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Warning over union plans for small firms
Thu 22nd Jan 2009, 10:16am
SMALL firms could be held back in public sector procurement by Government plans to promote trade union membership, business leaders have warned.
Ministers revealed earlier this week that businesses seeking a share of the £115bn of public sector contracts nationally are to be told they must promote trade union membership as part of their bid for work.
But the Federation of Small Businesses (FSB) has warned that the proposal could be disastrous for many small and medium-sized enterprises (SMEs) in the region, and said it adds yet another piece of red tape to the already complicated and timely bidding process.
The initiative comes at a time when the complications of procurement are being highlighted through the Buy North-East campaign, run by The Northern Echo and North-East Chamber of Commerce (NECC).
The campaign seeks to encourage local authorities to embrace the benefits of contracting services to North- East businesses, and make the process as straightforward as possible.
Research from the NECC has shown that the regional economy would grow by £1.35bn, and 6,000 jobs would be created, if the public sector spent an extra one per cent each year until 2016 contracting services from within the North-East.
Colin Stratton, FSB regional chairman for the North- East, said that many smaller contractors do not have unionised staff. "All businesses should have equal opportunity at obtaining a share of the £115bn on offer to deliver public services. However, SMEs are once again becoming sidelined by Government legislation," he said.
"The FSB would be extremely anxious about any further increase in the bureaucracy and red tape that SMEs have to go through to be successful in obtaining publicsector contracts."
The Government plans come after several new initiatives, which were hailed as being beneficial to small businesses bidding for local authority work.
Venture capitalist Anne Glover was appointed earlier this year to look at ways to simplify the "lengthy, cumbersome and costly" bidding procedure, and launched an online forum for SMEs to voice their concerns.
The move came after Alistair Darling recommended in his Budget that 30 per cent of procurement work should be given to small businesses.
That was supplemented with an announcement last month from the European Union, that bidding processes should be simplified in all member states.