The Government has announced (1 November 2010) new measures to boost enterprise and help the nearly five million small and medium private sector companies in the country grow and boost enterprise across Britain.
The Government says these businesses are vital to economic growth as they provide 60 per cent of jobs and half of GDP. But despite 66 per cent of small and medium-sized enterprises (SMEs) being ambitious to grow within two to three years, just 20 per cent expand their workforce each year.
To help translate aspiration into action, ministers from the Department for Business, the Cabinet Office, the Treasury and the Department of Communities and Local Government have announced three major policies to:
- improve access to finance;
- make it easier to do business with the public sector; and
- allow social tenants to start up their business at home.
The Prime Minister has appointed Lord Young to the role of Enterprise Advisor to propose new ways of encouraging business start-ups, reducing burdens, maximising procurement opportunities and engaging with small businesses.
Business Secretary Vince Cable and Chancellor George Osborne have announced several new policies, including:
- Continuation of the successful Enterprise Finance Guarantee (EFG) for the next four years, making around £2 billion available to viable small companies without a credit history or collateral. Its estimated that this will support 6,000 SMEs a year.
- A further £200m will go into Enterprise Capital Funds supporting equity investments in the highest growth potential businesses over four years.
- Encouraging 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.
- Working with banks in several areas including on a £1.5 billion Business Growth Fund, mentoring and a new lending code.
The Government has also stressed its commitment to ensuring small businesses can maximise opportunities through the wider public sector. It has set a goal to award a quarter of government contracts to SMEs, including removing those barriers that prevent small businesses accessing government contracts. It has also reaffirmed its commitment that 80 per cent of prime contractors are paid within five working days and that all Government contractors will be required to pay their suppliers within 30 days if they wish to benefit from Government procurement.
There are approximately 4.8 million small and medium sized enterprises (defined as those employing fewer than 250 people) in the private sector in the UK. Of these, nearly three quarters have no employees – other than a self-employed owner-manager.