Thursday, 28 April 2016

Out of Europe - the solution for small businesses?

A fascinating interview with Priti Patel this morning on 'Today' (Radio 4).

We are told that leaving the EU would lift the yoke of EU legislation on small businesses that have no leverage in Europe. When challenged, she managed to talk about packaging 'silly labelling' requirements in relation to such products as food and water.

By all accounts small businesses would benefit from the lifting of such costs. BUT, how are the 'Out' campaign going to discriminate between small and large businesses? Are there going to be two rules, one for small businesses and one for large? And, what about the cut-off point? One minute you are a small business subject to one set of rules; the next minute you have grown and are a large business, subject to a different set of rules?

Of course we would not travel this route - we would have a unified approach that benefits big and small businesses alike. I cannot imagine the leaders of the 'out' campaign taking no notice of lobbying from big business. So, lets be clear, this is nothing about small businesses - it is about big business and its dislike of regulation. We have seen far too much of their contempt for regulation over the years. Recent revelations about Volkeswagon are just the tip of the iceberg!

So, why do we have regulations? The 'out' campaign would have you believe that industry is as pure as the driven snow and it is just the meddling Eurocrats who want to control people's lives. What a load of tosh! We have regulation because a problem is identified. Then we have more regulation because of lack of compliance with earlier rules. It goes on and we see rafts of legislation. The answer is not to strip away the legislation but to take a cold hard look at the reasons for regulation and revise it - but do it at a European level so there is a level playing field.

'Out' campaigners will tell me I'm wrong and don't know what I am talking about! Well, I run a small business and I can say that the only problems I have with Europe arise because of the actions of big business such as Google, Starbucks etc. European VAT rules are a pain but can be dealt with. My biggest gripe comes from the UK's own procurement system.

When I started my business I found procurement rules in Natural England, the MMO and the EA all effectively excluded small businesses. To name a few:

·         Requirement for a minimum of £5m Public Liability Insurance, even for jobs worth a few thousand pounds. That ruled me out - when I started I was quoted £3,500 for this - way above what I could afford - so I was effectively excluded from bidding for work.

·         Requirement for a minimum turnover of £120k pa (the MMO) meant that as a start-up business I could never bid for small jobs that were exactly the sort of thing that I had comprehensive experience! Of course not being able to secure such contracts meant that I would never get to reach turnover requirements. Needless to say I don't bother looking at the MMO as a possible client.

·         Framework contracts for small jobs. The EA was totally wrapped up with framework contracts - even now I never see any jobs that I can bid for. I did get involved in bidding for a number of contracts (with a bigger consultancy). They are a big task and can take up many weeks work, with no guarantee of work at the end. Even if you win the bidding process you then have to go into mini-competitions and put in more work for a few thousand pounds. And, in some cases you get on the framework and never get any work.

Now, procurement people will say that I just have an axe to grind. Maybe - perhaps I am just a lousy businessman! The model I developed was to offer competitive rates to Government Agencies. Most of the small jobs that they need doing could be done on single tender. But of course that is not possible for a variety of reasons - risks of nepotism, lack of competition etc. Fair enough - that brings in a raft of processes that add to costs. If you are a one-man band then three weeks bidding and not getting work means that there is no money coming in (I had one summer where I spent 20 weeks writing bids and getting no work - because I was not big enough to have the right insurance, environment policy, health and safety policy etc).

So, I remain a small business, on its knees and just hoping I can survive long enough to draw my pension (when I will become a great deal better off). Is this down to the EU?  Well, there might be some EU rules concerning procurement but I suspect the vast majority of the problems is that Government is not capable of devising practices that do not discriminate against small businesses. What they fail to recognise is that specialists can be secured at lower rates if using small companies, but those rates are only low because they do not have the vast superstructure of bidding, insurance and policy production that can be afforded by big consultancies who charge much higher rates (mine are less than half those of a comparably skilled person in one of the bigger consultancies).

These issues are of course a total irrelevance now, as there is no money in Defra and its family; so I am working on the position that what little income I derived from these clients is over. By the time better times emerge I will be gone from the scene or too much of an anachronism to be of any use! Perhaps though, my successors will fare better if somebody looks at the issues and takes action?

So, Priti Patel and the 'Out' campaign, how are you going to help me grow my business when we have left the EU? I have found doing business in Europe a great deal less painful than doing it in the UK - single tender rules way above UK rules, no call for excessive insurance, no requirement for screeds of company policies, and a recognition of the need to buy the right skills for the job and not the right rules for the job.

1 comment:

  1. Fair comments, Roger - the procurement process in the UK appears to be horribly biased against small businesses. As you know, like you, my company is ineligible for most work with Government agencies. And if I relied on work from the framework contracts I'm on (that in some cases required very considerable amounts of time to be accepted on to), I'd be homeless and starving.