What has the Government done for small firms?

These small and medium-sized enterprises – SMEs in the jargon – have a combined turnover of £300 billion, accounting for 40% of GDP.

Yet if you talk to the typical owner/manager of a small business, likely as not you’ll find that they feel neglected and taken for granted by the Government – which in theory ought to regard small firms as the backbone of the economy. Add to that complaints about red tape, excessive regulation and over-zealous enforcement agencies, and you have the makings of an unhappy match between small firms and a Government which should be behind them 100 per cent.

So what’s going wrong? Is the Government neglecting small businesses, or is their perception of the Government out of touch with reality?

Politicians like to praise small businesses. They have their own Minister, Nigel Griffiths; his boss, Patricia Hewitt, the Secretary of State for Trade and Industry, was Small Firms Minister before him. The Chancellor, Gordon Brown, likes nothing more than rolling the phrase ‘engine-room of the economy’ when talking about small firms. The Opposition used to do exactly the same when it was in office. Everybody, it seems, is singing from the same hymn sheet.

But the simple truth is that much of the structure of the business environment in the UK evolved around big business. When business legislation is drawn up by civil servants, it tends to be modelled with big corporations in mind. In practice, this often means that the burden of complying with new employment laws or collecting tax and data for the Government is disproportionately heavy for smaller organisations. The typical big business, with its teams of administration professionals, can take new rules in its stride; in the typical small firm, it is the hard-pressed owner/manager who toils away alone at night grappling with some new, hideously complex piece of new business legislation....