Government money to support small businesses should be used more effectively, says FPB

Money set aside for the government's Trade Credit Insurance (TCI) top-up programme should be channeled into schemes more effective for small businesses, the Forum of Private Business (FPB) has said.

The not-for-profit organisation said there has been a disappointing take up of the programme because of the tight qualification criteria and steep costs.

As a result, the £5bn set aside for the TCI scheme should be "channeled into more effective initiatives".

FPB spokesman Chris Gorman said: "Of course, businesses in the printing industry are at the end of a long supply chain and may be particularly anxious about the risk of extending credit to customers.

"But the fact is that TCI hasn't worked, even in printing, and there are reasons why it hasn't been taken up."

He added it was too late by the time the government implemented the scheme as the recession had already claimed many companies, while many small businesses had already been left out-of-pocket.

The Enterprise Finance Guarantee (EFG) programme which is set to expire in March 2010 has also come under criticism, and the FPB said work on a successor to the existing scheme should be prioritised.

It has previously said the cost of securing funding under the EFG scheme is "severely restrictive" to small businesses.

With the pre-budget report expected in November, the FPB has called on the government not to sacrifice support for small businesses as part of anticipated spending cuts to plug the gap in public finances.

It has submitted a series of "responsible growth" proposals that include measures to improving existing support schemes, reducing small companies' corporate tax, and introducing a comprehensive regulatory review.

The FPB said the forecast for public sector net borrowing by the end of 2009 is £185bn, which means that substantial spending cuts will be required to fill the gap. 

Matt Goodman, FPB policy representative, said it is clear there is still a difficult road ahead, and cuts shouldn't include programmes that are making a real difference.

"The next 18 months will be crucial. As the main drivers of growth, small businesses need to be placed at the heart of plans for economic recovery so they can make the most of future opportunities."

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