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Lobbying: Access and influence in Whitehall - Public Administration Committee Contents


Memorandum from the Forum of Private Business (FPB)

WHAT IS THE FPB?

  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.

BUSINESS OPINION

  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% of turnover[60] 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 above—the 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 FPB.

  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 Parliament.

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 Trust (IPT)[61]. 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[62] 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 appropriate?

  Not applicable.

9.   Should government organisations lobby? If so, is it appropriate for them to use multi-client public affairs consultancies?

  "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 government.

  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?

  Not applicable.

September 2007




2006 http://stats.berr.gov.uk/ed/sme/




60   0-49 Employees-Department of Business, Enterprise and Regulatory Reform (DBERR) statistics, Back

61   The Times Focus Report "Business and Parliament", 23.07.2007 Back

62   Cabinet Office Ministerial Code: http://www.cabinetoffice.gov.uk/propriety__ethics/ministers/ministerial_code/ Back


 
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