Memorandum from FSB (Federation of Small
Businesses)
The FSB is supportive of decisions being made at
a local level wherever possible. We agree with the intention to
put more power and opportunity into people's hands by decentralising
power to local communities. We are strongly of the opinion that
small businesses are an integral part of the local community;
they generate wealth, employment and opportunity. It is therefore
vital that any plans for greater decentralisation are undertaken
in a way that recognises the importance of the whole community
including the business community.
We note that the terms of reference are particularly
focused around public service delivery. The main issue for small
businesses is in ensuring that increased public service delivery
at local level does not result in decision making in which the
interests of local business are marginalised by councils, or where
their actions go unchecked. This could lead to the emergence of
damaging differences between areas in terms of environments conducive
to business growth.
OVERSIGHT OF
PERFORMANCE
The abolition of the Comprehensive Area Assessments
and local inspections, means that there will be a reduction in
nationally led safeguards or monitoring to ensure minimum standards.
In some respects this raises questions for business in terms of
trying to ensure consistency of performance. While there are benefits
to local authorities being given additional flexibility to tackle
issues particular to their area (in conjunction with business
where appropriate), there is a danger that differences may begin
to emerge that work against the interests of business.
If local government increasingly reports on its performance
indirectly, such as through greater transparency, rather than
directly to government, it may be more difficult to monitor and
prevent local authority activity which hinders business. For example,
increased autonomy on the way regulation and licensing is carried
out could mean that national efforts to encourage better regulation
and reduce red tape for small business are undermined.
The FSB believes that there is still a need for certain
issues related to local service provision to have a level of national
leadership. As an example the FSB has recently supported moves
for the Local Better Regulation Office to have more teeth to ensure
regulation at a local level does not impinge on business activities.
There is a role for a body whose purpose is to support and represent
small firm's views on red tape within local authorities and drive
through change. A balance between greater autonomy in public service
provision and national leadership therefore needs to be struck.
There appears to be recognition of the need for such
a balance in the Government's LEP proposals which include an intention
to place certain Regional Development Agency functions under national
leadership rather than devolve them downwards to LEPs. This represents
a obvious tension with the Government's wider "decentralisation"
agenda.
LOCAL ACCOUNTABILITY
The committee's terms of reference includes the issue
of accountability of decision making and spending at local level.
This is of vital significance to local businesses. Although local
residents will have a redress through the democratic process,
this is not an avenue directly available to business. Greater
local power requires increased accountability. It appears that
this will be achieved through greater transparency, the ballot
box and mechanisms such as referendums.
If this is to happen it is vital that mechanisms
are put in place to ensure that the business voice is heard. For
example referendums should be required to include local businesses
where the issue will have a potential impact.
One example of where greater local autonomy may raise
concerns is around forms of revenue generation such as local control
over business rates. Business rates have a disproportionately
large impact on small businesses, representing the third highest
overhead on average. We would have strong objections regards local
tax-raising powers of this nature as any such moves risk inhibiting
small business growth. It is vital that decisions such as this
cannot be taken without proper consultation with and accountability
to the local business community. The present models of accountability
at local level would be insufficient to create the necessary safeguards
required for this level of decentralisation.
We do believe that the Government is committed to
involving business in aspects of local decision making. This is
evidenced through the move to form Local Enterprise Partnerships
which place local business leaders as key partners in promoting
economic development. We are very supportive of this move but
it is vital that these aspirations are delivered on and we would
like to see this recognition of the importance of the local business
community permeated right throughout the drive towards decentralisation
and empowering local communities.
October 2010
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