Small and medium-sized enterprises (SMEs) are struggling to access the finance they need to start-up, operate and grow, according to a report from the House of Commons Public Accounts Committee (PAC).
The report criticised the Department for Business Innovation and Skills (BIS) and the Treasury for failing to provide adequate information on how SMEs can access funding.
The main six existing BIS schemes provided support to more than 5,900 firms in 2012/13. The Treasury’s Funding for Lending scheme has also provided £17.6 billion of cheaper lending to banks, with the intention that they will pass this on to businesses and households.
Despite this, the PAC believes that many businesses are still unable to access finance due to incoherent “ad hoc initiatives” and a lack of public awareness. As a result, many SMEs are relying on credit cards and overdrafts for financial support.
Margaret Hodge, chairwoman of the PAC, told the Independent:
“Small and medium-sized enterprises have a vital role to play in driving the UK’s economic recovery, but despite government attempts to encourage lending to SMEs, many still struggle to access the finance they need. Departments were therefore unable to demonstrate that they are achieving best value for taxpayers’ money.
“There is no common understanding about which parts of the SME sector are generating growth and where government support would do most good. Departments were therefore unable to demonstrate that they are achieving best value for taxpayers’ money.”
