National Audit Office: government’s support to SMEs is ‘fragmented’

The government’s approach to supporting SMEs is often fragmented and lacks co-ordination, according to the National Audit Office (NAO).

The NAO has published two reports today (January 15). The first, Business support schemes, looks at the management of the support government, particularly the Department for Business, Energy and Industrial Strategy (BEIS), provides to businesses. The second, British Business Bank, examines the impact of the British Business Bank on small-medium enterprises’ (SMEs) access to finance and its preparedness to respond to future challenges.

The British Business Bank was set up by BEIS to help make access to finance more coherent and the report found that it has had some success in this area. However, while it has an objective to act as a centre of expertise for providing advice and support to public bodies, it is not ‘the default’ operator of government interventions.

The report on the Bank says BEIS and the Treasury should consider whether their statement in 2014 that the Bank would operate all national SME access to finance schemes across government still holds.

The NAO’s analysis of 10 schemes run by BEIS found that not enough was being done to understand which schemes are most helpful to businesses. Six out of the 10 schemes lacked measurable objectives and only one had a thorough evaluation of the scheme’s impact, making it difficult for BEIS to know which to continue with and which to stop.

The British Business Bank, on the other hand, had clear performance metrics and carried out a good evaluation of its impact on SMEs. Overall, the report found that it has been performing well and SMEs have been growing as a result of its activities.

In the Business support schemes report, the NAO recommends that BEIS coordinate a review of its schemes to determine their strategic fit with the Industrial Strategy and changes required as a result. In British Business Bank, the NAO calls for government to set out more clearly what it wants the Bank to achieve as part of government’s wider support to business.

Gareth Davies, the head of the NAO, said: ‘Government understands the importance of better co-ordination and coherence across the schemes it provides to business, but it still has some way to go before all the dots are joined up. More thorough evaluation of which schemes work best will help government plan and prioritise its support going forward.”

‘The British Business Bank has performed well against its objectives. Government now needs to think carefully about the role it wants the Bank to play in the future, particularly after the UK leaves the European Union.’