Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 141 - 159)




  141. Mr Fletcher, good evening. Could you identify yourself and your colleague, for the shorthand-writer, please?
  (Mr Fletcher) Yes; good evening, and apologies to the Committee for our tardiness today. My name is Ian Fletcher, I am Head of Policy at The British Chambers of Commerce.
  (Ms Harris) I am Sarah Harris. I manage the Euro Info Centre which is based in Bristol Chamber of Commerce, and Business Link West.

  142. Thank you very much for your paper. You listed a whole series of issues. Perhaps you could start just by saying what are the main ones, when it comes to procurement practice, what are the main problems that seem to face small businesses?
  (Mr Fletcher) I think they centre round three issues. Firstly, there is an issue of knowledge, of information, of actually knowing about the procurement process and the opportunities that are out there, and a number of sub-issues within that. For example, the contracts that are forced to be advertised are mainly above £95,000, because of European Union law; obviously, a lot of the contracts, I think, that small businesses would like to bid for are below that level. Also, there are opportunities in terms of sub-contracting to some of the larger contracts, and there is no sort of central point of collecting that information and disseminating it to the small business community. I think the second issue is one of procedures, and there are a number of procedures which discriminate against the small businesses that may want to bid for these particular contracts and tender for them. Then, thirdly, there is a perhaps a cultural issue, in terms of Government Departments are used to dealing with big businesses, perhaps think that big businesses are best and the best place to deliver, on a lot of the contracts that are advertised, and there is a momentum, perhaps, against change in that respect.

  143. Those are three big areas; has OGC made a difference, so far?
  (Mr Fletcher) I think it is early days.

  144. It is two years?
  (Mr Fletcher) From our perspective, it is really a relationship that goes back to about June, July, of this year; they proactively sort of sought us out and set out the programme they are now engaged in, in terms of trying to assist small businesses get Government contracts. I believe that some work had been going on before that, in terms of the drafting of various guides, in terms of tendering for Government contracts. They have since kept up a regular dialogue with us, they invited us to contribute to their Business Plan, they have kept us informed of their plans, and, most lately, have invited us to participate in a survey that they are doing with the small business community, trying to get some more feedback, particularly from businesses that are actually engaged in the process already.

  145. That has all been going on, you say, since last June or July; can you point to any practical improvements for your members, rather than all this dialogue and conferencing, and so on?
  (Mr Fletcher) There have been a couple of policy changes; firstly, in terms of the guidance that the OGC puts out to various Government Departments on the financial strictures that are stipulated in tender documentation. Previously, small businesses, and you have seen from our written evidence that one of the problems that they encountered was that they had to produce three years of accounting data, which, when you consider that, I think it is, about two-thirds of small businesses are not in existence after three years, obviously it rules out a large proportion of the small business community. And so, in that respect, that is a welcome change. And the other stipulation which has changed is on the liability insurance side of things, and, again, small businesses complained, in our written evidence, that they encountered problems because of the unlimited liability insurance that they were being asked to provide, and there have been stipulations from the OGC that that should not be the case in Government contracts but there actually should be some limit on that. It is a particularly burning issue at the moment amongst the small business community, they are finding that, in general, their insurance premiums for various different kinds of insurances are going up considerably, and that is obviously a problem, from their perspective.

  Chairman: Yes; it is one of the issues we may come on to a little later.

Dr Palmer

  146. You refer to your contact with the OGC as being "limited"; is this critical of Government, are you unhappy with this level of contact?
  (Mr Fletcher) I do not, I am not being critical. I think, as I said, the relationship only goes back to July and we have had five or six contacts in that time. To be fair to the OGC, what has perhaps impressed me is that they have been particularly proactive in building up a relationship with us, to the point, for example, where, when they asked us to contribute to their Business Plan, I was unfortunately on my summer leave during that period in time, and they chased us and chased us to make sure that we did contribute to the Business Plan; whereas, I think, some other Government Agencies would have said, "Well, they're not interested," and gone away. So that is a plus point, from our perspective.

  147. That is encouraging. Do you feel, having given that input, that they then took the comments seriously, or is it too early to say, or do you think it might even be lip-service?
  (Mr Fletcher) I think it is perhaps, one of the problems we are having is distinguishing between which work is actually going on by the OGC and which is going on by the Small Business Service, and it seems to be a joint project. And we have had feedback, through a session with two officials from the SBS, on the plans that have been taken forward. I assume, in that respect, that they are also speaking for their colleague at the Office of Government Commerce.

  148. Can you summarise the points that you made when you were contributing to the OGC's Business Plan; were there things that were particularly important which you would like us to know about?
  (Mr Fletcher) The key things going forward that we were keen to see; firstly, some more resource being put into the project, in the past few months this has very much been, from our perspective, one person at the OGC and two at the SBS, and, in terms of actually taking the various projects forward and turning them into practical action, some more resource may be required, in that respect. I think, in terms of, the other thing that we were keen to see is, once this project gets to the implementation stage then really to bring in people like Sarah, to the left of me here, in terms of, it is she and her colleagues who have to translate these various policy diktats into practical actions at a local level, and their input and the input of information specialists, in that respect, is something that we wanted to see built in there.

  149. Do you have any feeling for how these proposals were received, or is it too early to say?
  (Mr Fletcher) We have not received any feedback on the Business Plan; that is all I can say, really, on that.

  Dr Palmer: Okay; thank you.

Mr Beard

  150. Mr Fletcher, you list in your memorandum a lot of problems that your members face, starting with a lack of knowledge about procedures, and then going through the fact that contracts below £95,000 are not advertised, and those are the ones that are most interesting to most of your members. Out of that sizeable list, which is the most important, of the difficulties you face?
  (Mr Fletcher) I think, as said earlier, it is that one, it is the fact that the smaller contracts and sub-contracts are not made available. I think, also, tender documentation tends to be particularly complex for small businesses.

  151. What representations have been made about this?
  (Mr Fletcher) I think it is fair to say, very little, in the past.

  152. What, few representations or few responses?
  (Mr Fletcher) In terms of complaints of small business, across my telephone and across my door, the major thing that I have had complaints about in the past is actually the fact that they have to pay to get on things like "approved lists". and, as a matter of principle, a number of small businesses object to that. It has always been difficult to convey those complaints in the past because there has never been a central point for procurement matters in Government.

  153. There is now; so have you used the last two years to make these points?
  (Mr Fletcher) No, to be fair, no, we have not.

  154. Why?
  (Mr Fletcher) I have to say that it is not a priority amongst the various other issues that we have to lobby on, on behalf of small businesses, their priorities are things like red tape, skills shortages, transport issues, things of that nature.

  155. Red tape takes precedence over contracts of £95,000, or so, that could be accessible to them, not being accessible?
  (Mr Fletcher) It does. I think we are well-publicised as saying that red tape that the current Government has brought in is of the order of £15.6 billion; so against those contracting difficulties that is not something that our members have seen as our priority.

  156. So you really have not used the Office of Government Commerce at all?
  (Mr Fletcher) No; but I think, obviously, are obviously keen, and have been engaged, over the past few months, to support the project that they are now engaged in. It is one of these perhaps earthy issues that will not make it onto the front pages of the newspapers but actually is an issue that I think is worth taking forward.

  157. A number of the problems you list in the Appendix to your paper relate to local authorities, but how does that compare with any problems you have with Government Departments and their Agencies?
  (Mr Fletcher) At this point, I would perhaps defer to Sarah, who, operating at the local level, has more experience of the difficulties that small businesses face with the local authorities.
  (Ms Harris) Thank you. I do not know if it would be helpful for me to give a little bit of background about where I am coming from, but, because I manage the Information Service and the Business Link in a Chamber with the Euro Info Centre, we are constantly in touch with the small and medium-sized enterprises who are trying to get into public sector tendering; we offer a Tender Alert Service to them on a daily basis, which surveys (Official Journal of the European Commission). When it comes to the primary problems that companies have, I think there is a gap with the sub-threshold; that has been clearly identified and that is something that we would hope to address. And, also, the information that comes from OGC, just to backtrack slightly, to follow up on the previous question, the information that OGC puts out on its website is something that we have accessed, as a network of Euro Info Centres, in order to assist the businesses who are our customers, our subscribers, and for whom we are striving to gear up, so that they can tender more successfully. I am keen that the way forward with OGC is that, through the Business Links and the Euro Info Centres, the representation to OGC can be cemented and used more effectively, and that we can actually improve the situation for small businesses by accessing the information that is available through OGC. Now the brochure that they have produced is the most front-line piece of information that we use, as a sort of distribution mechanism for that, if you like.

  158. This is tendering for Government contracts?
  (Ms Harris) It is, indeed. We do not use that solely as something that we just send out, we use that as an adjunct to the subsidiary advice that we are able to give. The Euro Info Centres have been in the SME assistance game for ten years now, particularly with our public sector tendering advice service.

  159. And has the Office of Government Commerce improved the service to small and medium-sized enterprises?
  (Ms Harris) From my point of view, it has improved it, in the sense that we, as information providers and multipliers, have access to what is good quality information; so, yes, to that extent. I cannot say that, I do not believe, in my experience, that it has actually reached the level of awareness of individual and companies.

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