by Ross Clark - Wednesday, 5th September 2007 -

Last month, the National Audit Office was scathing about the performance of the Small Business Service (SBS), the quango whose role is supposedly to act as an advocate for small businesses as they struggle against increasing regulation.

In over half the cases it studied, the National Audit Office found the SBS had played a minimal role in influencing new legislation.

So what is it up to, this quango which employs 190 staff, including a chief executive on £145,000 a year and in 2004/05 chomped its way through £404m of taxpayers’ cash? It should really be called the Large Quango Service.

In its annual report for 2004/05 the SBS boasts, among its “achievements” of the year, that it has spawned even more quangos: it has set up the Small Business Council, the Small Business Investment Task Force, the Ethnic Minority Business Forum and the Women’s Enterprise Board.

Not only that, the SBS proudly reports that it has found time to conduct a “review of its future size and structure” and implemented “organisational change”.

Phew! With its staff so gainfully employed no wonder the SBS has so little time left for actually helping businesses.

The SBS has spent £9m of this setting up a web portal, businesslink .gov.uk, to advise businesses trying to obey an ever-increasing mountain of regulations.

But this is dwarfed by the £147m which went on “enterprise grants”, supposedly to businessmen “investigating an innovative idea”.

Closer inspection reveals that the SBS’s purpose is not so much to help genuine businesses but to channel money into “social enterprises” – ie welfare agencies in disguise.

Take Tipton Community Enterprise, a SBS-funded venture in the West Midlands whose mission statement is “to break through the artificial walls which classify people as homeless, exoffenders and substance-abusers”.

The body boasts that it has helped a drugaddict buy a van and set up a food delivery service – all very worthy, I am sure, but not quite what most businessmen consider should be the work of the SBS.

It doesn’t end there. The SBS has also funded a social enterprise called BizFizz, which boasts that it “has no rules, no set systems, no boundaries”. It, too, boasts of its work with substanceabusers.

One client, it reports, “wanted to drive a taxi, but was known to be a heavy drinker. This is a delicate personal issue that would fundamentally affect the success of his new business in a very small community which was aware of his drinking habits.

The coach helped the client work through how others in the community would perceive his business idea and himself.

The client then took the decision to change his drinking habits, and is now running a two-car taxi venture in partnership with his wife”.

Presumably BizFizz will next be helping kleptomaniacs to realise their dreams of opening banks and rapists to set up in business as escort agencies.

Another SBS-funded venture, Bootstrap Enterprises, had the brilliant idea of lending money to disadvantaged youths in Hackney to set up business as IT entrepreneurs – just as the dotcom boom was collapsing in 2000. It now admits that its business model could have been better.

Not all the activities of social enterprises are quite so outrageous, it has to be said. Many work in finding occupations for the mentally handicapped and profoundly disabled.

And of course it is a good idea that ex-prisoners and reformed drug addicts are rehabilitated.

But it is blatantly dishonest of the government to carry out what is essentially charitable work inside an agency whose advertised purpose is to aid genuine, wealthcreating businesses in their struggle against excessive bureaucracy.

As for real businesses, what is the SBS doing for them?

A search through the news section on its website reveals precious little. In fact, it seems intent on making life even more difficult for them.

One of its recent initiatives was a “crackdown on rogue employers to help vulnerable workers”. If that is the work of the Government’s official advocate for small business, what hope is there?

In its brochure the SBS declares, “The small business sector is incredibly vibrant. Every working day more than 2,000 businesses start up or close”.

Presumably, these quangocrats believe that the small business sector could be made even more “vibrant” if even more than 2,000 small businesses a day were being closed down. With the help of the SBS it is certainly a target that the government is on line to achieve.