PracticeConsultingBusiness Finance – Griffiths’ war on red tape.

Business Finance - Griffiths' war on red tape.

The small-business minister has announced plans to cut back on red tape which is currently preventing small start-ups from competing for government and local authority contracts. But has he bitten off more than he can chew?

Small business minister Nigel Griffiths wants to clear the way for small start-ups to compete successfully for government contracts by easing red tape burdens.

Speaking at a fringe meeting at last week’s Labour party conference, Griffiths described as ‘ludicrous’ the rule that businesses must present a full three years of accounts as part of their negotiations for government contracts.

He told delegates and members of the Federation of Small Businesses, which hosted the meeting, that he would ‘work very hard’ to get the three-year requirement amended to one year. He also undertook to use new regulatory reform orders to reduce red tape.

FSB chairman John Emmins, who chaired the meeting, said the move was a great step forward: ‘We welcome the reduction from three years to one. A lot of small businesses are on quite tight margins so the requirement to present three years of audited accounts means that government contracts go to bigger businesses who can more easily meet this rule.’

Michael Snyder, senior partner at mid-tier firm Kingston Smith and a member of the Small Business Service’s investment taskforce, said that he was in ‘total support’ of the minister’s initiative, but added that Griffiths was taking on an enormous task.

‘It’s not that small businesses are precluded from tendering for government contracts,’ said Snyder. ‘It’s that there are too many barriers.’ As well as three year’s of accounts, government and local authority tendering processes have insurance requirements, as officials need to see that contractors have the resources to fulfill obligations.

‘It is certainly worth doing,’ continued Snyder, ‘but the difficulty will lie in central and local government cultures adapting and relaxing their frameworks for procurement.’

Teresa Graham, Baker Tilly partner and member of the Small Business Service steering board, applauded recognition that burdens on small businesses need attention. But she said that the measure amounted to ‘an admission of failure’ and that the practice of cherry picking particular areas for reform was ‘worrying’.

‘Why should the business climate be hard for small businesses and harder for big businesses?’ she asked. ‘Why should things be hard, full stop?’

Federation of Small Businesses’ site can be found at www.fsb.org.uk

More on the Small Business Service at www.sbs.org.uk.

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