Next goal set for business support cull

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Only the “easy” part of a promised cull of business support schemes, announced by Gordon Brown more than a year ago, has so far been completed, the minister responsible has told the Financial Times.

Margaret Hodge, the small business minister, issued a consultation on Thursday on plans for the next stage of the cull, designed to reduce the number of schemes from 3,000 to fewer than 100 by 2010.

The radical simplification of the £2.5bn-a-year plethora of business support will save business £20m to £40m a year and taxpayers £240m over three years, according to the consultation paper.

But implementing those red tape cuts is proving a complex bureaucratic exercise in itself and achieving the targeted savings will depend on successfully negotiating a deal with regional and local bodies.

The consultation paper sets out a blueprint for how the government envisages business support should look after the cull, with the Business Link service acting as a “first port of call” for anyone seeking advice.

Ms Hodge admitted yesterday there was a long way to go before this plan could be implemented, however.

The chancellor announced the proposed cull in last year’s Budget. But no agreement has yet been reached on which schemes will be axed or even what detailed criteria will be used to select those schemes that survive.

“The work we’ve done to date has probably been the easy work. We’ve got a commitment from everybody in principle and we’ve been able to design a theoretical framework, which seems to meet everybody’s needs. The difficult exercise now is to apply that framework in practice,” the minister said.

This difficulty stems in part from pinning down what schemes exist. The 3,000 figure cited by the Department of Trade and Industry for the total number of state-funded schemes is an estimate.

The government admitted in the consultation paper it had only a “limited overview” of schemes and “there is no overarching national assessment of the impact of support on the economy”.

The proposed shake-up cannot be done by DTI diktat alone. About 40 per cent of the schemes are run by local authorities, and therefore cannot be closed down by ministerial command.

Ms Hodge said the government was looking for “levers and incentives” to get local authorities and regional bodies to co-operate with the cull, suggesting this aut-umn’s comprehensive spending review could “be a driver ... [for] simplification. How we ensure that, we’ll see”.

The spending review, which sets plans to 2010-11, will announce “strategic decisions on the business support to be provided in the future”, the consultation stated. Ms Hodge insisted this was “absolutely not” code for future cutbacks.

The Conservatives criticised the review for being “Whitehall-led, not business-driven”, arguing that the government analysis was “based on political targets and administrative procedures, not the needs of real businesses”.

Business organisations backed the principle of the review. But the CBI employers’ group warned it would “hold the government to its pledge to plough back any resulting savings into supporting businesses”.

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