PAC reviewed schemes run by the business department and HM Treasury, including the Funding for Lending scheme and six BIS schemes worth around £2.85bn in total. But incoherent management and inadequate research and evaluation make it impossible to assess the money’s impact, it found.
The committee found that the schemes “are managed as a series of ad hoc initiatives”, and recommends that government use the establishment of the British Business Bank as an opportunity to “start managing the various schemes as a coherent programme”.
Committee chair Margaret Hodge noted: “There is no common understanding about which parts of the SME sector are generating the most growth and where government support would do most good. Departments were therefore unable to demonstrate that they are achieving best value for taxpayers’ money.”
The report also found that departments could not be certain how much of their money has reached UK SMEs rather than, for example, being used to run the schemes.
Departments must do more to effectively publicise the schemes, said the committee, and to make sure that the schemes match the specific needs of SMEs. There are a range of financing options available, it said, but most of the funding invested so far “involves delivery via the banking sector”.