The government announced in its ‘Autumn Statement’ this week that the UK economic growth is much worse than expected with growth forecast at a mere 0.7%, compared to the 2.5% that had originally been forecast. The BBC is already reporting that the projected loss of public sector jobs over the next five years has gone from 400,000 up to 710,000, in the same week that RBS announced that they are to shut their Bristol branch with the loss of 440 jobs.

The Confederation of British Industry (CBI), however, believes that small and medium sized businesses are the key to the UK’s economic fortunes. It highlights the fact that SMEs that have a turnover of between £10 and £100 million generate 22% of economic revenue and 16% of jobs. Furthermore, the CBI report ‘Future Champions: Unlocking growth in the UK’s medium sized businesses’ goes on to say that medium sized businesses have the ability to add £50bn to the UK economy if they continue to grow and flourish.

The government has gone some way to demonstrating its commitment to encouraging SMEs to grow; a number of measures were announced in the Autumn Statement such as continuing the small business rate holiday until 2013 and underwriting £40bn of low interest rate loans specifically for SMEs. However, many claim that the government does not go far enough and needs to do more to create favourable training conditions, as well as looking at the UK employment legislation to enable SMEs to recruit more easily and more flexibly.

The Federation of Small businesses (FSB) goes further, stating that small businesses do not just need financial incentives to help them grow; the government also needs to put measures in place to support SMEs to gain valuable skills for business training. Learning and development is key to businesses to maintain their competitive advantage, but difficult trading times mean that many SMEs cannot justify spending vital cash reserves on non-immediate growth areas.

The FSB also highlights the need for leadership and management training to be offered to the SME sector. Many business owners have an ad hoc approach to their own training, often only adopting new skills as their business requires change. For example, as a business grows and recruits new employees, the owner will need to become familiar with HR practices and may decide to do training accredited by the CIPD. Similarly, as a company’s accounts become more complex, an owner may decide that it would be beneficial for one of its employees to study for formal accountancy training, such as AAT, ACCA, or ACA. This practice of in-house training, whilst resource-intensive, can cut longer term costs associated with out-sourcing.

Paul Dixon, owner of AutoDrain, benefitted from formal management training as part of Goldman Sachs ’10,000 Small Businesses’ programme, designed to benefit UK small businesses. Paul had owned ‘AutoDrain’ since 1989, but expanded rapidly in 2010 after receiving formal training enabling him to take his business into Europe.

Currently the government does offer management funding for SMEs but they must generate a turnover of £500,000 in three years. This leads to large numbers of new entrepreneurs missing out on funding; particularly as FSB statistics show that 58% of SMEs have a turnover of less that £300,000. Therefore, many businesses in their infancy are denied access to skills and training that might ensure their survival and success.

It would appear that the government does need to do more for SMEs if they are serious about the role that they have in the UKs financial recovery.