At no point in the past several decades has the health and outlook for UK entrepreneurship been more vital than now. It’s the ‘only strategy’ left for growth, David Cameron said last year, and it’s certainly true that if the country is to be hauled out of its current economic malaise then small business and enterprise will have to play a key role.

Small and medium-sized enterprises (SMEs) generate almost half the turnover of the UK private sector and provide some 60 per cent of private employment. Entrepreneurship in Britain is therefore clearly a matter that concerns us all, whether we work in the City, financial services or broadly throughout the economy.

While several popular TV shows vividly bring the world of the entrepreneur — whether realistically or not — into the UK living room nightly, entrepreneurship is still sometimes viewed through a pre-Thatcherite prism, with recollections of the 1970s when the UK was indeed a laggard globally when it came to fostering entrepreneurial endeavour.

Today the image of entrepreneurs is much improved and the attitude of Government towards them is more enlightened, with society more accepting of their positive role. Great advances that have been made in recent decades have much improved the backdrop against which entrepreneurs operate.

The Enterprise and Business Support Directorate in the Department for Business Innovation and Skills is playing a credible role in fostering entrepreneurship, through schemes such as its Enterprise Capital Funds and initiatives such as the National Enterprise Academy. Government support for such initiatives as the Silicon Roundabout Cluster in East London are welcome, while campaigns such as the recently launched StartUp Britain, are doing a lot to energise and enthuse people to be entrepreneurs.

The Autumn Statement bought a welcome package of SME-supportive measures. The Chancellor’s credit easing programme of £40 billion in low-interest loans to SMEs will help to provide the kind of financial injection that businesses hoped for from banks at the last round of quantitative easing. The business rate holiday relief for small firms has been extended to April next year and £1 billion has been set aside to subsidise six-month work placements for close to half a million young people.

These initiatives are to be applauded, but there is still much to be done if the country’s enterprise sector is to flourish. There is increasing evidence that the private sector is taking up some of the redundant workers laid off from the public sector as a result of the Government’s spending cuts.

However if smaller businesses and entrepreneurs are to drive the UK’s faltering economy forward in 2012, the government must take bolder, targeted action to put in place the conditions for these businesses to thrive.

The Coalition Government should draw up and implement an ‘SME Policy Package for Britain’, a range of creative, bold and specific measures that can spur the growth of smaller and medium-sized businesses, reduce unemployment and help to rebalance the UK economy.

Here are five policy elements that the government should adopt and push ahead fast with if this year is to be seen as a decisive marker on the country’s road to economic recovery.

Fair-pay culture

The government, already vocal in dislike of over-remuneration for bosses, should take steps to promote a culture of fair pay. Owner-managers that put a reasonable limit on the total pay differential between the highest-paid directors and staff should be rewarded with a reduction in the company’s corporation tax bill.

Enterprise zones

The government should increase the number of the UK’s current 21 enterprise zones, acknowledging that the country as a whole is in need of initiatives to spur job creation. The simplified rules, super-fast broadband and more than £150 million in tax breaks for new businesses that are planned over the next four years should be applied to more areas and the government’s National Insurance holiday scheme should be lengthened and extended to London and the South East.

Red tape and regulation

Ever the bane of small business and entrepreneurship, bureaucracy and compliance issues are a choke on new growth. Health and safety administration costs alone for SMEs are close to £2 billion a year. Tax and regulatory systems need to be made more proportional to small businesses and the burden of employment law compliance must be eased, as it currently costs SME’s around £2.5 billion annually.

VAT relief

Temporary cuts in the rate of VAT for smaller firms in at-risk sectors, such as retail and leisure, should be considered. Several European countries have taken the lead by slashing VAT for a year in sectors including construction and and tourism — a break of this kind for small businesses would be a key step in invigorating the economy.

Apprenticeships and internships

The government should review specific measures to increase apprenticeships and internships, both by examining how vocational training for the young can be improved and by considering incentives such as tax breaks for taking on young starters and supporting more formal intern programmes.

If indeed boosting small and medium-sized business is the ‘only strategy’ left, it is one that must be pursued with greater and more targeted vigour.