A TUC study has thrown doubt on the importance of small businesses to the economy and employment.

It said despite extensive help from the Government and £2.5 billion of taxpayer support, the contribution the sector makes was declining.

However, an advocate of small businesses (one to 49 employees) in Sussex said the study showed the TUC was "out of touch with the small business world".

Ken Stevens, the Federation of Small Businesses' regional organiser for East Sussex and Brighton and Hove, said the report came as "a bit of a shock".

He said: "We don't have that many big companies down here and small and medium-sized enterprises (SMEs) are vital to the success of our economy.

"It is essential that they have every opportunity to grow and if we don't do something - if there is a lack of support - this won't be the case."

Although the study's conclusions are tentative, due to an "amazing lack of hard statistical evidence at national, international and regional level", it makes a number of recommendations, including increased (and better) regulation and the promotion of economic stability as "the single most effective way in which government can provide a pro-enterprise environment".

It said: "It is extraordinary that despite the big claims made for small firms and the billions of pounds spent by successive governments in supporting the small and medium enterprise sector, it is only since the mid-

Nineties that fully reliable and directly comparable official estimates of employment in small businesses have become available."

It uses figures from the Office for National Statistic to show small firms' share of total employment is declining slightly. It also said the sector was being supported by taxpayers to the tune of £2.5 billion a year, with the Small Business Service accounting for £360 million by 2005 to 2006.

It said: "These are not trivial sums."

But Mr Stevens said: "The TUC is unhappy with the large amounts of government money directed towards small businesses but it doesn't consider the amount the Government collects from small businesses in taxation."

He also said active support -

and not just a stable were economy - was still needed.

"Ten years ago there was very little support for small firms but the system is far more supportive these days and progress has been made. There are still business failures but a number of successes too - and a number of bigger companies that were once small."

However, not all business people think the Government's approach is the right one.

A survey published last week by accountancy firm Ernst &

Young showed that, despite a sustained campaign over the past 12 months from both the Treasury and the trade department, 85 per cent of entrepreneurs surveyed thought the Government had little or no understanding of their needs.

The study showed 64 per cent believed entrepreneurs were at best a low priority for the Government and just 27 per cent agreed the Government had succeeded in "providing an environment in which business can flourish".

But small business minister Nigel Griffiths said: "This report is one of many looking at conditions for small firms. Last year, reports from both the Organisation for Economic Co-operation and Development and the Economist showed the UK has one of the best business and regulatory environments in the world."

what's your view?

HOW much of a contribution do small businesses make to our economy?

Is the Government doing enough to help small companies?

Should taxpayers be made to support entrepreneurs?

Let us know your views. Email stefan.hull@theargus.co.uk