PracticeConsultingBusiness Finance – DTI grants come under fire.

Business Finance - DTI grants come under fire.

Patricia Hewitt's drive to channel DTI funding to technology-based business development has been criticised by David Heathcoat Amory who believes the money would be better spent relieving the business tax burden across the board

Department of Trade and Industry grants worth #1bn aimed at small and technology-driven businesses have come under fire from shadow trade and industry secretary David Heathcoat Amory.

One of secretary of state Patricia Hewitt’s first acts since launching two departmental reviews – one into the system of cash support for business, and the second into the organisation of her department – was to host an awards presentations to 12 companies that have developed leading edge products with the help of the #22.6m smart grants scheme.

Hewitt sees one of the DTI’s key objectives as encouraging businesses to make more use of research and development and the scheme offers grants from #5,000 to £450,000 for technical support and product development.

Hewitt said the grant winners were ‘superb examples of how businesses can succeed by investing in scientific excellence and translating research into products and jobs’.

‘New technologies are transforming products, services, production processes and every other sector of the economy and UK companies must embrace them’, she added.

Such a change in direction would have a huge effect on intermediaries such as Business Links, if as she insists, funding is targeted towards initiatives that exploit new technology.

But her direction has already drawn criticism from the Conservatives, with Heathcoat Amory warning that what the department needs most is more muscle in its battle with the Treasury.

He believes that instead of funding schemes to benefit a few it should use the money to reduce tax burdens on business.

Heathcoat Amory, an accountant, said the DTI fails to defend industry against the Treasury resulting in, for instance, a climate change levy crippling the steel industry and the IR35 crackdown on consultancy companies hitting the new technology companies that Hewitt wants to encourage.

He said: ‘The DTI has got bigger over the past four years but grown weaker. It is not punching its weight in Whitehall, particularly against the Treasury.’

‘Frankly, the average small business is either unaware of DTI initiatives or does not qualify for them. Endless initiatives are giving help to a minority of small businesses,’ he said.

The overall review of the DTI – designed to end the fiefdom mentality and produce a more integrated, seamless approach – should be completed by the end of the autumn.

– The DTI’s website is at www.dti.gov.uk.

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