Dragon’s fire turned on government spending

15/03/07 11:09

Doug Richard, chairman of Library House and former BBC Dragons’ Den investor, has blasted the ‘excessive’ levels of government spending on small business.

A new report from Library House suggests that the government is spending £12bn a year on small business, without producing any measurable effect.

The Richard Report conducted by the Small Business Task Force and set up by the Conservative Party will be published in full in May, however the interim report includes evidence from the first six months of research.

It attempts to offer an accurate and comprehensive picture of government expenditure in the area, which includes 3,000 schemes and 2,000 public bodies

It also charts the ‘ad-hoc’ manner in which the ‘maze’ of government schemes have been set up over the last 25 years.

Efforts to simplify these schemes cannot succeed because the government has no means to separate the successful from the unsuccessful, the report says.

Also, researchers could find no ‘measurable correlation’ between the money spent and the activity produced.

Administration is partly to blame as for every pound spent at least 33.5 pence is lost in the various layers of bureaucracy, the report’s authors say.

“From this review it is clear that Business Support has become a booming business sector in its own right,” Richard said.

“Yet its failure to provide effective support is both a waste of the taxpayers’ money and a lost opportunity to grow an entrepreneurial economy.

“We must radically re-think how government supports small business, entrepreneurs and innovation.”

The Conservatives claimed the report to be evidence that the government’s efforts have been bad for business.

“It is extraordinary that the government can spend £12 billion on business support but is unable to show if it works,” said Mark Prisk, the shadow business and enterprise minister.

The report’s £12bn figure is calculated by adding together the £5.5bn spent on direct support services, £4bn on tax incentives and £1.5bn on the common agricultural policy (CAP).