Small Business, Enterprise and Employment Bill

Written evidence submitted by AGMA (SB 71)

1. Summary

1.1. The submission made by the AGMA Collaborative Procurement Hub on behalf of the various authorities in the Greater Manchester region welcomes many of the provisions of this Bill in relation to the removal of barriers to growth for small firms, strengthening the foundations for a sustainable recovery & creation of jobs building on the government commitment to help make the UK the most attractive place to start, finance and grow a business.

1.2. The provisions in relation to cutting red tape, access to finance, improving company transparency and information on director’s disqualification and the measures in relation to prevention of abuse of zero hours contracts and stronger penalties for breaking national minimum wage legislation present a balanced set of measures that will assist small businesses to grow.

1.3. The AGMA Authorities feel very strongly, however, that the provisions of the Bill in relation to Public Sector Procurement are out of place in this legislation. It is considered that the parallel process of implementation of New EU Procurement Directives early in 2015 will assist Small Businesses in accessing public sector contracts and that inclusion of Section 33 (regulations about procurement) of the Bill is unnecessary.

1.4. Given the current and continuing climate of austerity in the public sector, it is considered unnecessary to impose additional regulations that "require local authorities to exercise…….functions in an efficient and timely manner". Procurement teams, like all other local authority functions have always been under scrutiny to demonstrate their value / contribution in delivering savings and this scrutiny/expectation has increased under the austerity programme whilst available resources have diminished.

1.5. The AGMA Authorities are less concerned in relation to the provisions included in section 34 (investigation of Procurement Functions) in relation to the Cabinet Office’s Mystery Shopper as the authorities are confident that procurement and contract management exercises are undertaken professionally, competently and transparently. Given the decreasing resources available to public sector contracting authorities however, there are concerns that any increased scrutiny will divert resources from delivering procurement projects in an efficient and timely manner which is the expressed intention of Section 33 of the Bill.

2. About the AGMA Collaborative Procurement Hub

2.1. The Association of Greater Manchester Authorities (AGMA) acts as the voice of the ten local authorities of Greater Manchester and works in partnership with a wide range of private, public and voluntary organisations within the city-region and beyond.

2.2. On behalf of the AGMA Executive Board, the Improvement & Efficiency Commission has an overarching remit to:

· Lead the improvement of value for money public services, collectively and within individual Councils and partners for the mutual benefit of our customers and communities

· Support the City Region and Regional agenda by developing collaborative ways of working, which are both ambitious and inclusive, realising efficiencies and transforming the way we do business

· Create a culture within AGMA and our partners of openness, trust, generosity and support, to improve outcomes for our communities.

2.3. The AGMA Procurement Hub was established by AGMA to support these objectives. Membership includes the AGMA Councils (Bolton, Bury, Manchester, Oldham, Rochdale, Salford, Stockport, Tameside, Trafford and Wigan) plus the Greater Manchester Fire and Rescue Service, GM Police, Transport for Greater Manchester and Manchester Airport. In addition, Cheshire East, Blackpool, Warrington and Blackburn with Darwen have joined as associate members.

2.4. The Procurement Hub also maintains the link to the wider NW regional collaborative working through participation in the iNetwork and the LGA co-ordinated National Advisory Group for Local Government Procurement. This helps the participating Councils and Authorities to link into regional and national initiatives and to participate in development of national policy as a united entity.

2.5. This evidence for the Public Bill Committee on the Small Business Enterprise and Employment Bill is therefore submitted as a collective response on behalf of the AGMA Members and Associate Members who welcome the opportunity to provide comments on this important issue.

3. Response to the consultation

3.1. The AGMA Authorities are supportive in relation to many of the provisions of this Bill, and this response to the request for evidence will therefore concentrate on the Sections of the Bill that give serious cause for concern.

3.2. It is considered that Part 1 – Access to finance, Part 2 – Regulatory reform, Part 4 – The pubs code adjudicator and the pubs code, Part 7 – Companies: transparency, Part 8 – Company filing requirements, Part 9 – Directors’ disqualification etc, Part 10 – Insolvency and Part 11 – Employment are all supportive of the intentions set out in the Bill.

3.3. It is possible that some of the AGMA authorities may provide comments under separate cover in relation to Part 5 – Childcare and Schools and Part 6 – Education and Evaluation so this submission does not include reference to these Parts of the Bill.

3.4. The AGMA authorities have significant reservations in relation to part 3, Sections 33 and 34 in relation to Procurement for the reasons set out below.

4. Section 33

4.1. The AGMA Authorities are very supportive of the proposals to implement the new EU procurement Directives "early" so as to ensure early use of the provisions that cut red tape and will support more small business and voluntary sector organisations in engagement with public sector procurement.

4.2. The AGMA Authorities are, however, disappointed that the Bill includes measures to impose as yet unspecified regulations on "contracting bodies" (a definition that clearly is restricted to Local Authorities) with a requirement to only undertake such consultation as the Minister or the Secretary of State considers appropriate.

4.3. This is especially of concern following the announcement of the abolition of PQQs for below threshold procurement exercises and a duty for Councils to advertise procurement opportunities on Contracts Finder which was made one week before the consultation period had been completed. This decision was made in spite of a series of representations to the Cabinet Office via the LGA and by individual authorities expressing opposition to the proposals.

4.4. Section 33 allows that future regulations may impose

· duties to exercise functions relating to procurement in an efficient and timely manner;

· duties relating to the process by which contracts are entered into (including timescales and the extent and manner of engagement with potential parties to a contract);

· duties to make available without charge

o information or documents;

o any process required to be completed in order to bid for a contract;

4.5. Whilst there is little detail in the Bill as to what each of these "duties" could include, it is considered that this level of involvement by the Minister or Secretary of State is unnecessary as local authorities already carry out these functions in as efficient and timely a manner as is permitted by the resources that are available to them.

4.6. In addition, Section 33 provides the Minister or Secretary of State to impose duties relating to the acceptance of invoices by electronic means (including a prohibition on the charging of fees for processing such invoices, the publication of reports relating to the number of such invoices received or the electronic systems that must be used by a contracting authority) and duties to publish reports about compliance with regulations

4.7. Again, it is considered that this is unnecessary as the majority of local authority suppliers would find it difficult and expensive to move to producing invoices by electronic means. This is particularly true of the SMEs and Small Businesses that this legislation is designed to assist.

4.8. There is a strong view within the AGMA Authorities that providing the Secretary of State or the Minister with powers to make regulations that are designed to assist Small Businesses may conflict with the Local Authority’s need to abide by and support the principles of localism as outlined in the Localism Act 2010 which provides freedom in how councils organise themselves and the ability to run their affairs in a way that suits local circumstances.

4.9. The ability to impose regulations that support Small Businesses may indeed conflict with a Local Authority’s ability to deliver Social Value and the principles of the Localism Act 2010 in that Councils should be empowered to act innovatively and in general terms have the same freedom to act as an individual.

4.10. The recent Lord Young Reforms and the new EU Procurement Directives are presented as "deregulatory measures" to speed up the procurement process and to make it more transparent and less bureaucratic. The AGMA Authorities are of the view that any additional regulations imposed under this legislation are likely to have a diametrically opposite effect.

4.11. The AGMA Authorities have helped develop and fully support the recently launched new national procurement strategy for local government (July 2014) which includes a commitment to simplify processes in order to engage with a wide supplier base, whilst at the same time using procurement to grow their local economies.

4.12. There is a strong view that additional regulations will increase the administrative burden on local authorities and diminish the capacity available to bring further contracts to the market given the limited resources available which will effectively negate any positive benefits intended for Small Businesses under this particular legislation.

5. Section 34

5.1. Section 34 of the Bill outlines how the Minister or Secretary of State may conduct "Investigation of Procurement Functions" which related directly to the Cabinet Office’s "mystery shopper" initiative.

5.2. The existing "mystery shopper" initiative has been in operation for some time and, in general, it is considered that a suitable mechanism should be in place to ensure that the principles of transparency and proportionality are applied to all procurements whether above or below the EU Thresholds.

5.3. The AGMA Authorities are fully committed to the application of the principles of transparency, non-discrimination, equal treatment and proportionality and expect that the powers given to the mystery shopper also commit to these principles.

5.4. Sections 33 and 34 of the Bill are drafted as separate sections but Section 33 could provide the power for the Minister or the Secretary to impose additional measures in relation to the mystery shopper which may increase the administrative burden on Local Authorities and subsequently impact on the ability of procurement functions to "exercise functions relating to procurement in an efficient and timely manner".

5.5. Section 34 also identifies powers to investigate the way in which a contract is managed. It is considered that there is an overlap with the recent amendments to the Transparency Code which further increases the administrative burden on Local Authority Procurement functions at a time when resources are under increasing pressure to deliver.

6. Conclusion

6.1. Given the above, the AGMA Authorities are of the view that Sections 33 and 34 of this Bill are unnecessary in the context of the intentions of this legislation and actually cut across other parallel initiatives by the Government in the new EU Procurement.

6.2. The Public Bill Committee is therefore requested to consider removing Part 3, Sections 33 and 34 of this Bill as, for the reasons outlined above, they are unnecessary and will prove detrimental to the objectives of this legislation which in the main seeks to reduce regulatory burdens and facilitate the inception, financing and growth of business.

November 2014

Prepared 6th November 2014