The government has outlined its plans for a two year, £30 million programme to provide external advice to SMEs in the UK, which was first revealed earlier this year in Osborne’s budget.

Since coming into power the coalition government has made it one if its flagship policies to provide support to SMEs, as it believes they can provide stable economic growth and jobs for the future. This push has largely focused on the bourgeoning technology start up scene in east London, dubbed Tech City, and helping SMEs win more government contracts through initiatives such as the G-Cloud.

The Department for Business, Innovation and Skills has now said that it is going to use the £30 million programme to assess the best approach for giving SMEs external advice to encourage growth and then use this as a basis to feed into future government policy on business advice.

An online prior information notice outlines that the programme has three primary objectives:

1) The growth of businesses directly participating in the programme

2) Testing what works, increasing the government’s understanding of how to encourage firms to seek advice, and of what types of advice and delivery models work best.

3) Create a more dynamic and competitive market for business advice for small firms to overcome some of the problems of asymmetric information which currently exists.

Some £10 million will be made available in the first year, with the remaining £20 million being made available in year two. The programme will focus on firms least likely to use advice, mainly sole traders and firms with less than 50 employees.

Although the government is seeking advice from the market on what the programme should look like and how it should work, it anticipates that firms will be given between £100 and £2,000 to part-fund the cost of taking external advice, which may be face-to-face, telephone based, online, or a combination.

It will initially also target a number of specific areas that SMEs are finding barriers to growth, such as raising finance, increasing sales through marketing, reducing costs and winning customers by exploiting the internet and digital technologies, analysing business capabilities, and taking on the first employee.

The government is seeking a delivery system to distribute the funding available, which it states need to be easy to access, cheap to run, allows businesses to buy advice from a range of high quality suppliers, collects user feedback on business advice services (ratings), and has anti-fraud controls.