Enterprise and Small Business Principles
Sector policy
Up to the 1960s, sector policy was a key part of government national economic planning, as discussed earlier, but this was abolished in 1979. However, following an initiative launched to the CBI in 1993, a number of government attempts have been made to focus on the development of business sectors. An early change was the re-organisation of the DTI itself into a ‘Sponsoring Division’ from 1994. The aim was for the government to help each sector develop competitiveness. Inevitably some of this development has focused on SMEs, but probably there has still been a bias towards larger companies.
Potentially more important for SMEs have been attempts to encourage the role of trade associations and training organisations. These are voluntary bodies in Britain but they receive recognition by government and some funding to support training and businesses to develop initiatives. They suffer from a variable business membership but many trade associations are an important source of service to SMEs. Indeed most surveys of businesses show trade associations to be the first and main point of call for services after banks, accountants, lawyers and other professionals, ahead of local chambers of commerce and well ahead of any government-backed agencies (Bennett and Robson, 1999a). The main services provided by trade associations are government lobbying, information and advice, conferences and benchmarking for businesses. Standard setting, legal and arbitration services are more common in professional associations and bodies serving the smallest firms of the self-employed and owner-managers (Bennett, 1997a,
1999) . As it is a voluntary system, membership is variable, but density of membership is generally much higher for sector bodies than any other UK business associations (Bennett, 1997a): on average market penetration is 62% for trade associations and 50% for professional associations. Hence, sector associations are important interfaces and suppliers of services to SMEs and have been sought by government as partners in policy initiatives.
In the mid-1990s, attempts were made by government to improve trade associations so that they could provide a better basis to inform and work with government. In 1993 a Benchmarking Challenge initiative provided modest DTI funds to help trade associations set up ‘clubs’ to help their members to benchmark against each other in terms of competitiveness, in 1995 an Export Challenge invited trade associations to propose methods to help their members promote exporting. In 1996 a Network Challenge sought innovative proposals from trade associations in the use of IT (see Cabinet Office, 1996a; Berry, 1997). Most significant, however, has been the promotion since 1996 of a ‘model’ trade association with criteria and targets of best practice (DTI, 1996b; Bennett, 1997b; Berry, 1997). This aimed to encourage benchmarking of trade associations against each other, and to guide government departments towards those associations which met ‘model’ criteria. This was thus a source of ‘recognition’ of trade associations by government. Generally, the ‘model’ trade association was well received and was very widely disseminated. Since 1997 this initiative has been taken over and managed by the CBI, through a Trade Association Forum, but with continued modest government support. Since 2001 a key role of these sector associations has been to work with government through Sector Skills Councils. These seek to help government develop and promote vocational training standards, apprenticeships and the diffusion of take-up of training between companies.
