes has accumulated. There is no clear structure or rationale, rather an overly complex maze in which roughly 3,000 schemes are being administered by around 2,000 public bodies.

One of the most striking findings is that the schemes being offered may even be irrelevant to small businesses. A survey by the Federation of Small Businesses (FSB) reported a combination of low awareness levels and confusion about government initiatives. More than a quarter of businesses were not aware of the major small business support schemes available to them, while 15% were aware of them, but found them confusing. The FSB survey found that 4.4% of small businesses use government-funded support, compared with more than half that consult accountants. The corresponding satisfaction rates show that 57% of those using accountants for advice are satisfied compared with 9% of those using government support services. In short, less than 0.5% of small businesses both used the government for advice and were satisfied with the advice provided.

UNJUSTIFIED EXPENDITURE 

Cambridge University research similarly shows that public sector advice is far less important to small businesses than private sector, which provides around 75% of all help. The figures show that almost all small firms use business support and find their most important source outside the public sector, with Business Link rated as the key source by only 5% of respondents.

With this in mind, the current overall expenditure of more than £12bn a year can’t be justified in the absence of compelling evidence of effectiveness. The burden of proof is on the government to justify the expenditure or to discontinue it.

But certain things are clear. The big issues facing smaller businesses can’t be remedied by direct government support schemes. Over-regulation, taxes, infrastructure limitations, finance, government procurement and education must be addressed with the needs of small firms in mind.

Despite the system’s current failings, we should be encouraged by the dynamism of so many small firms and should be optimistic about the road ahead. The UK is a good place to start and run a small business. I hope that the government will seriously consider the recommendations in the final report, further facilitating the rich tradition of entrepreneurialism in the UK.