Sefton Central MP Bill Esterson said the government's axing of the Business Growth Service showed a "complete lack of understanding about supporting business".
Quizzing Business Secretary Sajid Javid, Bill Esterson, the Shadow Minister for Small Business, said the decision was a "major setback for business".
Speaking in the House of Commons, Bill Esterson said: "The government’s so-called support for business has seen grants converted to loans and the sudden closure of the Business Growth Service.
"Businesses supported by the BGS grew four times faster than other businesses, the scheme has created 83,000 jobs and added over £3.5bn to the national economy. As one BGS mentor says, 'the service’s closure doesn’t make sense considering its huge success and may prove detrimental to Britain’s economic health.'
"What message does the closure of the BGS send to businesses which want to grow and given the outstanding record of success, doesn’t the closure of the service show a complete lack of understanding by this government of what works when it comes to support for business?"
Speaking afterwards, Bill Esterson said the government had failed to listen to the business community before making its decision.
He said: "The Business Secretary's answer was to say that the only people who benefited from the Business Growth Service were consultants. This is patently untrue as the following quote from one of the Business Growth Service mentors shows:
"'The businesses that we worked with as part of the Business Growth Service grew four times faster than those without the support, created 83,000 jobs and added over £3.5bn to the national economy. With only a £220m budget, the service’s closure doesn’t make sense considering its huge success and may prove detrimental to Britain’s economic health. The government’s decision is incredibly disappointing. Not only has funding been devastatingly cut, so far nothing has been announced to replace the Business Growth Service, which is a major setback for any business navigating through growth.'”
Bill Esterson MP added: "We should be doing all we can to help businesses to thrive and to help the wider economy.
"We need businesses to do as well as possible to create good, well paid, long term jobs but the cut to the Business Growth Service shows that this government simply is not helping and if anything is making it harder for businesses, for jobs and for the wider economy."