The party's over: it's all change at the small business service

Words and pictures by Mike Harrison, September 2002
First published in First Voice

This year's change of leadership at the Government's Small Business Service was announced in a flurry of publicity. Since then there has been silence. What's going on?

In March, the Small Business Service (SBS) invited figures from the SME world to a lavish reception at Lancaster House - a venue frequented by royalty and captains of industry. It celebrated the achievements and departure after only two years of the SBS's founding chief executive, David Irwin, and the arrival of his successor, Martyn Wyn Griffith. Guests were told that, notwithstanding the organisation's success, it will no longer have direct access to Tony Blair or an extensive PR programme - those pass to the Small Business Council (SBC) and its unpaid part-time director William Sargent. The SBS must now concentrate on the delivery of services.

This might seem a sensible change. The SBS advises ministers in private, so perhaps it should avoid public pronouncements. It is part of the DTI and has a heavy administrative workload. Besides services like Business Link, it includes research, red tape indexing and reduction programmes, promoting start-up and e-commerce, providing SME finance, and an information service.

The more political and public roles, says the DTI, should be handled by public figures - the Minister for Small Business Nigel Griffiths, and the globe-trotting entrepreneur, Sargent of the SBC.

However, even before the party guests left, questions were being asked. Why was the SBS set up with such a high profile in the first place? Why is the chief executive job now at a lower grade and salary? Why didn't Irwin announce his next job, as would be expected if this was a planned move?

Privately, Whitehall sources have been willing to say Irwin was encouraged to leave the civil service. Senior figures had grown uneasy at his high personal profile, his impatience with the inward-looking culture and risk-averse management. As a result, the SBS received a critical internal review and when Irwin's contract came up for renewal in April, it was to be at a lower grade and without access to number ten. He's now freelancing as an economic consultant to Councils and other clients.

Irwin is bruised but remains enthusiastic about the work he began at the SBS. First Voice met him at Kings Cross station on one of his frequent commutes around his new contracts: "What attracted me to the job was the opportunity to influence ministers and the PM about policy. I'm pleased we launched Think Small First - the closest the Government's ever got to having a strategy for small business".

Irwin would have liked to do more to make legislation relevant: "Unless it's a matter of protecting the health, safety and human rights of individuals you should apply regulations only where they can make a real difference, not for the sake of a principle.

"Take the regulations controlling the disposal of waste from electronic equipment. We discovered that firms employing less than ten people comprised 60% of the sector but only generated 10% of the waste. So if you exempted those small firms it would make very little difference to the policy objective.

"I'm arguing for a pragmatic approach to regulation that just looks at the outcomes without being puritanical about applying them to everyone. On the whole the civil service was happy with that - the problems came from ministers and the EU".

He also cites the example of a bizarre regulation about the size of beer glasses which tries to allow for the head on the liquid: "There had only been one complaint for every 257 million pints so it wasn't a big issue, but it had been the personal crusade of one particular civil servant".

Most important, he says, is to try to foresee consequences of proposed regulations by talking more with businesses. The civil service was initially reluctant but this move eventually led to improvements to some new legislation.

But, says Irwin, consultation is a give-and-take process. It requires that representative organisations - including the FSB, Chambers of Commerce and CBI - should come forward with positive proposals for improvement, not just general condemnation of regulation: "For example, I fully understand the FSB's frustration with the Working Families Tax Credit but the political reality is that it ain't going to go away. So we need to find ways to make it work better".

Irwin leaves several initiatives unfinished - everything took longer than he expected: "One important thing we failed to get in place was the small firms litmus test. This was to be a formalised arrangement controlled by independent facilitators for assessing the impact of new regulations through consultations with businesses. It had gone into the election manifesto but still isn't working".

He found the caution of the civil service particularly irksome: "I spent a lot of time encouraging people to take risks and do things quicker. That included helping them to identify the barriers, then climb over them. If things went wrong then, provided they had been sensible in their analysis before they took the risk, I defended them".

David Irwin's lack of experience of civil service culture may have been his undoing: "I wasn't happy with the outcome of the review of our work. In retrospect, one of the things I didn't do enough of was building wider personal relationships with potential allies". His advice to his successor is to make plenty of influential friends around the civil service.

The new CEO, Martyn Wyn Griffith, has certainly kept his head down since he took up the post. He turned down an invitation to talk with First Voice and at the end of August some pages on the SBS's web site still showed Irwin as the CEO. This is hardly a dynamic start to the new regime but the SBS says a new two-year plan will be ready soon.

What is already clear is that the Chancellor's enthusiasm for small business makes it likely that the Treasury intends to wrest control of the SBS from the DTI. Most small businesses want nothing to do with central government and Gordon Brown has already indicated that he hopes to see most of the business support budget handed to regional organisations. Small Firms Minister Nigel Griffiths - a Brown supporter - is unlikely to object. It may be that the biggest changes at the SBS are yet to come.

©Mike Harrison 2002