Netting the smaller fish

Expanding the small business sector and promoting e-commerce are the main concerns of small business minister Patricia Hewitt. She talks to Douglas Friedli about the crucial role of the internet in achieving both goals

Two big tasks the Government has set itself for the second half of its five-year term are to encourage electronic commerce and expand the small business sector.

The new Small Business Service, details of which were announced last month, will play a crucial role in both tasks. The test will not just be whether it can increase the number of small companies, but whether more can survive through a greater take-up of technology.

The SBS will exist as a series of databases on the internet, while face-to-face contact will be provided by a revamped Business Link network.

The importance being placed on the internet is not surprising because minister for small firms Patricia Hewitt – newly arrived from the Treasury, where she was economic secretary – is also responsible for e-commerce. She says: `We’re trying to make sure the SBS, through the local Business Links franchises, becomes the single gateway for small business support.’

If the SBS is the gateway, there will be many paths leading to it. Trade associations, banks, solicitors and accountants will all be given access. `From a business’s point of view, they shouldn’t really have to worry about which scheme it is, which department is providing the funding or what it is called,’ Hewitt says.

Help for businesses will fall in to two categories: advice on how to grow, and help with regulatory requirements.

Country information, much of it originally from the Foreign Office and British Trade International, will be used to help firms wanting to expand through exports. And an on-line benchmarking service will allow companies to enter data and see how they are performing against averages for the country or sector.

On the regulatory side, the SBS will hopefully do more than just tell companies what their health and safety obligations are. It should also allow them to file their VAT forms and other documentation on-line. And at some point, according to Hewitt, electronic filing could be done directly from a company’s management information systems, eliminating the need to enter the same data twice.

Regulation has been something of a weak point for the Government. Small business organisations have complained about the time and expense of complying with legislation such as the working time directive, which limits the number of hours employees can work each week.

Keeping excessive regulation in check will be part of the SBS’s function, says Hewitt. `The chief executive will look at all proposals for regulation coming from different departments and scrutinise them from the point of view of small business. They will be an entrepreneur, somebody who knows what small business is about,’ she says. `Because they will have credibility within the small business community, they will have credibility in Westminster.’

Bur there has been some disappointment that the chief executive will not sit in on cabinet committees – unlike in the US, where the head of the Small Business Administration reports directly to the President. Hewitt says: `The point is that they will have clout. They will be able to talk to the Prime Minister and other cabinet members.’

Hewitt’s own background is in the voluntary sector – she has been general secretary of the National Council for Civil Liberties and a director of the Institute for Public Policy Research. Although this experience might seem a world away from a small engineering company, she believes there are similarities. `What I was actually doing was running, or helping to start up, small businesses. In those days we didn’t tend to see them as businesses, but that is what they are.’

At a local level, the SBS will be represented by 50 franchised operations across the country. Existing Business Link services will be invited to tender for these. If they do not measure up, other organisations such as chambers of commerce or private-sector business advisers will be invited to bid.

One thing local SBSs will be working on is Hewitt’s other area of responsibility: promoting e-commerce to a sector which is behind by international standards. `We are pretty near the bottom of the OECD league table for using computers. We just cannot afford that.’

Firms in some industries have already received the call. `Companies like Rolls-Royce now source all their components on a worldwide internet system. If you are a small business in one of their supply chains, you will have to go electronic to stay there. And if you want to find new customers the internet is ideal for giving you access to new markets,’ she says.

There is a role for the Government in making internet access more cost effective in the UK. `We need to get the cost of peak time access down,’ says Hewitt. `One reason why people stay on-line longer in America and Australia is that it is very cheap, or even free. That’s what I’m discussing with Oftel and BT.’

And the Government is also actively encouraging internet take-up through initiatives like its work on the automotive supply chain with the Society of Motor Manufacturers and Traders. `Business-to-business trading is 80% of e-commerce, and is likely to remain so for some time,’ says Hewitt. `Manufacturing is not just the thing you leave behind as you enter the new knowledge economy – it is central to it.’

{{Patricia Hewitt at a glance

Age: 50First job: Public relations office, Age ConcernEducation: BA Music, Newnham College, CambridgeCurrent job: Minister for small business and e-commerceInterests: Reading, theatre, music, gardening}}