Labour is considering a recommendation to “hugely expand” the Small Business Research Initiative, run by the Technology Strategy Board.
The recommendation was made in a Labour policy review document, launched by Chuka Umunna, the shadow business secretary, on 12 December in Birmingham. The interim report was compiled by Nigel Doughty, co-chairman and co-founder of venture capital group Doughty Hanson.
The report argues that the £15-20 million a year in contracts that the SBRI programme awards is too little. It notes that the US version, on which the programmed was first modelled, awards 15 times more. It highlights the US system as a good example, requiring the Department of Defense, NASA, and Department of Energy to “strategically award” R&D contracts to small businesses under the programme.
The programme, first introduced by Labour, provides business opportunities for innovative companies to solve the specific challenges facing government departments and other public sector organisations.
The review also talks about the need to support high-growth firms. It quotes figures by the National Endowment for Science, Technology and the Arts, showing that high-growth firms create more than half of all new jobs—even though such firms only make up 7 per cent of companies.
In addition, it says, policies should reflect that, contrary to common belief, such companies are not usually start-ups but are over five years old and spread out across the country.
The review argues that the single worst problem facing small companies is access to finance. It therefore recommends developing a “suite of state-catalysed finance schemes for SMEs”.
These should be channelled through the banks and be more ambitious in their scope than existing small-scale schemes, it says.
The report also recommends setting up a “champion agency” for SMEs in Whitehall, modelled on the Small Business Administration in the US. It adds that the agency should be headed by an entrepreneur rather than a civil servant.
The document argues that similar agencies in the US and Singapore have been very successful in understanding the needs of business.
“Building an economy that works for the 99 per cent means learning the lessons of the banking crisis,” said Chuka Umunna, in a statement. “The Government’s isolation abroad is matched only by the extent to which it is out of touch with the needs of the real economy at home.”