TAKE-UP of the Government’s £20bn business support package launched at the height of the recession was lower than expected.

The National Audit Office (NAO) said that by the end of 2009 the six schemes announced by the Department for Innovation, Business and Skills (BIS) in autumn 2008 provided just more than £3bn in subsidies, loans and guarantees.

The BIS measures included the car scrappage scheme, as well as working capital guarantees and enterprise finance schemes to ensure that viable small businesses could gain access to loans.

The department estimates that 6,200 firms received direct support as a result of the package, although it does not know how many indirectly benefited.

The low take-up of the schemes was due to the department’s conservative approach to limiting the taxpayer’s exposure – as well as announcing “ambitious levels of support which proved unrealistic”, the NAO said.

“Announcing such high numbers may have been an approach to lift confidence but it raised expectations as to what was achievable and created pressure to deliver,” the report added.

While participation in the car scrappage scheme was higher than expected, some measures such as the Capital for Enterprise fund were billed as short-term support but needed detailed due diligence and long-term investment.

The NAO praised BIS for acting quickly to set up the schemes, which were up and running by the second quarter of 2009.

But the watchdog added that BIS was “monitoring” signs of financial market problems for more than a year before it began rushing out its response in October 2008 in the immediate aftermath of the financial crisis.

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