Enterprise Bill

Further written evidence submitted by Sameen Farouk (ENT 80)

I'd like to make one further submission in support of the position of the Federation of Small Businesses.

1. The proposal in the Enterprise Bill is for a Commissioner to resolve disputes between small businesses and other private sector bodies. I understand that disputes with public sector bodies are expected to be handled by a relevant ombudsman or regulator. I think there is a case for reconsidering the drafting of the Bill where it relates to clause 3, subsection 11c and clause 4, subsection 5c.

2. These are where public authorities are taken out of scope. I'm not sure this can be justified in the case of local authorities and NHS bodies. I am not sure that SMEs are able to resolve complaints through to the Local Government Ombudsman. The owners or directors can do so on behalf of the business in some situations, but not quite as an entity in itself. The problem also is that such issues need to be dealt with through the council's own complaint resolution process which can drag on for months. Further thought needs to be given as to how public sector procurement can be brought into scope.

3. The definition of public authority needs to stretch to include those bodies which are not included under Schedule 1 of the Freedom of Information Act 2001 (http://www.legislation.gov.uk/ukpga/2000/36/schedule/1)%20nor. Many public bodies have their own resolution scheme which is subject to statutory guidance or within existing public sector procurement regulations. The policy should have assessed the existing resolution and redress schemes by these public bodies. Where they broadly offered a quicker and more streamlined service (e.g. test of equivalence) then they should be exempt from the scope of the Small Business Commissioner.

4. I live in Portsmouth, where the law proposed will not help small businesses in the way you've proposed. Many small businesses deal with public bodies but not aware of it until a problem emerges. I've noticed the city council is attempting to take a step back from some procurement relationships with SMEs. A good example is through prime contractor arrangements where SMEs then enter into sub-contractual arrangements (e.g. the hiring of temporary agency staff or providing specialist children's social care). The prime contractor should in theory be included in the scope of the Enterprise Bill but in the exercise of a statutory function, it is in itself discharging a function of a public body. To me, the law needs to then either clarify that such arrangements are caught within the Enterprise Bill clauses or instead delete the bit about the public authority. This can be done by a simple amendment in the text of the bill

5. I think Schedule 1 of the Freedom of Information Act 2011 isn't likely to capture entities set up by public bodies, who in and of themselves may be considered as large businesses in some areas of activities which are not statutory functions. In Portsmouth again, the use of Charitable Trusts (essentially to bypass business rates and then count them as efficiency savings) are being used to manage public assets including setting up concession agreements with businesses to provide services like retail and cleaning. As a small business, I believe recourse should be made to the Commissioner for entering into inevitable disputes that emerge with such entities. I stress this because I can see the city council attempting to put in place plans to establish a body corporate for health and social care needs. It’s not unique to Portsmouth but it presents a grey area in the applicability of the Commissioner which I think is best clarified in the Law rather than in the Courts.

6. Councils are able to set up trading entities which could in and of themselves be designed to sit outside of the clauses of the Enterprise Bill even though they are acting as if a large employer. For example, in Portsmouth's case, there is the Portsmouth Harbour Renaissance Ltd organisation which is really a body set up to administer Millennium lottery funding. Another example is the trading entity designated to undertake responsibility for the international port. The legal structure as I understand it is not actually separated from the council but it’s perfectly possible for an SME to enter into dispute with it and seek remediation via the Small Business Commissioner. I don't believe this was envisaged by policymakers and therefore I ask for the matter to be reviewed to cover entities like that Port.

7. Lastly, and this is the most important matter. The scope of the Small Business Commissioner needs to include public bodies which have opted to sub-contract their own services or assets to a private body. This is particularly important where councils are attempting to raise revenue through a form of tradeable services and then creating problems for small businesses. A very good example can be shown through the erection of fencing and signage. Where those services were undertaken by the council, it’s no guarantee they were helpful e.g. signage. In these cases which have happened, it is critical that small businesses can seek redress against the council through the small business commissioner, without any ambiguity. For this reason, the Enterprise Bill should clear up the law here to make it clear the Commissioner takes precedence over the Council's complaint process.

8. Current accountability arrangements are convoluted and don't work as well either in the city or consistently to a good standard in other local areas. Unless councils adopt best practise e.g. from nearby, they simply struggle and don't even make transparent information which can help set the norm (e.g. statistics about late payments. For this reason, I believe the Committee should consider extending the remit of the Small Business Commissioner and I hope you can press the Government to consider suitable amendments in order to do so, even if it requires a consultation.

My comments are made in a private capacity upon discussion with firms in the city and personal experience. All errors or misunderstandings are mine alone.

February 2016


Prepared 25th February 2016