York is increasingly admired for its growing success in forming and nurturing new knowledge-based businesses.

It can be argued that the very key to the city's continuing economic prosperity hangs on its ability to develop and sustain successful, high growth companies.

So a big question is: What are the main constraints to the growth of small companies? Or, put the other way round: How best to help small business grow and prosper?

This is where the Chancellor of the Exchequer and, especially, his annual Budget announcement become important.

Here is the opportunity to help small businesses or, if he does not get it right, to hamper their development.

So how did he do in last week's statement?

The general consensus was that it was pretty boring stuff but, after ten Budgets from Mr Brown, those who know about these things have come to learn that the devil really is in the detail.

Therein lies the rub for many a small business, because time and money are valuable resources, too often in short supply.

Businesses need to know and understand both their obligations within the law as well as the beneficial opportunities open to them.

But, for the smaller businesses, this becomes increasingly difficult with the growing amount of fine detail in legislation.

This means that there has to be additional reliance on professional advisors, often with significant additional cost, and still the possibility of missing relevant matters of importance.

Among the developments apparently intended to be positive for small businesses, the Chancellor stated his intention to:

Extend research and development (R&D) tax credits to medium-sized companies (250-500 employees)

Reduce the number of business support schemes

Revamp UK Trade and investment (UKTI)

Reduce red tape.

Hardly earth-shattering stuff.

R&D tax credits are potentially invaluable to young research-based businesses, but too often they remain unused through lack of knowledge or commitment to claim.

It is widely accepted that there have been too many business support schemes, leading to confusion and difficulties for businesses to access relevant help. The Chancellor wants to reduce the present 3,000 to around 100 by 2010 and to make them more locally-focused.

This all sounds very reminiscent of the earlier attempt by DTI to simplify its business support structures, which was in part thwarted by the proliferation of other national and local schemes and concluded with some of the best branded schemes (eg SMART awards) losing their name for the sake of perceived simplicity.

UKTI is a government agency responsible for promoting British exports and encouraging inward investment. It is proposed that there will be a radical change in how the agency works with a concentration on increasing trade activities between the UK, India and China.

Not for the first time, a Budget has talked about reducing the red tape suffered by businesses. This year targeted measures are being implemented to reduce the £5 billion costs associated with the regulatory burden of the tax system.

It is reasonable to assume that this will be backed up by still more time-consuming questionnaires to businesses asking how well Government is doing.

Sometimes it is possible to wonder whether government really does understand the needs of the very early stage businesses that it professes its desire to help.

Until it replaces complexity, heavy regulatory burden and excessive demands on reporting by simple, transparent and effective support measures, our small businesses will find it more difficult to grow quickly and strongly into larger ones.

Len Cruddas, pictured, chief executive of York and North Yorkshire Chamber of Commerce, said: "We would like to see better flexibility in the market, and the way to do that would be through low levels of regulation and high levels of workforce skills. That's the only way we will compete globally. I don't think there's a huge amount in the budget that will push us forward on those fronts. Overall it was a disappointing budget."

Updated: 11:14 Wednesday, March 29, 2006