Small Talk: Public sector failings holding back SMEs' recovery drive

Is the public sector hindering the ability of small and medium-sized enterprises (SMEs) to drive Britain's rebound from recession? The question is worth asking, because for all the rhetoric we hear from this Government – and its predecessors – on the importance of entrepreneurialism, the organisations over which it presides have an irritating habit of getting in the way.

Take late payment of bills. New statistics from Bacs, the organisation that administers Britain's money-transfer systems, reveals that small businesses are owed more than £35bn by their clients, who are taking longer to settle their bills. Its figures also suggest that while big businesses tend to be the slowest payer, a late payments culture also exists among public-sector bodies.

Or what about tax administration? Last year, the Office of Tax Simplification (OTS) called for the abolition of IR35, the punitive and complicated tax code that is designed to catch "disguised employees" – people who set themselves up as a company in order to pay less tax, even though they're doing work that would normally be undertaken by an employee paid through the PAYE system.

But instead of following the OTS's advice, the Treasury has just had to announce what is in effect an extension of IR35. After being humiliated by the disclosure that hundreds of senior, public-sector staff may have been getting away with disguised employees, it has brought in a whole raft of new rules to end such practices. Naturally, the vast majority of them will apply in the private sector too.

Then there's the strange case of the cookies, where the Government last week conceded that hundreds of public-sector websites will fall foul of new regulation on privacy that comes into effect this week. This was introduced over a year ago, but many public-sector organisations have not got round to ensuring they comply. The private sector, however, is under threat of fines of up to £500,000 for breaches of the new rules.

The examples go on and on. One of the ironies of the bitter debate about the proposals on employment law put forward in recent months by the venture capitalist Adrian Beecroft is that while everyone agrees that it would be admirable if we could get rid of more red tape, it's in the public sector that we often see the sort of breaches that prompt regulation in the first place.

To put that another way, the conversation on regulation needs to be as much about why we need red tape as when we can cut through it. The stereotype is of the unscrupulous, private-sector boss who would exploit his staff if he was allowed to get away with doing so. No doubt those bosses do exist, but as big a reason for regulation is to force large, public-sector employers to behave properly.

All this matters disproportionately to SMEs, for they are likely to have less capacity for dealing with such regulation than their larger rivals.

So if we really want to encourage these businesses, the public sector needs to up its game. Practices such as late payment are affecting SMEs directly, while the regulation prompted by misbehaviour in the public sector is strangling everyone.

Aim: Junior market continues to shrink as more companies leave than join

Just five companies joined the Alternative Investment Market during April, a statistic made all the more depressing by the fact that six companies left.

Those five new entrants managed to raise less than £20m between them, while secondary issues added a further £193m to Aim's capitalisation.

Total fund raising in the first four months of the year was therefore £984m – 51 per cent less than in the same period of 2011 (itself a tough period for the market).

Investors also appear to be losing interest in Aim – the average company traded just 2.9 per cent of its market capitalisation last month, statistics produced by broker Allenby Capital show, the lowest figure of the year. The London Stock Exchange may need to do more to promote its junior market.

Aim now has a third fewer companies than at its peak in 2007. What's more, many of its constituents are tiny – half have a market cap of less than £25m.

Small Exchanges: Plus is still minus some members

Icap's rescue swoop for Plus Markets does not appear to have ended the bid by the small exchange's rivals to cherry-pick its members.

Though it looks as if Plus' 160 companies will no longer be forced to look for a home, organisations such as GMG see the exchange's travails as too big an opportunity to ignore.

GMG has already picked up three listings – Hello Telecoms and US Oil & Gas, plus Proventus Renewables, which signed up on Friday – and has high hopes of signing more.

Larger Plus companies, such as Quercus, publisher of Girl with the Dragon Tattoo, pictured, are hinting at a possible move to the Alternative Investment Market or even to the main market.

At the other end of the scale, don't discount Sharemark, the platform owned by stockbroking firm Share. The brainchild of Share boss Gavin Oldham – who has forgotten more about private client broking than most people ever knew – it doesn't offer continuous trading.

Liquidity comes during regular auctions, and the platform's costs are accordingly lower.

Small Business Man of the Week: Making it all add up for those who can't figure out accounting

Quentin Pain, founder, Accountz.com

I left school at 16 with only a couple of 'O' Levels because no one told me what I needed these useless subjects for. Seven years later, I realised I was never going to get a job so I borrowed £500 from the bank, bought a motorbike and started a courier business.

That really took off and after doing the accounts myself for two or three years, I realised I'd effectively taught myself accountancy and invented a very useful piece of basic accounting software.

In 1985, I sold the courier business and concentrated on the software – it worked really well for 10 years until Acorn, which made the computers on which our software ran, was sold. It disappeared and I had no business left.

That made me realise it was a mistake to concentrate on a single platform – and after a few years off to write an accounting textbook and run seminars for small businesses on accounting, I launched Accountz. Our products run on any operating system and are designed to be used by people who have no experience of accounting or bookkeeping.