Select Committee on Treasury Minutes of Evidence


Examination of Witnesses (Questions 160 - 179)

WEDNESDAY 16 JANUARY 2002

MR IAN FLETCHER AND MS SARAH HARRIS

  160. Does that matter, whether they know where the information is coming from, if you are telling them?
  (Ms Harris) No, I do not think it does. I think what matters, for any small business, is that they need to know where to go for expert help and support.

  Mr Beard: Thank you very much.

Mr Ruffley

  161. Just very quickly, going back to the contracts below £95,000, and you identifying this as a problem, contracts that are attractive to small firms below £95,000 do not need to be advertised. Could you just quantify for us what proportion of the small firms underneath your umbrella would be affected, or are affected, by this non-advertisement of contracts below £95,000, quantify it?
  (Mr Fletcher) I am afraid I do not have those figures to hand. I could do some research to try to quantify that for you.

  162. I was just wondering about your reply to Mr Beard, which was to the effect that it was not one of your big priorities. I just wonder if you could say something about that? Because, in my constituency, the very large number of businesses work on quite small contracts, under £100,000, roughly, and if they are not being assisted in being able to bid for those contracts there is something wrong somewhere, is there not? I would like either one of you to comment on it?
  (Ms Harris) I can, certainly, on that; and I think, possibly, from Ian's perspective, Chambers of Commerce, he has just explained where he stands on that, but, the Euro Info Centres, the United Kingdom, part of the European network, official network, from the Commission, this has been one of the main thrusts of our activity over 11 years now. And we did some relatively "quick and dirty" research last year on our businesses, on their access to the information in public sector tendering, whether they were able to do it via the Internet themselves, whether they wanted it sent to them electronically, as and when they wanted it, but, also, on what else they wanted out of this sector. Because we know that a lot of them do go through the painful tender processing, the expensive tender processing, and do not achieve a terribly high level of success from the OJEC tenders, because they are so big. We know that there is a gap, simply because they tell us that that is so: "How can we get our hands on the sub-threshold?" Two strands, really: "How can we get our hands on the sub-threshold below £100,000 level?"; and, secondly, "How can we connect with the major contractors, who do win the major contracts, how can we get into the sub-contract sector?"

  163. Have you put those questions to the Government, or the OGC?
  (Ms Harris) No, we have not.

  164. But, surely, that is what you exist for?
  (Ms Harris) I take the point with great interest, and absolutely I take it on the nose. This year, I happen to be chairing the UK Euro Info Centres, and, believe you me, the fact that I have actually been invited here this afternoon, and as a follow-up action, it will be to try to effectively co-ordinate this kind of response from our companies. My only defence is that, until now, as a Euro Info Centre network, we have been primarily connected, if you like, to the SBS, first the DTI, now the SBS, and that connection still holds, with the European Policy Unit and SBS, but that Unit, that Directorate, knows that I am here in front of this meeting this afternoon, and it will be my intention to take forward whichever route is most appropriate, whether it is via the SBS Directorate or directly into OGC, because I see that as a real opportunity.

Mr McFall

  165. Can I just ask, it says in the OGC memorandum that "OGC is working with the DTI's Small Business Service to identify and tackle the concerns of SMEs."; is there a wider concern here for SMEs? I am mindful of the fact that I was at a dinner, a couple of months ago, when a Minister from the DTI was declaring, very proudly, that they had 170 different ways to help the SMEs, when someone said, "Well, is that not the problem?" Is there still a problem there, underneath that, for small businesses, with the DTI?
  (Mr Fletcher) There have been two separate strands of work going on, and the reason for pulling together the memorandum that we submitted to the Committee in the first place was a letter from the Small Firms Minister, in July of this year, asking us to look at this particular problem. We were already engaged, at that time, with the Office of Government Commerce, and so we were slightly concerned that there may be two different strands of work going on. The Small Firms Minister's motivation was to come up with a list of problems, that would be submitted to the Chief Secretary to the Treasury, for, presumably, him to communicate back to the OGC. In terms of too much information to the small business community, I think that, as you have seen, with the example of Sarah, although there is perhaps a number of different sorts of branded information services, practically speaking, at a local level, they often come together under the one roof, under the one organisation; and, to that extent, obviously, there are then a number of also, I think, private providers of information which businesses can subscribe to, for a fee.

  166. I think, what I am trying to get at, maybe, so that I could help you, is the reality on the ground, if we can say, well, the DTI, OGC, have come together; sure, there are papers on it, sure, there are ministerial statements on it, but what are the SME members saying, on the ground, what is the reality on the ground, what is the problem here?
  (Ms Harris) Are you asking, are businesses confused about the different Government Departments, or where to go for help?

  167. What I am saying is, on the ground, with small businesses, is it being turned from the theory, the written word, into practice, and SMEs are prospering as a result of this?
  (Ms Harris) You are talking about access to help and assistance?

  168. Yes; and then the reality, is it working on the ground?
  (Ms Harris) It is getting there, it is getting there, bearing in mind that, the Business Link, badging and the branding, Business Links are very new. I have been at the Chamber of Commerce 10 years; we have always had a Euro Info Centre, we went through all the pain of the Business Links in 1995, and then the logo has changed and the branding has changed, and so on, and I have fought to keep the Euro Info Centre badge with that, and, actually, now, the reality on the ground, under the new Business Links, the reformed, 46 Business Links, is that they are going down the path of being the gateway, the front entrance, if you like, for any small business, this is the way into help. And if they then co-opt third party preferred suppliers of other services, for example, the Euro Info Centres, then there is no problem with that and the procedures are all being put into place for that, and the small business, himself, does not actually need, or should not actually need, to worry too much about that.
  (Mr Fletcher) At the more sort of macro-political level, the major concern I think I would have is that you have the buy-in of various Government Departments to the OGC's work; for example, we know that the Small Business Service last year tried to collate the percentage of Government contracts that were going to SMEs from each Department, and the response rate was something like 46 per cent. And so, in that respect, obviously, what the OGC is wishing to deliver is obviously very dependent on the various Government Departments, and, as yet, if that statistic is anything to go by, there does not seem to be that buy-in.

Mr Beard

  169. Just taking up that point very quickly, there are two problems, it seems to me, from what has been said, that face your members. One is that big companies get contracts and your members do not know then who they are and how they can get sub-contracts; and the other is that the ones that are publicised by the Office of Government Commerce are always above £95,000, but there are an awful lot below that are more likely to be interesting to your members. And, as I understand it, you have not really lobbied the Government or the OGC about this at all?
  (Mr Fletcher) Yes, I think that is fair comment.

  170. But you say, in your memorandum, that you have made various suggestions to the OGC?
  (Mr Fletcher) Yes, only in the past four or five months, because of the project that they were undertaking and also the approach that was made to us by the Small Firms Minister.

  171. How did your members react to this publication, "Tendering for Government Contracts". have you had feedback from them as to whether it is helpful, or not, against any of these issues?
  (Ms Harris) I can speak for the businesses that we have supplied it to; their feedback has not been directly concerned with that. We provide it as part of a package of support to try to help them get into the public sector tendering. Now, as an information practitioner, I like it, I think it is user-friendly, I think it covers most issues, it signposts, more or less accurately, where it is supposed to, and it is a useful tool. I cannot say I have had direct feedback about that publication from the businesses directly.

  172. So you cannot see whether it has worked and made them have easier access?
  (Ms Harris) I would hesitate to say that on its own it could work, if a company had never had experience of tendering in the public sector before. I think it is a starting-block, if you like; that we would not send it out without counselling that particular company, in quite considerable depth, about the implications, the pitfalls, the opportunities, and how to proceed, we would not just send it out cold.
  (Mr Fletcher) An aspect of the document that I liked was the fact that it actually asks those that receive it for feedback on the document, and there is a promise there also to keep those that do feed back informed of the programme that the OGC is undertaking.

  173. But you have not seen any of the feedback?
  (Mr Fletcher) No.

  174. What was your feedback on it?
  (Mr Fletcher) We did not give feedback.

  175. That is surprising, is it not?
  (Mr Fletcher) I think it is. I do not know to what extent the OGC and SBS jointly tested the document before publishing it.

  176. Why was it that your organisation, the Chambers of Commerce, you are representing large numbers of small and medium-sized enterprises, many of them are not going to know about this or do anything; why is it that you did not reply on their behalf?
  (Mr Fletcher) Because, I think I can only plead pressures of work, and we have had a particularly full agenda this year, with a number of more pertinent policy issues that we have had to engage in.

Chairman

  177. Now you did mention the treatment of liability; would you like just to say a little bit more about that, as to whether it has changed within Departments, are they amenable on that, the liability insurance that small businesses need to have?
  (Mr Fletcher) I think it is too early days. The change in the guidance from the OGC only came into effect in the middle of October, and so that then needs to be translated, obviously, into the Government contracts that are being undertaken by the various Departments.

  178. And you will be monitoring that?
  (Mr Fletcher) Yes. I think that, as said earlier, there is an issue about insurance at the moment amongst the small business community, and a number of businesses are finding it very difficult actually to obtain all kinds of insurance, we are seeing premiums rise by something like 60 per cent. So, obviously, any cap on that liability is to be welcomed.

  179. Finally, the OGC told us that they are going to use e-procurement more and more, and they are piloting electronic tendering. Are the small businesses ready for that? Is that a no?
  (Mr Fletcher) I do not claim to have an expert knowledge of e-procurement. I think, more generally, looking at the issue of e-commerce, e-business, small businesses have the kit, there are statistics out there that show that about 94, 95 per cent of small businesses now have the ability to get on-line; however, we have actually seen three statistics, published by UK Online, of some back-tracking over the past year in terms of small businesses" use of e-commerce. And, in that respect, I do not know if that is a lack of skills, there are some security issues surrounding e-commerce, and various other reasons as to why they are not using e-commerce. It is something that we are actually trying to address with UK Online, and setting up a number of what we call "e-Business Clubs" to try to get small businesses using e-commerce more, and, obviously, e-procurement would be part of that. Is that your experience?
  (Ms Harris) My body language probably told you that I thought many of them are not; many of them are not. I have to say, I think many of the local authorities are not using the kit that they have probably as effectively as they could either, and somewhere one has to meet the other, somewhere or another, one side has to meet the other, and there is a gulf. E-procurement should, obviously it will cut down on the paperwork, it should force through the kind of streamlining that has been talked about for a long time, the streamlining of the tender documents, it should force that through, because they should then go through on templates that are routinely used, with reduced, if you like, size and scope, hopefully. There is a project, it is a pilot project, going on in the Highlands of Scotland, which is called "Digital Highland". and that is actually as close as I know to any kind of pilot for the sub-threshold opportunities, processed electronically; it is a project with Highland Council and with the North of Scotland Water Authority, the Health Board, the Northern Constabulary, plus some major contractors. And the Euro Info Centre in Inverness has been working very closely with the public sector purchasing authorities to encourage them to put through, they can enter their own sub-threshold data into the database and businesses can subscribe to that and find the ones that they want from it. But it is a process of education on both sides, and, as I say, there is a gulf, and I do not believe it is going to be met without some stick and some carrot, probably, in order to make all parties buy into it.

  Chairman: Fine; thank you very much. Mr Fletcher, Ms Harris, thank you very much indeed.





 
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