At least a third of government money spent on supporting small and medium-sized enterprises (SMEs) does not actually reach the businesses, according to new research.

A study by the small business task force, organised by the Conservative party, found that administration costs accounted for 33.5p of every pound spent by the central government on regional SME support.

The report calls the administration of some 3,000 support schemes by 2,000 public bodies "an overly complex maze" without a measurement system in place.

Doug Richard, chairman of library house and the taskforce, commented: "Small businesses are the lifeblood of the economy and the ultimate economic wellbeing of our country depends on ensuring that the UK is one of the best places in the world to start and run a small business.

"We must radically re-think how government supports small business, entrepreneurs and innovation."

The government currently contributes £12 billion to support enterprises, the figures reveal.

England's Regional Development Agencies organisation claims that it has contributed to 18,000 new businesses in the past financial year.