Memorandum from the Forum of Private Business
The Forum of Private Business (FPB) was formed
in 1977 and is a pressure group fighting on behalf of private
businesses. The FPB represents approximately 25,000 UK-based businesses,
which employ in excess of 600,000 people. The FPB is active in
Brussels, and is supported by an all-party group of MEPs.
The FPB provides a range of business services
aimed at increasing member efficiency and profitability.
All of the FPB's campaigns are based on the
views of our members. We talk to our members in various ways.
Via surveys, by telephone and face-to-face contact. We also collect
data electronically, which enables us to source opinions from
hundreds of businesses within a matter of hours.
The FPB works to bring businesses together with
their own elected representatives. Members vote in a quarterly
Referendum, adding comments for us to send to their MPs, MEPs,
MSPs and AMs. Referendum is a tool that business owners have been
using since 1977 to make their voices heard.
The FPB has more than 20 years' worth of experience
of accredited research into the small business community. We have
been using the Quarterly Survey since 1980 to track business growth,
and the rise and fall of key issues, working in partnership with
the Small Business Research Trust.
The Forum of Private Business (FPB) welcomes
the Public Administration Select Committee's (PASC's) inquiry
into the lobbying industry and the opportunity to discuss the
issues of transparency, access and influence of the lobbying sector.
The FPB represents more than 25,000 smaller
firms in the UK. Smaller enterprises represent a significant proportion
of the UK's economy, accounting for 48% of employment and 37%
in the private sector. The introduction of legislation disproportionately
affects smaller firms as they have fewer resources to allocate
to complying with new regulations. Profit margins of smaller firms
are generally tighter and the impact of new regulations will push
up costs, thereby giving larger firms (250 or more employees)
a competitive advantage.
Larger businesses have human resource departments,
and health and safety representatives, who are responsible for
compliance with government regulations. Larger firms can also
absorb the substantive policy effects of regulation more easily
through economies of scale, fixed-cost sharing between units and
diversification. The effects of new legislation on larger firms
can, therefore, be absorbed with less impact than that which is
felt by smaller businesses.
This comparison has a parallel logic when it
comes to influencing the legislative process. Larger firms simply
have many more, and more effective, avenues through which to pursue
their agendas. A typical large business will have its own public
affairs department to lobby directly, it will be a member of an
influential sectoral trade body, for example the British Retail
Consortium (BRC), and it will be a member of the Confederation
of British Industry (CBI).
In contrast, owner-managers of smaller firms
are occupied with the task of running their businesses. If they
are members of lobbying organisations, they will usually be represented
by just one organisation, such as the FPB, Federation of Small
Business (FSB), British Chambers of Commerce and so on, or, at
most, by a small, sectoral trade body plus one of the abovethe
trade body may even be a member of one of the above. They do not
invest time in attempting to influence the legislative process;
they effectively contract this out to organisations such as the
This, in itself, has knock-on consequences on
the ability of organisations representing businesses of different
sizes to obtain input from members and evidence that is likely
to influence a political process. To take the CBI as an example,
if it wishes to canvass the views of its members, it can contact
its members' public affairs departments. The FPB's members have
no such departments. If the CBI wants to bring a member to a consultation
meeting, it can contact the member's public affairs department,
and they can send a representative, within whose job description
lies the responsibility to attend such meetings. For a member
of the FPB, it would be the owner-manager who would be invited
to attend such a meeting, and that person would have to take a
day off work to do so. None of this is to criticise organisations
like the CBI but to illustrate the specific differences.
We believe that any inquiry into lobbying must
not treat lobbying organisations as a homogenous whole. Having
illustrated some key differences, we will now go on to answer
the specific questions set by the inquiry.
1. What does it mean for an organisation
to lobby government or Parliament?
An organisation lobbies the Government and Parliament
in order to represent its interests. Organisations may respond
to government consultations, attend department meetings at which
they express their views and meet civil servants separately to
discuss positions on policy developments. Organisations may also
communicate with MPs to ensure their views are represented in
2. Which ways of seeking to influence policy-
and decision-makers are acceptable, and which are unacceptable?
Acceptable and unacceptable forms of lobbying
are already addressed in the "House of Commons code of conduct
and guide to the rules relating to the conduct of Members".
To take an example of one of the principles of the code: "Members
shall base their conduct on a consideration of the public interest,
avoid conflict between personal interest and the public interest,
and resolve any conflict between the two, at once, and in favour
of the public interest". The code of conduct ensures only
acceptable ways of seeking to influence are permitted.
3. What evidence is there of the effect of
lobbying on the policy- and decision-making processes?
There is extensive evidence that demonstrates
the effects of lobbying on the decision-making process. The FPB
campaigned for 15 years for an effective redress against late-payers,
which led to the Government introducing a statutory right to interest
(SRI), with the Late Payment of Commercial Debts (Interest) Act
1998. Lobbying is essential in the decision-making process. As
few as one in five MPs has a business background, which has hardly
changed in 30 years, according to the Industry and Parliament
The representation of the views of smaller businesses is, therefore,
imperative if decision-makers are to understand how the policies
they are developing will affect smaller firms.
4. Do some organisations have more influence
over Parliament and Government than others?
As stated in the introduction to this paper,
some organisations have increased opportunities to influence due
to the various avenues for influencing available to them. Larger
firms have the financial means to join various trade organisations,
as well as the resources to represent themselves as individual
entities. Parliament and the Government also have a greater ability
to obtain evidence and opinions from some organisations over others.
5. Is it possible to limit lobbying and yet
to ensure that government and Parliament are properly informed?
People and organisations have the right to represent
their interests. Government and Parliament need to be informed
of the impact of their actions upon specific groups, such as smaller
businesses. Any action to limit lobbying would, we fear, have
more of a detrimental effect (withdrawing an evidence base) than
a positive one.
There should be no cause for additional regulation
to limit lobbying activities, as the House of Commons code of
conduct, guide to the rules relating to the conduct of Members
and the Ministerial Code
ensures that unacceptable forms of lobbying are not permitted.
The industry is self-regulated, thanks to the application of these
codes, and the fact that lobbying is just as much a market as
any other: firms that provide bad products, that is to say they
mislead decision-makers, will tarnish their reputations.
6. Are the provisions in the APPC's and PRCA
Codes of Conduct appropriate for a self-regulatory system? Why
are some multi-client lobbyist firms not members of these Associations?
The codes of conduct of the Association of Professional
Political Consultants (APPC) and the Public Relations Consultatants
Association (PRCA) codes mirror the government codes relating
to ethics involved in lobbying. To take an example from the APPC's
code of conduct, "Political consultants must not: Make any
award or payment in money or in kind (including equity in a member
firm) to any MP, MEP, sitting Peer or to any member of the Scottish
Parliament or the National Assembly of Wales or the Northern Ireland
Assembly or the Greater London Assembly, or to connected persons
or persons acting on their account directly or through third parties".
Such codes are appropriate for a self-regulatory system. Lobbyist
firms that are not members of such associations should have their
own internal measures for ensuring appropriate conduct.
7. Should lobbyists be regulated by an outside
body? If so, what would the focus of such regulation be? Who would
enforce the regulation?
Such a body would only be necessary if it addressed
an unmet need to control the behaviour of lobbyists to ensure
that they do not "abuse" their positions, which means
corrupt behaviour. In reality, such safeguards already exist.
We cannot find any potential need for a regulator that is not
already addressed. The lobbying industry is already self-regulated
by the House of Commons and Ministerial codes. In addition, an
organisation acting inappropriately will damage its reputation
and, subsequently, will be unable to lobby effectively.
8. Are the current transparency requirements
placed on the behaviour of public officials, ministers and Members
9. Should government organisations lobby?
If so, is it appropriate for them to use multi-client public affairs
"Lobby" is possibly the wrong choice
of word. They should advise and provide vital information. For
example, it may be within the scope of a review by one department
to suggest budgetary changes to a particular programme they are
delivering: in which case, the Treasury would need to be involved
to advise on the feasibility. One example we have encountered
was the review of Statutory Sick Pay (SSP), where the review group
included a representative of Her Majesty's Revenue & Customs
(HMRC) to advise on the fiscal administration elements of SSP.
This is simply good practice. However, "lobby" implies
the attempt to persuade another department towards a certain course
of action, rather than simply to provide information for joined-up
Lobbying should only happen when such activity
is specifically within the remit of the public sector body doing
the lobbying. For example, the Better Regulation Executive, or
Enterprise Directorate (formerly Small Business Service) of the
Department for Business, Enterprise & Regulatory Reform (DBERR).
10. Is there anything that the UK can learn
from attempts to regulate lobbying in other countries?
60 0-49 Employees-Department of Business, Enterprise
and Regulatory Reform (DBERR) statistics, Back
The Times Focus Report "Business and Parliament", 23.07.2007 Back
Cabinet Office Ministerial Code: http://www.cabinetoffice.gov.uk/propriety__ethics/ministers/ministerial_code/ Back