The Department of Trade and Industry (DTI) has no idea if its small business support scheme is having any impact on enterprise in Britain, according to a damning report from a government spending watchdog.

The report from the National Audit Office (NAO) criticises the DTI’s Small Business Service (SBS) for being overly complex, lacking influence and having effectiveness that difficult to measure.

Business, meanwhile, has claimed the report confirms that the SBS was “set up to fail”.

“Its very conception was flawed,” said Victoria Carson, campaigns manager with the Forum of Private Business (FPB). “When small firms make up the overwhelming majority of business in the UK, why are government departments designed to the needs of big business?

“The SBS has neither the influence, nor the structure to best serve small firms. Our members need real representation at the highest levels, not what is, essentially, a cumbersome compromise.”

The NAO said the government’s annual £2.6bn small business support strategy was flawed from the outset by its complexity.

“To date [the SBS] does not have measures to establish its overall impact, or the information it needs from other departments to establish the overall impact of wider government support for small business,” the report states.

The NAO said that government plans to slash the number of programmes supporting small business at all levels of government from 3,000 to 100 further complicates the SBS’ efforts and “makes planning and monitoring a cost-effective package of interventions difficult.”

The watchdog blamed broad goals and ambiguous strategies for the SBS’ “ineffectual” performance in key areas of providing more firms with access to finance and developing new regulation because government departments are slow to involve the SBS and it lacks influence.

“Government needs a better appreciation of its impact on small businesses and simpler performance management arrangements if it is to achieve its aim – to make the UK the best place in the world to start and grow a business,” said Sir John Bourn, head of the NAO.

The report did, however, praise the SBS’ advisory service, Business Link, for providing a high quality and volume of services.

To read the NAO’s full report, please visit http://www.nao.org.uk/publications/nao_reports/05-06/0506962.pdf.