A radical downsizing of the government agency charged with supporting small business will be announced by ministers soon, as part of a streamlining of the £2.6bn-a-year programme of business support by the state.

Alistair Darling, trade and industry secretary, said the Small Business Service would be restructured to make it "smaller and more focused on what it can do. It will have a much smaller policy focus and a much closer tie-up with the Treasury, so the Treasury is more tied into business concerns." A "lot of" the £150m in business support directly administered by the SBS will be transferred to regional development agencies, he said.