Examination of Witnesses (Questions 160
WEDNESDAY 16 JANUARY 2002
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.
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
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.
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
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
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.
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
(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
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
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
(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.
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
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
(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.