Source · Select Committees · Treasury Committee
Recommendation 1
1
Accepted
SMEs face narrow access to finance, rising costs, and apathy about seeking funds
Conclusion
Small and medium-sized enterprises make a large contribution to the UK economy, accounting for over half of total business employment and turnover. SMEs are struggling with narrow access to finance in the face of rising cost pressures and higher interest rates and are generally pessimistic about their ability to raise funds. Furthermore, apathy about seeking finance is a concerning trend amongst SMEs, and this further reduces access to and awareness of potential sources of business investment. All these pressures will be felt most acutely by the smallest businesses in the SME population, who may have the least resources to withstand difficult economic conditions. (Paragraph 13) Basel 3.1 and the SME supporting factor
Government Response Summary
The government welcomes the report on SME finance, recognising their significant contribution and challenges, and commits to a range of actions including launching consultations by Spring 2025, extending the SME Digital Adoption Taskforce, announcing a £4m pilot package for tech adoption, and bringing forward a Small Business Strategy Command Paper next year.
Government Response
Accepted
HM Government
Accepted
The Government welcomes the report on SME finance from the Treasury Select Committee of the previous Parliament. The report underscores the significant contributions of SMEs to the UK economy, with these enterprises providing around 16.7 million jobs and generating an annual turnover of £2.4 trillion . As of October 2024, there were over 5.48 million SMEs in the UK, compared to just 8,250 large businesses . The Government recognises the crucial role that SMEs play in driving economic growth and is committed to ensuring they have access to the finance and services they need. Small businesses are vital to our high streets and communities, and essential to the success of the Government’s Growth Mission. To that end, the Government is planning to take action across a wide range of areas to deliver on the commitments we set out in our manifesto–especially on strengthening small businesses’ ability to invest and grow. These include: • Committing to continued funding for key business support programmes in 2025–26: We will continue funding the 41 Growth Hubs in England, offering businesses free, impartial advice and support at any stage via a single point of contact. They provide a triage, diagnostic, and signposting service so all businesses can access the right support at the right time. • We are also continuing funding for the Help to Grow: Management programme, which is open to firms with 5-249 employees. This programme has supported over 9,000 small businesses since 2021, helping SME leaders develop skills in financial management, innovation, and growth plan implementation to improve productivity. • We have published post-implementation reviews on the Bank Referral Scheme and Commercial Credit Data Sharing with a view to launching consultations by Spring 2025 on how these can be further enhanced. • The SME Digital Adoption Taskforce will be extended by at least 6 months. They will produce an interim report early in the new year with practical steps and recommendations to enhance SME digital technology adoption, using insights from local and international experiences. Additionally, the Department for Business and Trade will soon announce details of a £4m pilot package to encourage tech adoption for SMEs. These measures aim to focus on important tasks, automate costly admin, and reduce the time required from citizens by a modern digital Government. • To drive further progress on our commitments, as part of the growth mission, the Government will also bring forward a Small Business Strategy Command Paper next year.