Overview of Cardiff Council Support to Small Businesses. 6. Economic Development .... Improve the management and marketi
A report of the: Economy and Culture Scrutiny Committee
Small Business
January 2014
The County Council of the City and County of Cardiff
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CONTENTS Chair’s Foreword
5
Terms of Reference
6
Key Findings
7
Recommendations
11
Evidence
15
1.
The Councillor’s Role
16
2.
Views of the Federation of Small Businesses
17
3.
Business Perceptions from Scrutiny Research
20
4.
The Policy Context in Cardiff
25
5.
Overview of Cardiff Council Support to Small Businesses
27
6.
Economic Development
28
7.
Business Rates
31
8.
Commissioning and Procurement
37
9.
Regulatory Services
55
10.
Miscellaneous Perceptions of Local Businesses
58
11.
Issues Specific to the City Centre
63
Inquiry Methodology
67
Legal and Financial Implications
69
Committee Membership
97
Committee Terms of Reference
99
Appendix 1 Department of Skills’ “Good Councils To Do Business With” Study
70
Appendix 2 Statistical Analysis of Small Business in Cardiff
84
Appendix 3 Methodology and Overview of Scrutiny Research
94
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CHAIR’S FOREWORD It is perhaps a little known fact that there are 24,400 small and medium sized enterprises in Cardiff, representing 96.8% of Cardiff’s business stock, and employing 46% of the city’s employed workforce.
Many of these are worthy enterprises doing good business in Wales, the UK and wider afield, who do not need to be highly visible, while others are iconic firms known to everyone who lives in, or visits the city and whose brand is inextricably linked to Cardiff’s unique quality of life.
The recent economic downturn has tested all business organisations, but given the relative lack of resilience of small firms to withstand a prolonged period of slack customer demand, Committee felt that it was important to test the challenges facing the City’s small firms in 2013, and to seek to identify and resolve the biggest challenges for the Council in supporting this important sector.
During the Inquiry we received excellent support from the Federation of Small Business and from many individual firms. In organising a “listening day” in the Castle Arcade in May 2013, Members were privileged to meet and hear from dozens of local entrepreneurs, and were impressed with the sense of pride that traders have, not only in the success of their own bottom line, but of the overall success of our great city.
It is clear that some good work is already embedded, and that further improvements can be made, and we are pleased that the report’s key findings and recommendations will help the Cabinet to engage with small businesses, understand their issues, and optimise the support that the Council can provide.
Cynghorydd / Councillor Craig Williams Cadeirydd Pwyllgor Craffu Economi a Diwylliant Chairperson Economy & Culture Scrutiny Committee 5
INQUIRY TERMS OF REFERENCE As part of their 2012/13 Work Programme, Members of the Cardiff Council Economy and Culture Scrutiny Committee established a task and finish Inquiry into Small Business in Cardiff, to explore:
How small enterprises in the City and those wishing to move here are supported by the Council, in partnership with governmental and non governmental agencies.
How the Council’s strategic approach operates and supports small businesses and whether it meets its objectives.
How support is offered in appropriate areas, including training, staff recruitment, finding/providing suitable premises, sign posting to information including (health and safety, taxation, employment law etc), business start-ups, planning and expansion, access to funding.
The support given by other Councils to their small enterprises to identify best practice and value for money.
Perceptions of small enterprises of the role the Council plays and the services the Council provides e.g. Business Rates (Research Element).
This report is part of a suite of work focussing on the economic regeneration of Cardiff undertaken by Committee this year to assess the emerging needs of the city’s new businesses, also including reports on Higher Education Innovation in Cardiff (Autumn 2013) and Central Market and Arcades (Spring 2014).
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KEY FINDINGS Members have drawn the following key findings from the evidence received during this Inquiry. These key findings have been used to draw recommendations for the Council’s Cabinet to consider. These are listed on pages 11 – 14 of this report.
General KF1. Small businesses have unique and specific needs that are different from those of medium sized firms, and which sometimes become blurred and misunderstood by lumping small and medium sized businesses under the umbrella “Small to Medium Sized Enterprises (SME)”.
KF2. There is a perception amongst some small businesses that local ward Councillors prioritise the interests of their constituents over those of businesses operating in their Ward, and do not take an interest in local small business issues and roles within the local community.
Procurement KF3. Whilst the Council’s Commissioning and Procurement Team reports on estimates of the Council’s spend on SMEs every two years there is no system in place to measure procurement activity by size of business more frequently. IT systems exist and are utilised in other authorities to undertake this activity.
KF4. Good practice authorities have expressed targets for small business spend. At present Cardiff Council has no accurate means of measurement of small business spend, and therefore has no targets. 7
KF5. The Council’s Commissioning and Procurement Service Team has developed a web presence and has potential to exploit this presence further. Good practice authorities have utilised social media channels to engage with small businesses and have utilised multimedia training packages to reduce the costs of providing direct procurement training to small businesses.
KF6. Good practice authorities have identified that Public Liability Insurance procurement requirements can often act as a barrier to small businesses, and have offered a Top Up Insurance Scheme as mitigation.
Payments KF7. Cash flow issues caused by payment delays disproportionately affect small businesses. Whilst the Council operates within the Welsh Government framework for prompt payment to businesses practice, Halton Borough Council are now developing a new scheme to offer early payment discounts which allow businesses to opt into, and the Council gain a discount for such prompt payment which aids cash flow for the business and promotes a message that the Council are ‘good to do business with’.
Business Rates KF8. Whilst the Council is responsible for the collection of Business Rates it is not responsible for the allocation of the monies. The Council is not currently allowed by statute to communicate this on Business Rate Bills and several small businesses have formed the erroneous negative perception that Cardiff Council is responsible for levying business rates. With a planned move nationwide from postal to online billing, there will be greater opportunities for the Council to correct these false impressions, as the Council is able to place messages adjacent to the electronic attachments that businesses will download as they manage their Business Rates payment. 8
KF9. Current Small Business Rate Relief criteria operating in Wales enable a loophole whereby large companies operating from low rateable value premises can claim Small Business Rate Relief.
KF10. Small city centre businesses whose premises‘ rateable value exceed £6,000 per annum (and are hence subject to Business Rates) have ongoing concerns about the level of business rates, lack of information on how business rates are spent, the need for Small Business Rate Relief to continue, the need for a change to the Business Rate Relief criteria as large businesses benefit from the discount. The Council has a lobbying role to play in supporting the views of small businesses.
KF11. The current arrangements for local authority Discretionary Business Rate Relief adversely affect the financial position of the Council during a time of budgetary constraints. Silk Commission proposals to localise Business Rates could potentially improve the financial position of the Council, providing greater opportunities for the provision of Discretionary Business Rate Relief. Should Business Rates become localised, work would be required to establish the strategic criteria for the provision of Discretionary Business Rate Relief.
Contact systems KF12. Small businesses have reported difficulties in contacting the correct Cardiff Council personnel when they have business queries. The Council currently does not operate a coordinated business enquiry service.
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City Centre Issues KF13. Small businesses are encouraged to appeal to the Valuation Office Agency (Ty Rhodfa, Ty Glas Road, Llanishen, Cardiff CF14 5GR. Tel: 03000 505505) if they believe that the rateable value of their premises is assessed at too high a rate. Information is usually disseminated upon inquiry, and information on companies that assist small businesses in appealing to the VOA is not provided on the Council’s website.
KF14. Independent traders within the city centre are reporting difficult trading conditions and highlight high business rates as a barrier to growth. Independent traders highlight the following as potential improvement actions for the Council:
•
Evaluate the Bristol Pound and examine whether it can be applied to Cardiff.
•
Examine approaches to encourage landlords to utilise empty retail units.
•
Improve way finding (both IT and physical) to encourage footfall through Arcades and Markets.
•
Improve the management and marketing of Cardiff Central Market.
•
Procurement processes appear complex and inaccessible for small business.
•
Develop Business Improvement Districts.
•
Ensure that the voice of the independent trader is heard when considering changes to the city centre.
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RECOMMENDATIONS The Task and Finish group gathered evidence from a wide range of sources, including officers, stakeholders, research and publications relevant to the topic area. The Task and Finish group has drawn the following recommendations from the key findings listed above, which are themselves based in turn on the body of evidence presented in the report below.
The Committee recommends that the Council’s Cabinet:
Council and Councillor Roles R1. Supports small businesses in Cardiff to succeed in overcoming the challenges they uniquely face, in particular by increasing joint working between Council teams like Licencing, City Centre Management and Economic Development and Cardiff Business Council, and by vesting lead championship and responsibility for supporting small firms across the whole organisation within one Council function. (Supported by Key Finding 12 and several others)
R2. Seeks support from the Cardiff Business Council to recognise the unique needs of small businesses in Cardiff, and to ask them to ensure that the voice of the city’s independent traders is clearly heard. (Supported by Key Finding 14, bullet point 7)
R3. Seeks support from the Cardiff Business Council to set up a structured approach to working with Ward Councillors, to help them champion the needs of businesses within their locality while building their awareness of the bigger picture of economic development across the city, and helping them avoid being too parochial in their approach. (Supported by Key Finding 2)
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Procurement R4. Develops Procurement reporting systems to enable the Council to measure the Council’s procurement activity by the size of business procured to provide services. (Supported by Key Finding 3)
R5. Once the above system has been introduced, agree appropriate targets for the number and value of contracts awarded to the small business sector, and publish the results each year. (Supported by Key Finding 4)
R6. Considers opportunities identified through the evidence provided to this inquiry to engage with small businesses wishing to provide services to the Council. In particular to consider how social media and e-training packages could reduce the costs of providing direct procurement training to small businesses. (Supported by Key Finding 5)
R7. Considers how the practice followed by some councils in offering a Top Up Insurance Scheme as mitigation for Public Liability Insurance procurement requirements could be deployed in Cardiff. (Supported by Key Finding 6)
Payments R8. Considers what it can do to ensure that Cardiff Council promptly pays small businesses for services they provide to the Council. In particular, how the practice of Halton Borough Council (commended to this Inquiry by the Cardiff Federation of Small Businesses) of agreeing early payment discounts which aids cash flow for the business 12
and promotes a message that the Council are ‘good to do business with’ can be deployed in Cardiff, should such a scheme be acceptable within existing Council or Welsh Government policy. (Supported by Key Finding 7)
Business Rates R9. Seeks to work with and educate the small business community about business rates. In particular: ask the Cardiff Business Council as part of its ongoing work with the small business sector to address concerns expressed by small businesses in key findings eight, nine and 10 above; and use various means (such as enclosures in annual rates bills and increasingly via online media such as the Council’s website and Twitter) to help businesses understand that whilst the Council is responsible for the collection of Business Rates it is not responsible for the allocation of the monies. (Supported by Key Findings 8, 9, 10 and 11)
R10. Ensures that useful advice is available on the Council website and through Cardiff Business Council to support small businesses who are considering an appeal to the Valuation Office Agency (Ty Rhodfa, Ty Glas Road, Llanishen, Cardiff CF14 5GR. Tel: 03000 505505) if they believe that the rateable value of their premises is assessed at too high a rate. (Supported by Key Finding 13)
R11. When the trade of a small business or group of small businesses is affected by nearby development works, the Cabinet takes advantage of its powers through Discretionary Small Business Rate Relief. (Supported by Key Finding 11)
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Contact Systems R12. Addresses concerns expressed by small businesses about the difficulty of gaining timely advice from Council officers over a range of inquiry areas including grants, business development and operational issues – either through a centralised contact service, through Cardiff Business Council, through a Council service area or through another effective mechanism. (Supported by Key Finding 12)
City Centre R13. Considers the feasibility of introducing to Cardiff a scheme similar to the Bristol Pound. (Supported by Key Finding 14, bullet point 1)
R14. Recognising the unique contribution to Cardiff’s retail offer made by its Edwardian arcades, considers improvements to signposting and way finding from key transport nodes, and how to better profile and encourage footfall through the arcades via Council publications, electronic and social media communications activity. (Supported by Key Finding 14, bullet point 3)
R15. Consider developing more than one Business Improvement District in Cardiff, to spread the benefits evenly across Cardiff’s business sectors and neighbourhoods. (Supported by Key Finding 14, bullet point 6)
R16. Is ready to consider additional findings likely to emerge from Committee’s Spring 2014 Inquiry into Cardiff Market and Arcades. (Supported by Key Finding 14, bullet points 3 and 4)
And finally, that the Cabinet, in responding to these recommendations, draws up an action plan to demonstrate how it will implement them. 14
EVIDENCE
1.
During the course of the Inquiry, Members considered a wide range of written and face to face evidence, which is documented in this report in the following order:
The Role of Councillors in Supporting Small Business
The view of the Federation of Small Businesses
Perceptions of Cardiff’s Small Business Community
The Policy Context in Cardiff
Business Support Services provided by the Council a. Overview b. Economic Development c. Business Rates d. Commissioning and Procurement e. Regulatory Services f. Other Business Support Services
Miscellaneous Issues
City Centre Issues
Two Appendices are attached which provide greater depth of data.
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1 - The Role of Councillors in Supporting Small Business 2.
In conducting a small business visit Members were informed that there was a perception that Councillors were only interested in resolving the issues of constituents and had limited interest in local businesses. The business owner also commented that until the visit by Councillors, as a part of the Scrutiny Inquiry, no local ward Councillor had visited to find out about the business about the issues he faced. This left an impression that Councillors did not fully appreciate the vital contribution small businesses play in the provision of local services and in increasing the economic wellbeing of the electoral ward.
3.
Members discussed the role of councillors as both strategic leaders and community champions and that Councillors are now expected to have a much wider set of skills and attributes while still retaining their fundamental role as democratically elected representatives of local people and local businesses. The potential role of councillors in supporting small businesses was discussed which could potentially include:
the promotion of specific entrepreneurial needs of local small business to allow them to be created, developed and thrive.
attendance at network events to gain the reactions of SMEs to current conditions
encouraging the development of new and emerging businesses, forging links between schools, colleges and small businesses and providing a way forward together with the required training needs.
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2 - The View of the Federation of Small Businesses in Wales 4.
Members of the Inquiry heard evidence from the Federation of Small Businesses (FSB) Wales, the authoritative voice of small businesses in Wales. With 10,000 members, a Welsh Policy Unit, two regional committees and twelve branch committees, FSB Wales is in constant contact with small businesses at grassroots level. It undertakes a monthly online survey of its members as well as an annual membership survey on a wide range of issues and concerns facing small business.
5.
The FSB advised Members of the overall scale of the Small Business Sector in Wales: •
£38.4bn turnover in SME sector in 2011.
•
202,700 small and medium sized enterprises in Wales (99.2% of Wales’ business stock).
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24,400 small and medium sized enterprises in Cardiff (96.8% of Cardiff’s business stock).
6.
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60.2% of employees in Wales work for SMEs.
•
46% of employees in Cardiff work for SMEs.
Scrutiny Research provided a background document, detailed at Appendix 2 of this report, which provided statistics about the size and scale of Small and Medium Sized Businesses in Cardiff, and the rate of business start ups, successes and failures.
7.
The FSB forecast that fewer small firms expect business prospects to worsen over the next three months, but confidence remains weak in Wales. The Small Business Index (SBI) for Wales rose in Q4 2012 to stand at -16.0 from a score of -25.0 in Q3. The rise in the SBI in Q4 was largely due to an increase in the share of businesses reporting expectations of improving business conditions ahead. However, although the latest movement in the Index is towards a strengthening in confidence, with the SBI now well above a reading of -40.0 in the same quarter a year ago, optimism remains at significantly muted levels and compares to a UKwide figure of -5.6. With business confidence remaining firmly in negative territory it was felt likely that difficult economic conditions in Wales would continue to prevail into 2013. 17
8.
In line with increases in business confidence, fewer small businesses were expecting turnover to fall during 2013. However, despite turnover performance strengthening, firms report profitability conditions remaining tough. More than one in ten businesses (13%) reported profit levels declining over the past three months, while a full quarter of companies (25%) expected profits to decrease in the next quarter. These figures suggest that although sales are being made, costs are increasing faster.
9.
A large share of small businesses in Wales was expecting to increase capital spending over the next twelve months. A return to positive expected investment growth following Q3’s weaker outlook was encouraging news for the economy of Wales, as capital investment is typically a key driver of economic recovery.
10. The FSB suggested four key areas for the Council to focus its attention to improve outcomes for small business in the city:
a. Economic Development and Planning: Cardiff Council should have economic development as a key organisational objective; ensuring that their economic development departments are not working in isolation and that other departments are aligned to wider economic development goals. Local authorities should develop economic strategies that reflect the local economy and promote opportunities for job creation and growth. Economic development should be a key consideration in planning; allowing small businesses to benefit from a flexible, affordable and responsive planning process.
b. Business Support: The provision of business support services and the availability of good business advice are essential for small businesses in Cardiff, particularly during the early years of a business. Local authorities need to re-double their efforts to provide credible advice to businesses, including start ups and those aspiring to grow their business. Local authorities also need to be pro-active in highlighting the grant and loan support they can provide to small businesses in Wales and consult businesses when reviewing the effectiveness of support provided. In 18
particular, Cardiff Council could examine the use of discretionary business rate relief and business finance as a means of further supporting small businesses.
c. Procurement: Local authorities in Wales account for a large proportion of the Welsh Government’s £4.3bn annual procurement spend making it essential that local authorities open up opportunities for small businesses to succeed in winning local contracts. A positive approach to small business procurement including; the dissemination of best practice, fostering strong local buyer/supplier networks and the use of community benefit clauses, can lead to vibrant local economies and small business supply chains. Local authorities must also work together to streamline the use of prequalification assessments to avoid unnecessary duplication.
d. Transport and Infrastructure: Businesses in Wales are often dependent on transport infrastructure that enables them to travel ‘for’ work and their employees ‘to’ work. The difficult circumstances in which the Welsh Government and local authorities find themselves as a result of declining capital budgets mean local authorities will need to be innovative and cooperate with the Welsh Government in order to alleviate many of the issues facing the transport system. Local authorities should work constructively with local businesses to minimise any possible disruption as a result of any road works. This is particularly important in a city such as Cardiff that has grown rapidly in recent years. Congestion is still a concern for many businesses within the city.
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3 - Scrutiny Research into Key Local Business Perceptions 11. The Inquiry Team wanted to assess how far the vision set out in paragraphs eight to 11 above, and also the range of services outlined in paragraph 12 were understood, recognised and appreciated by Cardiff’s small business community. They therefore commissioned research from the Council’s Scrutiny Research Team to assess traders’ perceptions across a number of business support areas. The Executive Summary and Methodology for the research is detailed at Appendix 3 of this Inquiry report, on pages 96 – 98.
12. Members of the Task Group were provided with a background to the key findings from the questionnaire, which are summarised below.
a) Forecast for Business Growth
What are your business projections for the next financial year? 14% 22%
12%
Negative growth No growth Minimal growth Significant growth
52%
13. Somewhat surprisingly due to the current national economic situation facing the country, nearly 75% of respondents felt their business projection for the following financial year would show some growth, with either minimal growth (52%) or
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significant growth (22%). 12% of respondents felt they would experience no growth at all, while 13% felt their business faced negative growth for the following year.
14. These forecasts for growth remained very similar when segmented by the type of business, the number of years they had traded, or the location of the business.
How important are the following factors in Keeping Cardiff economically viable for the next five years? 100% 90% 80%
38
32
28
23
21
18
Percen tag e
70% 60%
Critical 50% 40%
58 50
73
71
75
Important / Very important
63
30%
Slightly important 20% 10% 0%
7
7 5
2 3
7
High speed Accessibility of the Effective internet available city promotion of the throughout the city as a place to city do business
Unimportant 3 1
A safe city
5 3
6 1
A clean and well A well organised / maintained city managed city
Factor
b) Critical Factors for the Future Economic Viability of Cardiff
15. The availability of high-speed internet throughout the city was seen as the most critical factor in keeping Cardiff economically viable for the next five years with almost 40% of responses rating it critical. However, respondents were keen to emphasise the importance of Internet access throughout the city and that there should be “faster internet availability to all” and not just those based within the centre of the city.
“there needs to be much more care and promotion of surrounding areas - forget 'fast' internet in the city... how about any internet whatsoever when you get a mile or two out. Its a joke to think Cardiff can grow in any way without growing the economy and welfare of the surrounding area (25 mile radius at least).”
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16. The next most critical factor for the economic viability of Cardiff was the accessibility of the city. This area was also mentioned a number of times in some of the open ended responses, particularly in relation to Cardiff airport, tourism, and bringing more people into the city. There were a number of respondents who felt that Cardiff Council should work with the airport to try and improve the number of flights and airlines available. These respondents also emphasised the need to improve the transport roads and links from Cardiff to the airport itself.
“They (Cardiff Council) should also work closely with the WG to sort out Cardiff International Airport which is a shambles, the public transport to and from the airport is shocking which really gives business visitors a very poor first impression of the city.”
“More needs to be done to bring people to Cardiff. Improving the connections the local airport (CWL) has with other destinations would truly improve things but link roads to and from the airport really need to be improved also.”
17. The promotion of the City was rated the next most critical factor for Cardiff’s future economic viability. Respondents felt that Cardiff was behind the competition in terms of marketing and was missing the potential to promote many of the cultural and historical aspects of the City which could attract more visitors.
“Current promotion of Cardiff is poor, it lacks imagination and any sense of sophistication. You need to look to other European cities for examples - Amsterdam, Copenhagen, Munich, etc. Visit Cardiff website is dated, and information on it difficult to navigate/discover. Cardiff feels behind at promoting its cultural assets compared to drinking and shopping.”
“Promote far more strongly the still widely unappreciated and undiscovered cultural and historic dimensions to Cardiff: music, drama, food, open spaces, diversity....geared towards attracting professional, educated, affluent groups.”
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“Embrace the city's cultural assets - and build them into the stories we tell about the city and its economic success - television, film, theatre, music, art, photography, design, architecture.”
18. The safety, cleanliness and management of the city were seen as the least critical factors but still did have a very high percentage of important / very important ratings. This would appear to indicate that the safety, cleanliness and management of the city were viewed as important to a large number of businesses, but not critical to their success.
19. Interestingly, while high-speed internet and the promotion of the city had a high number of ‘critical’ responses, they also had the most ‘slightly important’ and ‘unimportant’ ratings. This would infer that whilst these factors are critical factor to some businesses in the city, they have a lot less importance to others.
20. This was borne out in the analysis, as when these issues were explored by the type of industry, creative industries and IT businesses were more likely to rate high speed internet as critical, when compared to any other sector. Indeed some of the comments relating to the internet emphasised the importance of Internet provision to maintaining some businesses.
“If the broadband provision in Cardiff doesn't improve, we will be forced to relocate.”
21. Furthermore businesses such as the tourism and leisure industry as well as the retail sector were far more likely to see promotion of the city as critical in comparison to other industries.
22. Therefore when the Council considers how best to maintain Cardiff’s economically viability for small business, the authority will need to decide whether to make more generic changes which are important to lots of businesses or targeted support which is critical to a smaller number.
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c) ‘Other Responses’
23. Over 50% of respondents added ‘other’ factors as important to the viability of their business, and Cardiff for the near future. The ‘other’ responses were also rated as being either very important or critical to respondents and when they were analysed they reflect the same themes that were outlined in the responses to question 6 and 17.
24. These themes undoubtedly reflect the main priorities for small businesses who responded to the questionnaire, as they are repeated across a number of the questions relating to how the council can help small businesses. These factors were also not affected by any of the variables such as location, type of business or the number of employees. They are therefore the fundamental messages which should be taken from this report.
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4 - The Policy Context in Cardiff 25. Cardiff’s ten year partnership strategy What Matters! includes amongst its seven desired “Outcomes For Cardiff” that Cardiff has a Thriving and Prosperous Economy. The Cardiff Partnership Board enables the Council to work with key partners in delivering this aim, and has set up a Programme Board to govern to implementation of the outcome, along with a range of objectives, workstreams, performance indicators and milestones.
26. In its Corporate Plan 2013 – 17, Cardiff Council set itself five overarching priorities. Several of these relate closely to the issue of Small Business. They are:
Making a Better Future for our City
Creating Jobs and Opportunity for All
Helping Those that Need it Most
Working Together for the City and the Region
Working Smarter and Better.
27. Following a recommendation of a Welsh Local Government Association Peer Review report in the Summer of 2013, the Council refined its core priorities to three, as follows:
A clear focus on economic development
Provision of first class education and skills-training services
Ensuring that nobody gets left behind.
28. The Plan’s chapter on Economic Development clearly sets out the Administration’s vision for an economically successful city: “Our priority is to set out a new economic vision for the city which looks to establish Cardiff as a leading UK business city whilst further enhancing its reputation as a visitor destination….Cardiff is a growing city. It is a young and talented city. It’s become a great place to visit and an even better place to live. It is primed for economic growth; the potential is there but it needs to be unlocked. In an economic climate which is hitting our most vulnerable areas hardest, there should be no doubt that 25
the capital city represents Wales’ best economic opportunity. We will make sure that this opportunity is grasped.”
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5 – Overview of Council Services to Small Businesses 29. The Council provides a range of services to small businesses in Cardiff. Although the following is far from an exhaustive list, it demonstrates on the one hand the breadth of services provided, and also the fragmentation of these services across a range of Council Directorates:
The Economic Development Directorate provides overall ownership of the task of regenerating the city’s economy. As well as providing a large range of support services to small businesses, including support for business grants, incubation spaces and general business advice, it also manages major infrastructure projects such as the recent transformation of the city centre. The Council has recently facilitated the creation of a Cardiff Business Council, which will allow all Cardiff businesses to shape arrangements for the city’s sustained growth and promotion. Some of these services are detailed below in Section Six (pages 28 30).
The City Centre Management Team operates within the Sports, Leisure and Culture Directorate to provide overall co-ordination of operations, and communication between city centre traders and Council services, including coordination of the night time economy and major events. Some of these services are detailed below in Section 10 (pages 58 - 62).
Regulatory and Supporting Services, based within the Environment Directorate co-ordinates a range of functions such as licencing of shops and business remises, trading standards, enforcement of noise and other forms of pollution and anti-social behaviour. These are detailed below in Section Nine (pages 55 - 57).
The Environmental Directorate also co-ordinates waste and cleansing operations across Cardiff.
The Strategic Planning, Highways and Transportation Directorate coordinates the overall planning context for Cardiff’s future growth, as well as more immediate business concerns such as Planning, building and development control and the operation of the City’s highways.
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6 – Economic Development Directorate
a) Cardiff’s Economic Development Directorate - Business Support Overview
30. Officers from the Council’s Economic Development Directorate presented the Inquiry with the following information about the services they offer to small businesses:
Capital Cardiff Fund: A fund launched in April 2009 as a response to the global economic crisis, aiming to support innovative companies and create new jobs in the local economy. Providing a total of £1.7m budget allocation from 2009/10 to 2013/14 in grants, loans & equity investments.
New Enterprise Start Up Grant: providing up to 50% of costs to a maximum of £5,000. Eligible expenditure includes specialist equipment, machinery, works to premises, specialist software / hardware / IT infrastructure, and creation of IP (if capitalised on balance sheet). To be eligible, businesses need to:
Operate from a business premises (or home based if appropriate building permissions are in place and they pay business rates)
Create a minimum of three jobs over a three year period
Be new start companies
Provide services that are neither retail nor purely local services
Have a business plan and three year financial projections
Be registered with a business advisor.
Revenue Grants: providing up to 50% of costs to a maximum of £5,000. Eligible expenditure would support an external consultant to develop a business plan, feasibility study or marketing strategy, and would need to lead to job creation outputs.
Capital Investment Fund - Loans: providing up to 50% of costs to a maximum of £50,000 loan, with a competitive 5% interest rate (regularly reviewed), five year repayment periods and £250 administration fee. Designed for start-up growth businesses and established expanding companies. Supporting capital 28
expenditure (eg business fit-out, machinery, equipment, building works, R&D, intellectual property and innovation). To be eligible, applicants would need to demonstrate job creation / safeguarding, and provide a personal guarantee from Directors or a party of sufficient substance.
Capital Investment Fund - Equity: The Council would consider becoming a minority shareholder alongside Finance Wales, Cardiff University / Fusion IP, UK Steel Enterprise, Xenos or private investors with equity investment in high growth, innovative businesses with intellectual property as security. The normal level of funding is £50,000, following independent expert investment advice. Recently supported Q Chip Ltd, Medaphor Ltd and Microcosm Games Ltd, with various other projects under review.
Workshops and Innovation Centres: The Directorate provides over 200 managed workshops across the city (Gabalfa, Fairwater, Ely, Bessemer Road, Cardiff Bay, Splott, Lamby Way and Willowbrook). They provide “easy in – easy out” tenancy agreements or up to 3 year leases, and enjoy overall 88% occupancy across the portfolio. Specialist innovation centres include Cardiff Medicentre (a medical / life sciences incubator) and the technology based Cardiff Business Technology Centre. The Directorate is currently developing a website to provide a search facility of available business premises in Cardiff in collaboration with local property agents.
Advisory Services: The Directorate advise and assist clients to apply for the Welsh Government Wales Economic Growth Fund. Six companies are through the first stage application including:
Clarks Legal - 4 new & 6 safeguarded jobs (£100k)
CEIP – 15 new jobs (£100k)
360 Solutions – 2 new & 4 safeguarded jobs (£100k)
Circle Telecom - 30 new jobs (£100k)
Capital Coated Steel – 5 safeguarded jobs (£100k)
Circle IT.
Signposting Services: The Directorate has strong relationships within the enterprise landscape and refer clients on to other organisations for additional 29
support and finance, including Business in Focus, Business Wales, Welsh Government sector teams, Finance Wales, UK Steel Enterprise, banks, The Princes Trust, Cardiff Credit Union, UnLtd and private sector services and investors.
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7 - Business Rates
a) Cardiff Provision 31. Cardiff Council is responsible for collecting Business rates from businesses across Wales, but not for setting the level of business rates, or for spending the receipts. Members were provided with an introduction to Business Rates and were informed that:
•
Business Rates is the common name for National Non-Domestic Rates (NNDR).
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Domestic properties are assessed as Council Tax.
•
NNDR is levied not only on businesses but also on central and local government properties, and properties occupied by charities and other non profit making organisations.
•
The local Valuation List for Cardiff comprises approx.11,000 assessments with a net debit of over £190 million a year.
The basis of the Tax was: Rateable Value x Rate Multiplier
•
Rateable Value is determined by the Valuation Office Agency and represents a property’s annual open market rental value.
•
Rate Multiplier is determined by Welsh Government and is increased annually in line with inflation. For 2013-2014 the Multiplier is 0.464p
32. The Inquiry was provided with an example of how business rates were calculated: Rateable Value (eg £55,000) X Multiplier (0.464p) = Annual rate bill of £25,520. It was noted that the local authority has responsibility to bill and collect tax in its own municipal area, and all monies collected are then paid into a National Pool for Wales. 33. In examining Small Business Rate Relief Members were informed of the following points:
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•
Various reliefs are available to businesses, one of these reliefs being Small Business Rate Relief (SBRR). There are currently just over 4,3e00 properties benefitting from this type of relief in Cardiff.
•
SBRR was first introduced in Wales in April 2007, but has been amended a few times since then.
•
A scheme was also introduced in England which was not exactly the same as that operating in Wales.
•
To qualify for SBPP, property must be occupied, and the Scheme does not apply to empty properties.
•
Eligibility to relief is dependant on rateable value and type of property.
34. Some property is excluded from scheme, for instance properties occupied by the Crown, local government, charities, advertising rights, assessments used for the parking of motor vehicles, sewage works, beach huts and telecommunications masts. In Wales there are different rateable value thresholds for some types of property, including post offices, retail premises, child minding premises and credit unions. These properties are subject to separate rateable value criteria and different levels of relief.
•
In October 2010 the UK Government provided extra funding and enhanced the scheme in England.
•
Wales adopted the enhanced English scheme in the main, although there are a few instances where taxpayers are still better off under the Welsh scheme.
•
This enhanced scheme was only supposed to be in place for one year but it has been extended a number of times since and is currently due to end in March 2014.
Current Levels of Relief Awarded
35. The table below sets out details of Rate Relief:
Rateable Value Up to £6,000 £6,001 - £7,800
Business Type All qualifying properties All qualifying properties 32
Amount of Relief 100% 99% - 70%
Existing (Welsh) or New Scheme New New
•
£7,800 - £10,500
Retail only
69% - 25%
New
£10,501 - £11,000
Retail only
25%
Existing
Up to £6,000
Child care
100%
New
£6,001 - £9,000
Child care
99% - 50%
New
£9,001 - £12,000
Child care
50%
Existing
Relief is automatically applied to the account in most instances as it is based on rateable values of which the Council already holds details.
•
The Council needs to verify that the property qualifies for the Scheme.
•
Ratepayers are granted relief dependant on which scheme benefits them most.
•
The cost of this relief is £7.9 million this year
•
The existing scheme is due to finish on 31st March 2015.
a) Perceptions of Small Businesses about Business Rates 36. The most important issue highlighted in responses to questions 8 and 17 (as well as in the ‘other’ responses to questions 14 and 16 about the future viability of businesses) in the Small Business Survey conducted by Scrutiny Research was the issue of business taxes, and more specifically business rates. The majority who commented felt that they were too high and needed to be re assessed, particularly in light of the recession. Respondents also felt that the rates played a large part in why so many businesses were moving or closing, and why there were so many vacant premises. Small businesses also felt that the rates system was unfair and did little to support or differentiate between smaller businesses and large multi national corporations. The re-evaluation of business rates in England and Wales has been delayed by two years (to 2017), which will not help alleviate these concerns.
37. Respondents did, however, point out that rates could be used to help start up businesses and improve the economy in Cardiff, but that this would need a different system to be implemented.
38. By far the greatest number of responses to the questions on “how the authority could help improve the forecasts for growth”, and “the one thing that the authority 33
could do, which would help improve business”, was the reduction / abolition of business rates. A large number of respondents simply responded with - ‘reduce business rates’ due to the negative effect they were having on their business.
“Reassess business rates for smaller business - they are crippling!”
39. However many respondents went into more detail and highlighted the different issues around business rates and the impact they were having on the city as a whole. For example, one of the key criticisms of the ‘high’ rates was the impact they were having on shop vacancies and the knock on effect this was having on the city and employment.
“Review the rates charge on small businesses. Reductions would encourage growth and employment”.
“Work with Welsh Government and Central Government to address Rates which are far too high and do NOT tax cash flow, and so accelerate business failures and empty industrial units leading to low occupancy rates”.
“Reduce business rates as they are currently too high for small companies (in addition to all the other burdens placed upon them). This explains why there are so many empty shops in the city centre. For people visiting Cardiff it does not create a good impression to see boarded-up shops in prime locations”.
“Reduce business rates to encourage occupation of the many vacant shops/ shop units and also to assist existing tenants”.
40. Indeed one respondent felt that the rates were having such a strong impact on their business that they had decided to concentrate their work in a neighbouring authority because of the more favourable rates they received there.
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“We have now decided as a result of the lack of support from the Council to concentrate on our business in RCT where our premises do not get charged any rates!”
41. Respondents also felt that the business rates were not fair for small business in comparison to large companies. There were complaints that small business was unable to compete with larger retailers who paid similar rates, or that larger companies should have to pay considerably more to trade in areas which the smaller independent retailers had built up.
“Stop taxing small business and get Tesco, Amazon and Starbucks to give you taxes not small business. As a result of heavy tax, small businesses such as us have been unable to expand!!! We should/would have opened more business. Employing more people!!!!”
“For businesses to compete with the likes of Amazon (who do not have to pay for each company's four walls) they have to be on a level playing field. “
“A fairer system of business rates is needed, with predatory large companies paying for the privilege of trading in an area in which long established independents have spent many years building a customer base.”
42. There was also a suggestion as to how business rates could help assist start-up companies: “Perhaps lower the cost of rental units for new start ups as I have had to go private due to the huge costs involved. My business unit costs are a quarter that of the Council’s”.
43. Therefore, businesses felt that rates were having a particularly negative effect at present, but also have the potential to have a positive effect on small businesses. This was also the case for another key theme that was highlighted throughout the survey responses, namely tendering and procurement.
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Small Business Relief
44. As part of this study into the relationship between Cardiff Council and small business, the Scrutiny Research Team were also asked to explore the potential impact of the loss of small business relief on respondents.
What impact would ending small business rate relief have on your business? 6% 2% Significant negative impact 38%
26%
Negative impact No Impact Positive impact Very positive impact
28%
45. The graph shows that nearly 40% of respondents felt that ending this relief would have a significant negative impact on their business. A further 30% said it would have a negative impact. Somewhat surprisingly, over 25% felt that ending the small business relief would have no impact and 8% felt that this could have either a positive or very positive impact.
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8 - Tendering and Procurement for Council Contracts
46. In considering how procurement within the Council operated with small businesses Members considered information from procurement officers, a short study of procurement practice undertaken by the Scrutiny Research Team, and lessons from the winning entries to the Department of Business, Innovation & Skills’ “Best Councils to do Business With” competition.
a) Cardiff Commissioning and Procurement Service 47. Members were informed that the Council’s Commissioning & Procurement Strategy 2011-2015 had been developed in the context of an unprecedented challenge to balance the ever increasing demands and expectations for services at a time when budgets were being reduced.
Commissioning and Procurement Strategy
48. The Council’s Commissioning & Procurement Strategy aimed to:
Establish a clear strategic direction and priorities for change;
Establish key commissioning and procurement policy principles;
Set out what the Council was going to do and how it would support delivery of the Council’s vision;
Provide a framework to plan and deliver the changes required to meet the vision.
49. The Commissioning & Procurement Strategy also set out a number of objectives which would be completed over its lifetime:
Develop and implement a coherent and consistent approach to commissioning across the Council to ensure services meet statutory obligations and deliver positive outcomes for citizens, communities and customers;
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Manage and organise all of our procurement activities using category management to ensure effective prioritisation and co-ordination of resources across the Council;
Use strategic sourcing to lever scale through aggregation of related spend across the Council and manage demand to avoid unnecessary costs and spend;
Strategically manage markets and key suppliers with a stronger focus of supplier relationship management and contract management;
Make use of and support collaborative sourcing where it represents value to the Council;
Invest in the Council’s organisational structure and ensure people are aligned across the organisation to deliver the new ways of working. In particular, developing the capability of all Council staff involved in commissioning and procurement;
Recognise the value and importance of partnering and collaboration across the public, private and third sector;
Simplify and standardise core processes and ensure the Council’s controls mandate compliance with process, contracts and suppliers;
Invest in effective use of technology to underpin and simplify our core processes for both staff and suppliers;
Create and share information to allow effective performance management and decision making;
•
Create frameworks / contracts to consolidate requirements;
•
‘Working Smarter’ by understanding the current market, using lotting strategies, collaborative frameworks and consortia / collaborative bids to improve access to opportunity;
•
Creative proportionate qualification requirements and community Benefit clauses;
•
Producing a “Selling to the Council” Guide (developed through a collaborative project, and explaining what suppliers need to do to bid for Council and wider public sector business.
50. At the Task and Finish Group meeting on 11th July Members were provided with evidence of the work that is being undertaken to assist small businesses to secure public sector procurement opportunities in Cardiff and beyond. These included: •
Cardiff leading a collaborative Source Regional Project with Caerphilly Council, Rhondda Cynon Taf Council, Torfaen Council, Welsh Government and the 38
University of South Wales aimed at simplifying and improving how public sector organisations procure. Through the Project Cardiff Council has: –
Developed and published a Selling to Cardiff Council Guide (See below)
–
Developed and published on a quarterly basis an online Contract and Framework Calendar which enables organisations to see when Cardiff Council contracts are due for renewal. It also enables SMEs to see who our prime contractors are and identify where there may be subcontracting opportunities.
–
Developed and piloted a Self Declaration Form (see below)
–
Agreed draft guidance on advertising that would enable advertising within a specific region where there is a competitive market, this needs to be agreed by Legal Services.
•
Participated in regular ‘Meet the Buyer’ events including South Wales Chamber of Commerce, Constructionline and joint events with Business Wales.
•
Raising awareness of procurement developments through the Commissioning and Procurement Newsletter which is sent to all organisations registered as wanting to do business with Cardiff Council.
•
Splitting major contracts into smaller lots to provide opportunities for SMEs to develop consortia bids. During the Building Maintenance Tender a bidder forum was held with Business Wales and Morgan Cole to provide advice on developing consortia bids.
Selling to Cardiff Council Guide
51. This was developed through the Source Regional project. The Guide aims to clearly explain to potential suppliers and contractors how the Council buys goods, services or work and thereby increase their chances of finding out about opportunities and bidding for work. The draft Guide was subject to consultation with a number of organisations including the South Wales Chamber of Commerce, the Federation of Small Businesses, the WCVA and C3SC. A similar Guide has now been published by Rhondda Cynon Taf Council with Torfaen and Caerphilly Councils due to publish their Guides in 2014.
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52. The Guide has been well received both by organisations and within the Council. It also signposts organisations to services provided by other organisations including Business Wales, including support on tendering and winning contracts.
Advertising Opportunities to Tender
53. The Wales Procurement Policy Statement contains an objective that all procurement opportunities over £25,000 are advertised. Through the Source Regional Project the Council is assessing how this can be best implemented. Members were informed that the Source Regional Project had developed draft guidance on advertising that would aim to:
•
Advertise openly to all suppliers
•
Advertise to suppliers based in a select region (or regions)
•
Advertise to suppliers based within a particular postcode area.
54. It was noted that any advertising should generate sufficient interest to create real competition.
55. Any changes to procurement thresholds and the introduction of increased advertising will need to be first reflected in the Council’s Contract Standing Orders and Procurement Rules. These are scheduled to be updated in 2014.
Streamlined Self-Certification / Declaration
56. In an attempt to simplify the procurement processes for small businesses the Commissioning and Procurement Service developed and piloted a more streamlined, self certification /declaration process and form. The form can be used to qualify suppliers for low risk contracts and ensure bidders meet minimum Council requirements and highlights mandatory and optional questions with suppliers self certifying by ‘ticking’ the relevant boxes (Yes/No). The pilot has shown that this form is simple and quick for suppliers to complete, and simple for buyers to assess. The feedback from both buyers and suppliers has been positive
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and the Welsh Government is looking to highlight the Self Declaration form as an example of best practice.
57. Members were informed that the simplified process was less onerous as suppliers would only be required to provide evidence / information related to the qualification questions if they are chosen as the preferred supplier during the tender / award stage. The preferred supplier is then given 10 days to submit evidence before they can be awarded the contract.
Current Council Spend
58. Members were informed that all Council Directorates rely on the external procurement of goods, services and works in the delivery of their services. Annual external spend was around £350m in 2012/13, with 10,000 suppliers and contractors. It is important that the Council manages its market position sensibly to ensure that best use is made of available resources through smarter, sustainable procurement.
59. Members were provided with the geographical nature of the Council’s spend and it was noted that approximately 38% of expenditure was outside of Wales. Caveats were provided as to the data set which was recorded on a post code basis and it was noted that it was not possible to track whether expenditure stayed in Cardiff or Wales.
Cardiff Council Spend 2011/12
Region Cardiff Outside Wales Cardiff Region (exc Cardiff) Wales (exc Cardiff and region) Other Total Spend
£ 147,555,702 128,948,565 49,269,576 7,733,509 610,748 £334,118,099
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% 44.16 38.59 14.75 2.31 0.18
Measurement of Spend
60. In discussing the levels of spend outside Wales Members asked about the influence of EU legislation. Members were advised that EU Directives aim to encourage open and transparent competition through a competitive tendering process and that public sector bodies must comply with EU Directives and EU Treaty principles. In order to ensure compliance Councils could not discriminate by company size within contracts and tendering processes but the Source Regional Project is presently assessing advertising options (see above).
61. In comparing the levels of spend on small businesses, Members were informed that the Council produced data every two years utilising a national service provided through the Welsh Government that mapped spend data information to information about company size. The Welsh Government is presently changing its service provider and the data for 2012/13 is not expected until March 2014.
62. The last available data for Cardiff was for 2010/11. There were inevitably gaps in this data and it was only possible to map around 85% of spend data to an organisation’s size. The 2010/11 data showed that around 48% of the Council’s total procurement spend was with SMEs. This figure rose to 57% when using only data where it was possible to map the spend data to the size of the organisation.
63. The national data does not record spend within the supply chain where prime contractors are sub-contracting work to SMEs.
64. The Council has recognised the need to provide more timely information on spend with SMEs, ideally on a quarterly basis, and it was highlighted to Members that options were being explored through a procurement e-sourcing blueprinting exercise. The Council will also be looking to record its prime contractors spend with SMEs.
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Category Management
65. Members were informed that Category Management was another tool the Commissioning and Procurement Service utilised in engaging with small businesses. Category Management was defined by the Procurement Strategy as the best practice approach to managing procurement. It organises the Council’s spend and resources into specific spend categories and provides a clear, structured framework. As an approach it should deliver improved value for money from the Council’s external spend on goods, services and works by challenging what the organisation buys and improving how it is bought. This is achieved by identifying key spend categories and proactively managing them to ensure:
–
The Council only buy what it needs (Demand Side)
–
Supplier arrangements deliver maximum benefit (Supply Side).
Demand Side Levers
Supply Side Levers
Buy less or eliminate spend
Aggregate or Bundle Spend
Standardise or change specification Substitution
Change Nature of Supplier Relationship Understand Total Acquisition Cost
66. Cardiff’s spend, like that of most local authorities, is extremely diverse. Under the Category Management approach, the Council has established category teams to manage its expenditure: Social; People and Professional Services; Construction & Special Projects; Environment; Transport & Facilities Management; and Corporate & ICT. These teams each manage three main category groups of expenditure.
67. The Inquiry received further details of the category management structure for 2012/13; the Category Management Team; and the key processes
a. Savings of £18.5 million were initially targeted by 2013/14, £12.5 million of which was General Fund savings. b. Savings achieved to date were £3.977 million in 2011/12 and £3.641 million in 2012/13. c. Planned savings for 2013/14 were £4.4 million – totalling general fund savings of £12 million. 43
d. A further £8 million savings had been earmarked during the next three years.
68. Members were advised of the consideration given to the local economy and Small to Medium Enterprises as part of Category Management procurement. The Committee was informed of the need to gain an understanding of the local market, breaking down contracts into small contracts to improve access to opportunity, and the use of collaborative frameworks and promotion of consortia bids.
69. Members also noted that SQuID has been developed by Welsh Government and rolled out across the public sector. It is now widely used across procurement teams within local Councils, the NHS and other public sector organisations. The key aim is to simplify and standardise the questions asked at selection stage meaning suppliers are able to reuse their responses and update/adapt where necessary for each particular contract.
70. The Council is promoting the use of SQuID for both Pre-Qualification Questionnaires (PQQ) or for selection stage questions within an Invitation to Tender (ITT). There are 3 parts:
Part 1 – Introduction Overview of the 7 sections that SQuID covers - Regulation, Economic & Financial Standing, Capacity and Capability, Management, Equal Opportunities, Sustainability and Health & Safety.
Part 2 – Guidance on selecting questions Sets out how best to address each section depending on the risk of the contract ensuring proportionate questions are asked. The guidance will help determine what level of checks - light-touch’/ ‘basic’ or ‘in-depth’/ ‘comprehensive’.
Part 3 – Question Catalogue The full question set – questions selected will depend on the outcome of the risk based assessments carried out in Part 2.
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71. SQuIZARD is an Excel tool which incorporates all three parts of the guidance above. It includes a risk-based questionnaire for buyers to work through which will automatically output the relevant questions to ask in the PQQ or ITT depending on the responses provided. The Welsh Government should launch the online Supplier Qualification Information Database (SQuID) in 2014 and it is hoped that this will further simplify the procurement process.
Supplier Survey
72. The Commissioning and Procurement Team undertook a survey of suppliers in 2012, with 613 valid responses returned. A survey of Council staff was also undertaken and 220 valid responses were received. The results were largely positive and have been used to shape how services are developed; they were a catalyst for setting up the Source Regional Project. The surveys are scheduled to be repeated in 2014.
b) Perceptions of Small Businesses about Tendering & Procurement 73. Members were informed by the Federation of Small Business that effective and locally responsible procurement spend had the potential to lead to a range of benefits including:
Create new jobs and sustain existing ones
Contribute to tackling issues such as worklessness and deprivation
Support the creation of new business
Boost spending in local shops and on local services
Support the development of local labour through apprenticeships.
74. Members were provided with the Scrutiny Research results that highlighted their perceptions of the tendering process. Whilst the experience of tendering with the Council was a question on its own (Q11), this issue was also mentioned by a large number of respondents in relation to questions 8 and 17 and even in the ‘other’ responses in questions 14 and 16. 45
75. Many of the responses to questions 8, 11 and 17 highlight what they saw as the unfulfilled potential that the Council has to help small businesses through the procurement process.
“You should use Cardiff Council's purchasing power to support local businesses and to propagate the transparency, fairness and VFM agenda”.
“Need to make it easier for SMEs to hear about, apply, and deliver services for the Council. And easier for companies to get onto various call down and supplier lists. Projects should be spread out to as many capable companies as possible during the course of a year.”
“Realise the importance and value of using small established local businesses when awarding contracts, rather than relying on larger firms.”
“Cut out some of the requirements requested when filling out tender forms. Give smaller firms a chance in carrying out any small work instead of it going straight to a large contractor who has huge overheads. This would then save the council more money in which they could then use on other projects”.
76. However, respondents not only mention the potential for the Council to support small businesses but also highlighted why it was so difficult for small businesses to currently tender for Council procurement contracts. The main reasons given for this were the complexity of the tendering process and the resources required to undertake a tender.
“I have tried tendering on many occasions because we sub contract to various companies that carry out work for Cardiff Council. Unfortunately I can never get anywhere as the tender forms sometimes seem impossible to answer.”
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“We don’t not have enough staff to cope with the tender application process despite being more competitively priced and suited to the work than our competition.”
77. As the process was felt to be so complex and time consuming, a number of businesses also felt that support was required to aid with the tendering process but was not forthcoming.
“The Council should supply business support for small business who are relatively inexperienced in business and tendering processes. I need all the help and advice I can get.”
“The Council should make sure local businesses are supported for tenders and not just used to fulfil the requirement to look for local suppliers”.
“I would have liked some assistance in the (tendering) process - whether by Cardiff CC or by someone else. It's a bit of a minefield of an area if you don't know how to do it”.
78. Finally, a number of respondents felt that the process favoured larger companies over the smaller businesses despite small businesses having the skills and expertise to do the work.
“I sometimes feel that when trying to fill in a form for tendering that my company is not big enough for the Council to carry out any works for them. I know 100% that we can as we carry out works for the rail infrastructure, Wales & West and have also carried out works for Hafod Housing.”
“The tendering process is not suited for SMEs. One man services cannot provide the range of checks and balances and concentrate on their work.”
“We would very much like to work for Cardiff Council but found the tendering process heavily biased towards larger companies who are able to undertake a large amount of bureaucratic paperwork, prior to being 47
awarded the works. We felt that ability to actually undertake the work was a low priority for the Council.”
“They only allow relatively large business to participate. The most recent tender required us to have a turnover of at least £1,700,000 seven times our current turnover .Of course the Councils current policy of withdrawing all business from small companies reduces our turnover further.”
79. Members were of the view that clearly, there are a number of issues that respondents raised in relation to tendering. These included the potential that the tendering and procurement process has to help small businesses, the complexity of the tendering process itself and the availability of support with the process. Respondents also identified support and information from the Council emerged as a key theme in relation to a number of areas.
c) Good Practice from “Best Councils To Do Business With” Award 80. The task group were provided with University of Bangor research with SMEs that found that a number of issues that are experienced as barriers to engagement with the public sector. These include:
the complexity of the public sector procurement process;
the difficulty experienced in completing PQQ documentation;
a lack of transparency in the evaluation and feedback process;
use of non-contract specific risk criteria which are sometimes unduly onerous compared to the value or risk posed by the contract;
obtaining access to, and use of ‘approved lists’.
81. The Council’s Scrutiny Research Team analysed the good practice identified from the top ten placed Councils in the Department for Skills’ ‘Best Councils to do Business With’ competition, who were selected for their innovative procurement practices for small businesses by a panel which included industry experts and local and central government representatives. Appendix 1 on pages 70 - 83 provides in
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depth commentary on the good practice identified, and the paragraphs below provide an overall summary.
82. The Scrutiny Research undertaken as a part of the Inquiry identified a number of measures which local authorities have put in place to improve the involvement of SMEs in their procurement process. These have involved:
Systems for Measuring Spend: (eg procurement systems to identify the level of expenditure made by Council procurement with SMEs).
Offering Information And Guidance (eg procurement processes and opportunities, and; facilitating and supporting procurement from SMEs).
Improving SME Awareness Of Tendering Opportunities by publishing them on web portals / electronic tendering websites and via local and social media. Many local authorities have published guidance on how the procurement process works and how to achieve success when tendering for local authority contracts. These are delivered through dedicated web pages and published guidance documents, in addition to providing face-to-face guidance via periodic ‘meet the buyer events’, procurement seminars and workshops. Many of these were specifically intended and directed for SMEs.
Providing Training And Mentoring To SMEs to improve the ability of SMEs to effectively compete for Council contracts. Training and mentoring has been provided via one-to-one, seminar and workshop events.
Making Tendering More Viable For SMEs. Contracts have been packaged into smaller lots by some local authorities aiming to make procurement more viable for SMEs. In addition, prompt payment procedures have been established by some local authorities to mitigate cash flow risks for SMEs.
Relaxing / Removing Pre-Qualifying Criteria which could preclude some SMEs from competing for certain contracts. A number of local authorities have relaxed the requirements / use of pre qualification questionnaires (PQQs) for lower value contracts with the aim of making contracts more accessible to SMEs. 49
Other local authorities require organisations to complete a PQQ once only regardless of the number of contracts which they compete for, with the aim of making the tendering process less onerous.
Incorporating A Commitment To SMEs In Procurement Strategies. A number of local authorities have included a commitment to encourage procurement from SME organisations in their respective procurement strategies. Some local authorities have signed up to the best practices and have adopted the principles of SME procurement that are included in the Small Business Friendly Concordat (LGA / ODPM 2005) or the Opening Doors Charter for SME Friendly Procurement (Welsh Assembly Government 2008). Additionally, some local authorities have implemented arrangements whereby they require the receipt of quotes from local SME organisations on contracts of lower values.
i) Measurement of SME Spend
83. Whilst it was not possible to analyse Council procurement spend by size of business in Cardiff, analysis from the ‘Best Councils to Do Business with Award’ submissions highlighted that some other Councils have adopted systems for analysing Council spend, and there is a varied percentage spend on small business as demonstrated in the table in Appendix 1. It should be noted that the Council’s reporting on their procurement spend may have adopted slightly differing methodologies for measuring their spend.
ii) Information and Guidance
84. Many local authorities provide information and guidance which firstly aims to improve SME awareness of tendering opportunities. Secondly, many local authorities provide information and guidance on competing for tendering opportunities. This information and guidance is published in hard copy or electronically by many local authorities. Some local authorities have additionally provided guidance to SMEs via face-to-face workshops, seminars and events.
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iii) Improving Awareness of Tendering Opportunities
85. The results of a Federation of Small Businesses survey of its members in 2012 reported that the most widely cited reason for not submitting a bid for public procurement was because SMEs were “not aware of appropriate contracts or suitable opportunities”. This was the main reason cited by 49% of respondents.
86. To improve awareness of such opportunities, arrangements have been put in place to improve SME access to procurement opportunities within the public sector. Nationally, a number of web portals have been set up that provide details of public sector contracting opportunities to suppliers. Various examples are detailed in Appendix 1, as are other special arrangements local authorities have put in place to improve SME knowledge of, and access to, procurement opportunities.
iv) Providing SME Guidance and Training on Tendering
87. There are a number of different approaches which local authorities have used with the aim of better informing organisations (including SMEs) about how to compete for local authority contracts. These broadly comprise: a. providing written guidance notes which are published in hard copy or electronically; b. holding periodic events, where organisations can meet buyers, and attend guidance seminars and workshops.
88. A number of local authorities have published guidance notes and developed website pages on how to conduct / win business with their Council. These include Newcastle Council, Leeds City Council, East Sussex County Council, Northumberland County Council, Wiltshire Council, Wakefield Council, Lewisham Council and Sheffield City Council, with case studies detailed in Appendix 1. Some local authorities also hold periodic events, where prospective supplying organisations meet purchasers. These events provide SMEs with opportunities to raise questions and improve their understanding of the goods, services and works required by local authorities.
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89. In addition, other local authorities have developed procurement workshops and seminars targeted towards SMEs. These events are held in order to raise SME awareness of procurement opportunities within councils, and provide guidance on producing effective tender submissions. The local authorities who have conducted these events are Harrogate Council and Oxford City Council.
90. A number of local authorities provide training and mentoring to SMEs with the aim of improving their ability to effectively compete for Council contracts. Training and mentoring has been provided on a one-to-one basis and through workshop events. 12 examples of how different Councils train and support SMEs to be able to compete for Procurement are detailed in Appendix 1.
iv) Making Tendering More Viable for SMEs
91. Some local authorities have revised their tendering arrangements to make tendering for Council procurement opportunities more viable for SME organisations. For some local authorities this has involved packaging contracts into smaller lots which may be more feasible for smaller organisations. Case studies from Northumberland, Kirklees and The Highlands Council are detailed in Appendix 1.
92. Members were provided via ‘the best Councils to do business with’ awards with examples of Councils using prompt payment clauses. Prompt payment is vital for small businesses with many firms not able to survive the cash flow problems that late payments create. The table below highlights best practice information on prompt payment.
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93. The Council’s current payment performance for 2012-2013 highlights that 84.16% of undisputed invoices were paid in 30 days. A number of procurement contracts adopt the Welsh Government’s 10 day payment standard. Notable practice of prompt payment elsewhere is highlighted in Appendix 1, including Halton Council’s approach of seeking discounts for invoices that it paid within 10 days.
94. Surrey and East Sussex Councils have both actively defined a minimised set of standard requirements for tenders. Selection criteria, including insurance levels and required levels of past experience, are based on an assessment of risk specific to each tender. East Sussex also operates a top-up insurance scheme for suppliers able to SMEs to achieve required levels of public liability insurance. The initiatives include Build East Sussex, which supports the local construction industry to gain new business, and the nationally recognised Contractors Top Up insurance scheme. The insurance scheme makes it easier for small firms to get the insurance cover they need to carry out public sector contracts, such as repair and maintenance work in schools.
95. Pre Qualifying Questionnaires (PQQ) are commonly use by procuring organisations for the financial and technical vetting of prospective vendors. They include a set of criteria which tenderers must meet in order for their tenders to be considered. A number of local authorities have relaxed the requirements / use of 53
PQQs for lower value contracts with the aim of making contracts more accessible to SMEs. Other local authorities require organisations to complete a PQQ once only, with the aim of making the tendering process less onerous. Appendix 1 shows some case studies of this approach.
v) Procurement Strategies Incorporating SMEs
96. A number of local authorities have committed themselves to encourage procurement from SME organisations as part of procurement strategies, nine of which are detailed in Appendix 1. Some local authorities have signed up to the best practices and principles in SME procurement included in the Small Business Friendly Concordat (LGA / ODPM 2005); and the Opening Doors Charter for SME Friendly Procurement (Welsh Assembly Government 2008).
Additionally, some
local authorities have procedures whereby the receipt of local quotes from SME organisations is required for contracts at lower values.
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9 - Regulatory Services 97. Members were informed of the support to business provided by the Council’s Regulatory and Supporting Services function, and the approach it adopted. Regulatory and Supporting Services is responsible for a budget of £10.3 million, and generates income of approximately £5.9 million a year. It has approximately 250 employees and is accessed and delivered through 8 service delivery points throughout the City. The key services provided to small businesses are:
a. Trading Standards and Wales Illegal Money Lending Unit: a host of consumer protection statutes including product safety, food standards, counterfeiting, animal health and feed, weights and measures and investigation of false claims on goods/services. The service investigates complaints, conducts inspections as well as instigating a substantial sampling program. Trading Standards also advises businesses on their legal responsibilities under criminal legislation and helps them to comply. The service also encompasses the Illegal Money Lending Unit for Wales.. b. Licensing: administering and determining applications for licences, certificates, registrations and permits in respect of alcohol, public entertainment, gambling, street trading, taxi licences, charitable collections and animal related licensing within the city. c. Consumer Services: advice, education, casework and mediation services for consumers and businesses, financial capability material and delivery of lessons in schools and community organisations and a range of educational services to the community and business. d. Public Protection and Private Sector Housing: the traditional elements of environmental health by protecting public health in areas such as Food Safety, Port Health, and Health and Safety in the workplace. Private Sector Housing provides help and support to landlords and tenants living in private housing by encouraging landlords to improve the physical and management standards of privately rented houses. e. Pollution Control: including the Noise and Air Pollution team, the Ant Social Behaviour team (ASB), the Contaminated Land team, Cardiff Dogs Home & Dog Warden and the Pest Control service.
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f. Cardiff Scientific Services: an accredited laboratory situated in Croft Street, currently provides a testing service for industry and the general public on a fee paying basis. Services include food quality standards, consumer protection (toy and general product safety), environmental (air quality (Nox), factory inspection (raw material analysis), testing for food industry and Road Traffic Act 1988 Independent Testing. 98. It was noted that the service area enjoyed high levels of customer satisfaction, and that regulators always attempted to work in a proactive preventative way with small businesses. It was also highlighted that the service probably had the most consistent engagement with small businesses across the city. Examples of partnership approaches with businesses were also provided, and Members visited Newgarage Ltd on Tudor Street, operated by Mr Hari Patel, which was able to positively demonstrate the good working relations with the Regulatory team.
99. Respondents to the Scrutiny Research survey who had contact with Regulatory Services rated regulatory teams highly across a number of factors. The four charts below show that in relation to the overall standard of service, understanding legal obligations and in fair treatment during regulatory inspection, each regulatory inspectorate scored highly. There was a very slight dip in relation to the clarity of information but there were still a much larger number of positive responses in relation to this area.
Overall standard of service 50
45
Percentage
45 40
41
35
30
30
35
24
25 20 15 10
32
14
13
14 14
11 6
16
5
5
0
0 1+2
Environmental
Licensing
3+4
5+6
Trading Standards
56
7+8
Rating
9+10
Helping you understand your legal obligations 60
Percentage
50
44 44
40
32
30 20
48
24 16 9 10
10
16 15
11
10
7
13
0 0 1+2 Environmental Licensing
3+4 5+6 Trading Standards
7+8
9+10
Rating
Information being clear and easy to understand 45
39
40
34
Percentage
35
34
29
30
23
25 20
37
20
18
15
3
5
14
10
9
9
10
17
3
0 1+2
Environmental
3+4
Licensing
5+6
7+8
Trading Standards
9+10
Rating
Being fairly treated during regulatory inspection 60
52 48
Percentage
50
40 40
35
30 20
22 21
18 14
14 9
10
10 6
3
9
0
0 1+2
Environmental
Licensing
3+4
5+6
Trading Standards
7+8
9+10
Rating
100. Members were not clear as to the extent of contact and co-ordination between these Regulatory Services and the other support services provided to small businesses by Cardiff Council. 57
10 – Perceptions of Miscellaneous Support from the Council 101. In discussions relating to the Scrutiny Research and the support and information provision of the Council, Members considered Question 7 of the survey that specifically asked small business how they rated the Council’s support in relation to a number of different services. The results of this question are shown in the table below.
How effective would you rate Cardiff councils support in relation to the following areas 100% 90%
28
80%
34
39
40
45
P e rc e n ta g e
70%
53
57 72
60% 50% 40%
59 59
49
55
30%
47 42
20% 10%
39 25
13
0%
7
11
8
5
4
4
Promotion of Cardiff
Response to your concerns
General advice and support
Skills training and development
Signposting for grants / funding
5
Waste collection Community safety Planning services advice Area
Very effective
Effective enough
Ineffective
102. Those respondents who were aware of the particular service felt the support relating to waste collection was the most effective, with 59% rating it effective enough, 13% very effective and only 28% saying it was ineffective. This finding contrasts with a number of negative comments relating to waste collection in the ‘open ended’ questions.
“There has been recent confusion / conflicting advice about when waste is connected from Fanny Street means our rubbish can be on the street for a few days.”
“Newport Road often looks a disgrace with rubbish spilling onto the pavement. Very unsightly to a visitor to our city.”
103. Furthermore, one of the most significant issues mentioned by small businesses was the high additional costs for waste collection on top of their business rates. 58
“As far as waste removal I feel at the extortionate rates charge it should be included in the price, not be made to pay extra for the privilege.”
104. The fact that this factor had the highest percentage of “effective” and “very effective” ratings could be reflection on how poorly the respondents rated the other areas.
105. Community safety had the next most effective rating of support with 59% feeling it was “effective enough” and 7% “very effective”. This still left over a third of the respondents who were aware of the support in this area feeling that it was “ineffective”.
106. Support for planning services, the promotion of Cardiff and the response to concerns had very similar response numbers with around 40% of those respondents aware of the support rating it “ineffective” in these areas. The promotion of Cardiff did however have a larger number of “very effective” responses, with 13% stating the support services were very effective.
107. Support to general advice and support and training and development fared poorly, with over 50% of those aware of the services rating them “ineffective”. The support to the signposting of grants and funding was rated the least effective by respondents with almost 75% of respondents who were aware of support in this area rating it “ineffective”.
108. Members were of the view that these results are very interesting in their own right, and demonstrate that the small businesses who responded were generally negative about the Council’s support in a variety of areas. However, one of the most prominent elements from these findings is actually the lack of awareness surrounding the support services provided by the Council.
109. The table below demonstrates lack of awareness was particularly evident in relation to skills training, with nearly 50% of respondents being unaware that support was available in this area. Around 37% were unaware of support relating to community safety and grants / funding support. Nearly a third of respondents 59
were unaware of support relating to general advice, planning services or responding to concerns and 16% were unaware of any support relating to waste services provided by the Council.
Graph to show the awarenss of support provided by the council 60
Percentage
50
48 38
40
36
33
30
30
27 20
20
16
10 0 Skills training and development
Community safety advice
Signposting for grants / funding
General advice and support
Planning services
Response to your concerns
Promotion of Cardiff
Waste collection
Area of Support percentage of respondents who were unaware that support was available in this area by the Council
110. this lack of awareness of support was not only evident in responses to this question. Many respondents answering the open ended and ‘other’ questions mentioned the lack of awareness surrounding what Cardiff Council offers in relation to small business support.
“We are totally unaware of what services the Council can offer relating to signposting for grants / funding.”
“I am completely unaware of any available support or advice offered by the Council. On the one occasion I called to ask for advice, I was passed around to various people who didn't know where to send me or with whom to speak.”
111. Some of the comments did refer to the type of support provided, with one respondent emphasising the need for the right kind of support which could vary by the type of business.
“I think it's important to stress that we need *relevant* advice and support. Generic business advice is fairly ineffective for us at the moment.” 60
112. A specific example of such support was for:
“All regulatory forms be available on line and in other formats besides .pdf, e.g. word/.doc/.txt. An upgrade of Council's site search facilities on internet/intranet accessible to the public.”
113. Members heard that the majority of issues highlighted by the comments do not tend to be around the quality of the provision of the support by the Council, but rather about people’s awareness of what was being provided. Respondents felt that this issue could be easily addressed if the Council provided far more and accessible information to businesses on the services they provide.
“Make us more aware of what you have to offer small businesses tell us more effectively what support you can provide.”
114. This final comment echoes a very similar theme which emerged in relation to support, namely the provision of information. A number of respondents felt that there simply wasn’t enough information to establish, what kind of help was available, or who to contact for advice etc.
“I need access to information on services the authority provides.”
“The Council should provide clearer information about start-up / small business grants or other financial support for non convergence area businesses (are there any?)”
115. Indeed one respondent felt that the Council should embrace modern technology to inform businesses about the support available:
“CCC should also use social media more effectively to tell us about the services you can offer e.g. Twitter.”
116. Other respondents felt that the Council should play more of a role in setting up and supporting networks to help raise awareness of support and issues. 61
“As a micro business we very rarely if ever see information about how the Council can support micro businesses. There should be more networking events to allow CCC to make business such as our aware of what support you can provide.”
117. A number of respondents also suggested other ways in which they could find out more information from the Council, which would also enable them to contribute to planning and development. This was via more effective consultation and engagement. Respondents felt that they did not know what the Council was planning, and wanted to be more engaged with any developments that were being planned or undertaken.
“Please engage with us and include us in a focus group to address the very real obstacles highlighted above.”
“Consult, collaborate and engage with local businesses. I have received no invite to collaborate with any initiatives / changes for anything that happens in my local area despite our site having a prominent location and being one of the busiest of its kind.”
“We recommend that related officers should periodically make field trips to renew the confidence of small businesses, especially now, to establish their financial predicaments and to promote better competitiveness with the big boys.”
118. It is quite clear from both the quantitative data and the comments surrounding support, that awareness of the support available and a lack of consultation was a big issue for the small businesses who responded. Businesses suggested remedies to these issues, such as the use of social media and forums and networks which could help alleviate the lack of awareness and engagement that small businesses apparently feel.
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11 – Perceptions Specific to City Centre Small Businesses
119. Retail is massively important to Cardiff’s economy, contributing £1.2 billion to the day time economy, and £400 million to the night time economy. Cardiff was ranked as sixth as a retail city across the UK, and St David’s Centre is ranked fifth in the UK. Footfall in the city centre has increased by 48% since 2008 from 26 million to the current 38.8 million annual visits. Footfall in the newly pedestrianised St Mary Street / High Street has also increased from 8.2 million in 2009 (pre pedestrianisation), to 12.8 million in 2012. 120. The city centre arcades enable new entrepreneurs to open businesses that add a unique attraction and distinctive products to the city centre. These starter businesses have the potential to grow into established businesses to further enhance the City’s Offer. Between them, the six key arcades ( Royal, Morgan, Castle, High Street, Duke Street and Wyndham) contain 158 shops and turn over £60 million a year.
121. Members were provided with an overview of the support for small businesses provided through the Council’s City Centre Management Team. City Centre Management aim to be champions for the retail sector, actively promoting a variety of opportunities that focus on working with individuals to ensure that continuous development of this sector is maintained.
122. City Centre Management co-ordinate a range of activities to support retail development. These include initiatives like:
a. Producing weekly sales and footfall reports, and monthly comparisons with other retails cities’ performance. b. Facilitating the Cardiff Retail Partnership, where small businesses are represented by owners and / or landlords of the city’s Arcades. Its mission statement is to create interesting, hospitable, special and opportunity filled, year round, high quality City Centre experiences that strengthen Cardiff’s appeal for shopping and entertainment.
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c. Providing “Activity Sites”, where small business are supported by enabling them to free use of the promotional sites across the City Centre – for openings, events, offers etc. 30 local firms have made use of these sites in the past 12 months. d. The introduction of a Saturday Market in summer 2012, comprising 26 stalls – giving niche retailers the opportunity to trial new enterprises. This initially led to challenges from Central Market stall holders relating to duplication. City Centre Management are meeting with all the tenants to assist them to develop the market, introduce promotional activities and raise the profile, and awareness of the market, its importance to the city and the opportunity to enhance as many of the 66 businesses as possible. e. Co-ordinating and supporting events like
“Step into Christmas” (launched in 2011). The team are currently developing an Animation programme with landlords, owners, and tenants, to bring activities to the areas of the city that have “features” such as heritage, uniqueness and an emphasis on small business, which will promote businesses and increase footfall.
“Independent Day” on the 4 July, advertising the event on The Hayes & St Mary Street (this day celebrates the uniqueness of independent shops).
The launch of the Castle Quarter and Café Quarter branding and websites.
123. In late May 2013, the Committee arranged a listening event in the Castle Arcade , hosted by local business Rules of Play, to find out at first hand the issues facing small traders in the city centre. The event was attended by over 40 local arcade and Central Market traders and other city centre small enterprises, as well as some business people who had travelled into the city centre to attend. Scrutiny Research and Members logged numerous views of the local business community about its relationship with the Council and issues relating to the City Centre and small businesses. In relation to marketing, transport and signage the following points were highlighted:
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Lack of affordable car parking
Bus stops and signage do not support the flow of the public into the markets and arcades
City Centre signage focuses on large retail centres
The historical and independent quarter of Cardiff has not been effectively marketed.
124. In discussing the support available to small businesses, Members were informed of the following issues:
Lack of business forums for the city centre.
There is a need for peer business mentoring schemes.
The Council has a role to play in facilitating action to assist traders.
Group meetings with independent traders do not occur and would be welcomed by some.
Small businesses would welcome the backing of the Council.
City Centre Management focus on large retailers.
Council officers need experience of the difficulties the commercial sector is facing at this time.
Lack of knowledge of where to find help and advice.
Cardiff Retail Partnership has some work to do to engage with small independent traders.
The Council has a potential role to play in fostering a culture similar to that of Cambridge or Bristol.
Cardiff Central Market has significant issues and the Council need to be more proactive in its management.
One city centre arcade business owner who was a resident of Canton, and who also had experience of Business Improvement Districts (BIDs) from other parts of Wales and England, suggested that BIDs could deliver benefits for small businesses. Other visitors to the Listening Morning echoed this view, feeling that while the city centre was an obvious location for a BID, other neighbourhoods of Cardiff might also benefit from this partnership approach.
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The Bristol Pound
125. At the Listening Event Members were informed of an initiative that assisted independent traders in Bristol - the ‘Bristol Pound’. Members were informed that Bristol Pounds stick to Bristol, build community connections and work for people rather than for banks to create a fairer, stronger, happier local economy. The Bristol Pound is the UK’s first city wide local currency, the first to have electronic accounts managed by a regulated financial institution, and the first that can be used to pay some local taxes.
126. The Bristol Pound is run as a partnership between the Bristol Pound Community Interest Company and Bristol Credit Union. It is a not-for-profit social enterprise. The public can spend Bristol Pounds at every participating business using either paper Bristol Pounds, or from a Bristol Pound account with any mobile phone by using our simple TXT2PAY SMS payment system, or over the Internet.
127. Having electronic accounts makes Bristol Pounds easy and convenient to use for the public and opens up the opportunities for business to business payments. All electronic accounts are managed by Bristol Credit Union on established and secure banking systems Bristol Pounds are purchased for sterling and can be spent with business members. See our Business Directory for where you can spend Bristol Pounds*
128. Bristol Pounds are spent just like pounds sterling with £B1 equal in value to £1 sterling. Each Bristol Pound is backed pound for pound by sterling deposits, so taking part incurs no more financial risk than is generally the case when depositing money with an authorised and regulated institution. The Bristol Pound is a complimentary currency, designed to work alongside sterling, not replace it.
129. Business accounts are available to traders that are independently owned and based in or around Bristol. The Bristol Pound is not legal tender and so accepting Bristol Pounds is voluntary. Printed Bristol Pounds are highly secure, printed by specialist printers, incorporating a host of security features. All Bristol Pound systems are secure. Money can only be taken out of the system by registered account holders. 66
INQUIRY METHODOLOGY
130. The Economy & Culture Scrutiny Committee applies a project management approach to its inquiries including mechanisms to consistently prioritise topics suggested for scrutiny, scoping reports and project plans. The aim of these is to ensure there is a dialogue with the service areas involved in the scrutiny process with the ultimate aim of improving overall service delivery and enabling effective scrutiny.
131. The Economy & Culture Scrutiny Committee applies a project management approach to its inquiries including mechanisms to consistently prioritise topics suggested for scrutiny, scoping reports and project plans. The aim of these is to ensure there is a dialogue with the service areas involved in the scrutiny process with the ultimate aim of improving overall service delivery and enabling effective scrutiny.
132. During the inquiry the Committee heard evidence from the following witnesses.
Internal Witnesses
Ken Poole, Head of Economic Development
Gareth Newell, Operational Manager (Enterprise)
Steve Robinson, Operational Manager (Commissioning and Procurement)
Gary Watkins, Operational Manager (Revenues)
Kathryn Richards, Operational Manager (Culture, Tourism and Events)
Emyr Williams, Principal Scrutiny Research Officer.
External Witnesses
Josh Miles, Federation of Small Businesses in Wales
Numerous visitors to the Listening Morning
179 respondents to the Small Business Survey
Mr Hari Patel, Newgarage Ltd, Tudor Street. 67
133. Two research reports were commissioned and undertaken by the Scrutiny Research Team entitled:
Small Business Perceptions of Cardiff Council (online survey of small businesses, utilising social media and business networks, report available on request).
Procurement Practice and Small Business (Literature review, report available on request).
134. In addition a content analysis of “Best Councils To Do Business With” award entries was undertaken with a comparison with Council practice.
135. In an attempt to reach out to small businesses Members agreed to undertake site visits and organised a Small Business Consultation exercise with independent city centre traders on 30 May 2013, in Rules of Play, Castle Arcade, hearing from approximately 20 businesses.
BIBLIOGRAPHY AND REFERENCES
Cardiff Council: Small Business Perceptions of Cardiff Council (Scrutiny Research Team 2013)
Cardiff Council: Procurement Practice and Small Business (Scrutiny Research Team 2013).
Cardiff Council: Small Business Consultation – Listening Morning (Scrutiny Research Team, May 2013).
Department for Business, Skills and Innovation: “Best Councils To Do Business With 2012”.
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LEGAL IMPLICATIONS
136. The Scrutiny Committee is empowered to enquire, consider, review and recommend but not to make policy decisions. As the recommendations in this report are to consider and review matters there are no direct legal implications. However, legal implications may arise if and when the matters under review are implemented with or without any modifications. Any report with recommendations for decision that goes to Cabinet/Council will set out any legal implications arising from those recommendations. All decisions taken by or on behalf of the Council must (a) be within the legal powers of the Council; (b) comply with any procedural requirement imposed by law; (c) be within the powers of the body or person exercising powers of behalf of the Council; (d) be undertaken in accordance with the procedural requirements imposed by the Council e.g. Scrutiny Procedure Rules; (e) be fully and properly informed; (f) be properly motivated; (g) be taken having regard to the Council's fiduciary duty to its taxpayers; and (h) be reasonable and proper in all the circumstances.
FINANCIAL IMPLICATIONS
137. There are no direct financial implications arising from this report. However, financial implications may arise if and when the matters under review are implemented with or without any modifications.
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Appendix 1
Digest of Good Practice identified from “Best Councils To Do Business With” Award The 10 winners of the ‘Best Councils to do Business With’ competition were selected for their innovative procurement practices for small businesses by a panel which included industry experts and local and central government representatives. The winners were:
Barnsley Metropolitan Borough Council
Bury Council
City of London Corporation
Halton Borough Council
Harrow Council
Hertfordshire County Council
Manchester City Council
Norfolk County Council
Sheffield City Council
Surrey County Council and East Sussex County Council (joint bid)
Norfolk County Council.
a) Measurement of SME Spend
City of London County Corporation: SME procurement spend is reported annually to a finance committee of Council Members.
Hertfordshire County Council “Last year we set up a third-party analysis tool (Atamis) to set a robust benchmark for measuring the proportion of spend with different business sizes, locations and sectors. Through Atamis we can see at a glance, for example, that 96% of our spend on horticultural services is with SMEs. This analysis is informing our approach to the various sectors and markets we work with, and providing us with quantitative data against which to measure our success. In addition to this, we also collect qualitative data from suppliers and contractors and where we can, we act on this to improve local and small business take up. An example of how we have listened to our suppliers is 70
when we were challenged that the way we used credit reference agencies was disadvantaging smaller businesses. So we have adopted a much more flexible approach to financial checking to give more micro-businesses and sole traders more opportunity.”
SME City of London Hertfordshire (84% of suppliers categorised as SMEs) Surrey County Council East Essex County Council Barnsley Metropolitan Borough Council Norfolk County Council Halton Borough Council Sheffield City Council
40%
Micro
Small
Medium
1%
44% 17%
22%
37% 38% 53.9% 42% 86% 28%
b Providing Training and Mentoring to SMEs o www.supply2.gov.uk. A government sponsored national web portal that offers access to lower value public sector contract opportunities. The portal has enabled access by SMEs to lower value contract opportunities. It has been reported that the portal makes it easier for businesses to source relevant opportunities and reduces access barriers to public sector contracts. Through this portal, businesses can create a unique supplier profile which can be accessed by public sector procurers. In its first two years of operation, more than 101,000 suppliers registered on the site and over 93,000 contract opportunities were advertised, of which over 31,000 were for lower value opportunities (HM Treasury 2008);
o The Welsh National Procurement Website consists of two portals, which are www.sell2wales.co.uk (for suppliers) and www.buy4wales.co.uk (for purchasers). 30,757 suppliers had registered on the website by the end of the August 2008, of which 18,720 were registered in Wales. It was reported that 165 public sector procurers have registered, representing 97% of public sector organisations in Wales (HM Treasury 2008). The Sell2Wales website states that it advertises up to £5 billion of contract notices annually allowing businesses to identify
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procurement opportunities. It also enables businesses to contact local authorities and promote their companies;
o The Public Contracts Scotland (www.publiccontractsscotland.gov.uk) portal provides details of available contracts from a number of bodies including Scottish local authorities. It allows organisations to sign up to email alerts of procurement opportunities;
o North Eastern Purchasing Organisation (NEPO) is a purchasing and contracting consortium consisting of 12 full member local authorities and 13 associate members. NEPO developed standardised tendering documents which could be accessed through a regional portal (www.nepoportal.org) (LGA / ODPM 2005). The regional portal enables businesses to register as suppliers for opportunities advertised by NEPO, to receive tender alerts and make tender submissions.
o A number of local authorities have procurement portals / electronic tendering websites, which enable businesses to register their interest in procurement opportunities and submit tenders. Some examples include East Sussex County Council, Leeds Council and Northumberland County Council (LGA / ODPM 2005).
o Norfolk County Council uses social media to publicise contracts more widely. Following feedback from small local businesses all contracts are posted on Twitter. “We use social media, particularly Twitter, to engage with local businesses and present the message that we are ‘open for business’ we have more than 500 Twitter followers, concentrated in the east of England. We have linked our £500 spend with our contract database, so that spend against each contract on the register can be viewed. We are rolling out a new etendering system which captures supplier category so we can see what percentage of bidders are SMEs, versus percentage of successful tenderers. The use of Twitter and Contracts Finder, together with concept viability days, helps to draw in new entrants. We use outcome-based specifications to encourage innovation, and test our specifications at concept viability days to make sure they are not a barrier.”
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o Dudley Metropolitan Borough Council advertises tender opportunities in the local media and on its own website, whilst having electronic tender guidance and submission options events (Dudley Council Website).
o Derbyshire County Council and eight other neighbouring councils have introduced SME procurement friendly changes which include providing listings of new procurement opportunities and recurring contracts which could be bid for. This is in addition to providing details of contract winners to enable subcontracting opportunities to be pursued (Murray 2009).
o Lewisham Council has issued guidance on how to tender for their contracts on their website, as they were concerned that a gap in information and understanding prevented firms from tendering for Council contracts (LGA / ODPM).
o West Yorkshire Councils implemented an e-Procurement project, a component of which was dedicated to engaging with SMEs and informing them about the benefits of tendering for council contracts (ODPM / LGA).
o East Sussex County Council’s procurement portal includes business profiles, current tendering rules, regulations and policies and e-Procurement opportunities (LGA / ODPM).
o Leeds Council has developed an e-Tendering Toolkit for SMEs together with detailed guidance for suppliers and contractors generically. (LGA / ODPM).
o Northumberland County Council publishes a range of guidance and tender information for suppliers on a procurement section of its website (www.northumberland.gov.uk/business) (LGA / ODPM).
o The South-west of England Regional Development Agency is operating a ‘Profit through Procurement’ project. Through this project a regional campaign is being run to make SMEs in the South-west more aware of public sector procurement opportunities. Actions, which have been designed to help SME identify and take
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advantage of procurement opportunities, include awareness-raising events, training workshops and specialist training (ODPM / LGA).
o Leeds City Council, Northumberland County Council, Oxford City Council and Sheffield City Council describe hosting annual summits, chaired by the Cabinet Member for Business, Skills and Development, to encourage local businesses to bid for Council contracts. Summits are attended by Council buyers, key supply partners and the private and voluntary sector. The forum encourages members to share their views on how best to address the issue of building local supply chains, specifically what the private, voluntary and public sectors can do working together.
o The South-west of England Regional Development Agency is operating a ‘Profit through Procurement’ project. Through this project a regional campaign is being run to make SMEs in the South-west more aware of public sector procurement opportunities. Actions, which have been designed to help SME identify and take advantage of procurement opportunities, include awareness-raising events, training workshops and specialist training (ODPM / LGA).
c) Making Changes to Pre Qualifying Questionnaires (PQQ) / Financial Vetting o St. Helens Council developed an online electronic pre-qualification tender form, which was designed to be completed once instead having to make a separate submission for each tender. The pre-qualification form worked like a CV, which buyers could access and consider when sourcing goods, works or services. It has been reported that this scheme enabled suppliers to make buyers aware of their business (LGA / ODPM).
o East Sussex Council developed a standard format for pre-qualifying questionnaires with the aim of making the tendering process more accessible to SMEs. The Federation of Small Businesses rated East Sussex County Council as the 6th most small business friendly out of 52 surveyed (East Sussex County Council 2009). 74
o The Head of Product Sourcing and Services (John Lewis Partnership) has explained in a HM Government conference how John Lewis evaluates suppliers on their expertise, innovation and service level, as opposed to using extensive PQQs. He advocated for the creation of a competitive landscape by disaggregating contracts and creating an internal competitive market between different suppliers of goods and services which can reduce costs and improve quality. He also highlighted the importance of offering SMEs a level of security, trust and long term commitment. (HM Government Conference 2012).
o The Managing Director of Stepnell suggested during a HM Government conference that PQQ questions should be flexible and not make unnecessarily high demands which could exclude innovative small suppliers. He outlined the importance of considering non-financial factors in developing the PQQ and considering proportionality between the procurement requirements, and the size and capabilities of the bidder (HM Government Conference 2012).
o Thanet District Council had adopted an arrangement whereby the procurement officers assess prospective suppliers against PQQ and tender criteria, in which the financial standing of the supplier will not be set to a level where it would unreasonably exclude newer businesses (Thanet District Council Website).
o Norfolk Council has scrapped PQQs for contracts under the value of £100k, which is a practice that Hammersmith and Fulham Councils are also considering adopting. Norfolk Council’s cabinet member for community engagement suggested that it is easy for big companies to have the information required for PQQs, whereas it can be a burden for small firms (The Guardian 2012).
o Nuneaton and Bedworth Borough Council was reported as giving consideration to redrafting the Council’s Contract Procedure Rules (Standing Orders) to be more inclusive to SMEs in procurement. There is a reduced requirement for PQQs to be used for smaller contracts, and the threshold for allowing such simpler procurement processes has been raised to £100k (Federation of Small Businesses 2012).
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o Nuneaton and Bedworth Borough Council allows different levels of insurance for different projects, which reportedly enables some SMEs to quote for projects where high insurance cover is not required (Federation of Small Businesses 2012). The Council uses a data analysis tool to analyse SME expenditure and promote a health balance of spend between SMEs and larger contractors.
d) Making Tendering More Viable for SMEs o Northumberland County Council repackaged the Council’s food supply tenders, allowing suppliers to tender by product type and by lots relating to distinct geographical areas. An increase in the weighting to the quality criteria against price was included in the evaluation criteria. It has been reported that these initiatives provided an opportunity for small local suppliers to compete and tender for contracts (LGA / ODPM 2005). A suppliers’ seminar was also held, providing a further opportunity for small / specialist suppliers to join the supply chain.
o Kirklees Metropolitan Council reported that it is developing guidelines on how to encourage procurement from local SMEs. In addition, contracts have been broken into lots to aim to make tendering more viable for SMEs (Kirklees Metropolitan Council Website).
o The Highland Council has encouraged SME procurement through a business development programme, and through breaking down contracts into lots. The Council holds open supplier meetings to inform vendors about procurement processes, and development workshops and discussions, which aim to improve the ability of businesses to work with the public sector. In the financial year 2011/12 The Highland Council spent £146 million directly with Small to Medium sized Enterprises, equating to 54% of its overall spend (The Highland Council Website).
o The Global Strategic Procurement Manager at Intel reported in a HM Government conference that their company identifies and targets support to underutilised, underrepresented, and SME suppliers for bidding opportunities throughout its supply chain. Furthermore, he also stated that Intel also invests in small business, mentors them in improving their capacity and business and 76
organises small business technical boot camps, to provide information and assistance in the procurement process (HM Government Conference 2012).
o Tower Hamlets Council developed a new commissioning framework and code of practice which fundamentally changed its business with social enterprises. The Council believes that social enterprises can deliver service improvements for the Council. It offers a range of assistance to social enterprises aiming to increase their competence in bidding for services. This includes a capacity building programme, covering financial systems, IT, HR policies and governance. The Council also gives advice and guidance on contractor bidding, provides open briefings to potential service providers and offers support in forming consortia (LGA / ODPM 2005).
o Supply London provides a package of activities aimed at helping small businesses take advantage of business opportunities in the London public and private sector supply chain. Supply London runs workshops and provides advice and action plans to help organisations win procurement contracts (LGA / ODPM 2005).
o Leicester Council was involved in a partnership which provided one-on-one support and workshops for local businesses covering all aspects of the procurement process. The Council’s Head of Procurement also highlighted the importance of meeting SMEs on a one-to-one basis, as this has enabled the Council to identify the obstacles these groups face. Since the implementation of this initiative in 2010 the Council’s procurement from small business has increased from 42% to 52% (The Guardian 2012).
o Cookstown District Council (Northern Ireland) provides one-to-one tendering support to SMEs in response to procurement issues which they have raised. A tendering support pilot programme for SMEs aimed to build the capacity of 80 SME across various sectors to help them identify, prepare and submit professional tender bids. It has been reported that 20 businesses have been assisted to submit tender bids, and 10 of these have successfully accessed new work valued at £5.33 million. The Tendering Programme was awarded Best
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European Funded Project in the 2011 Local Government Awards Northern Ireland (Federation of Small Businesses 2012).
o The North East Procurement Organisation (England) has a supplier training programme. The programme includes modules on raising awareness of opportunities to supply to the public sector and support on how to develop tenders, and prepare and present proposals. One-to-one mentoring is also provided in addition to ‘meet the buyer’ events being held, which can provide procurement opportunities (The Federation of Small Businesses 2012).
o A Property Services Supply Chain Readiness Network initiative in East Sussex aims to bring framework contractors and SMEs together using £500k of funding from the Council’s recession fund. The network also aims to assist SMEs in marketing products and services to framework contractors. It was reported that the network could publicise framework contract opportunities promptly, and help train and skill local companies with a view to helping then win these contracts (East Sussex County Council 2009).
o Newham’s KickStart Project was set up by the London Borough of Newham in 2004 to help encourage and enable SME suppliers. KickStart provides local SMEs with the training and support to set up their e-commerce websites and provides incentives such as subsidised Broadband and the loan of a PC. All SMEs in Newham are eligible to join the scheme. It was reported that they contacted over 1,000 Newham companies, and helped over 50 to set up ecommerce websites and to start trading online. The project increased the level of e-enablement by 5.4% (Newham KickStart Project 2012).
o Bury Council - all Council opportunities valued above £25k are advertised via an online business opportunities portal - The Chest. This online solution is free for businesses to register on and allows them to access opportunities in their sphere of interest. Automatic emails are generated when an opportunity is posted by a procurement officer and these are communicated to all businesses registered in the relevant category. Small firms are advised about The Chest through direct mailing, information on our website, press releases and at business networking events. The Chest also enables the advertising of sub contract opportunities. 78
The Council support prime contractors by providing information about local suppliers and potential subcontractors and post details of contract awards to ensure local contractors know where Council contracts have been awarded to enable them to make contact about opportunities.
o Southwark Council, in partnership with Lend Lease, engaged with SMEs to explore opportunities for future working in a £1.5 billion regeneration of Elephant and Castle. This development would provide homes, commercial, leisure community and cultural facilities. A half-day engagement event was held which included presentations and workshops on how to enhance SMEs capacity to supply. This event was considered to be a success, with attendance by 60 SMEs from which positive feedback was received (Institute for Sustainability 2012).
o Bristol City Council used an approach called KickStart TM. Through this approach, suppliers were invited to meetings and mediums were set up for electronic trading. An ‘@Advisor’ also visits each company to assess the most appropriate next step for their business. This can involve the creation of a trading website, or a sophisticated multipage online catalogue website. KickStart TM has achieved close to 100% take-up of e-commerce by those attending the meetings (LGA / ODPM 2005).
o Sheffield City Council: Working with a new SME entrant (Patch Work Media) the Council has filmed procurement workshops to enable them to be available for download as and when required. When completed, this will enable SMEs to access the video content and ensure that all SMEs have access to this valuable training material at their convenience.
e) Prompt Payment Clauses
Sheffield City Council
Accelerated payment of SME and sole trader invoices (
