Speak up for small businesses

In his message to small businesses before the general election in May last year, the Prime Minister emphasised their importance to the national economy. He has recognised that a healthy, vibrant small business sector not only creates wealth and employment, but also generates new products and new ideas.

Some cynics doubted that a new Labour government would sustain its previously expressed interest in the small business sector after its election. Yet, three events in the last months of the 1997/98 Parliamentary session have proved their fears to be unfounded.

In March this year the Select Committee on Trade and Industry launched an inquiry into some of the issues affecting SMEs and reported its findings to the House on the 9 June.

Then, on 17 June, the Department of Trade & Industry published an “action update” setting out for the record the Government’s achievements for SMEs in its first year of office.

Finally, on the 19 June, the Minister for Small Firms, Trade & Industry, Barbara Roche, both opened and replied to the first ever Parliamentary debate in Government time on the small business sector and confirmed her intention that such a debate would become an annual fixture.

These and other clear signs of commitment have been welcomed publicly by spokesmen for a number of representative organisations operating in the small business sector. However, along with the Government, many still recognise that it has a significant task ahead in leading the development of an enterprise culture in the SME sector, which is so vital to national economic prospects.

The Government recognises that its single most important task is to provide the right economic background, through better long-term management, thus facilitating the conditions for stable and sustainable economic growth.

It has already introduced helpful tax reforms for SMEs, which take effect in April 1999, and has passed the Bill dealing with commercial debts, which will come into effect this autumn.

Its commitment to establish Regional Development Authorities is progressing to the extent that regional chairmen have already been selected and it is expected that the remaining board appointments will be made later this year.

The manifesto promise to boost competitiveness will also be carried forward in the autumn by the publication of a competition White Paper which will address, in particular, the needs of small businesses through to the next century.

All these policies have been developed in conjunction with wide consultation among small business interest groups. It must, therefore, be a matter of considerable concern and regret that, thus far, the consultancy profession appears not to have contributed to the consultative process.

It is worth remembering that, following growth of 14 per cent in 1996 and a further 24 per cent in 1997, total annual consultancy revenues are currently running at between #3bn and #3.5bn. Despite this astonishing growth rate, the vast majority of consulting firms, even in the top 100, are not only themselves SMEs by definition, but almost certainly, through their SME clientele, have very clear insights into the practical problems facing this sector.

In its report to the House of Commons, the Trade & Industry Select Committee (which, incidentally, took no evidence from either the MCA or the IMC) highlights two areas of activity affecting small companies in which the Government is committed to taking positive action. These are of particular interest to consultants. The first is to improve the efficiency of Business Link services generally, and the second is to improve the export performance of SMEs.

These are both problem areas in which the consultancy profession has much relevant advice to give. And, by giving it, the profession also stands to gain an improved appreciation by Government of its value to the economy.

It would be wise and timely if both the IMC and MCA were to consider now how they might best help the Government in this regard and take appropriate steps in that direction.

Christopher Brocklebank-Fowler is a member of the IMC Council and a former Member of Parliament.

Related reading

HMRC banknotes