Small and medium sized businesses could miss out on Birmingham City Council contracts thanks to an "unnecessarily bureaucratic" new policy designed to help them, it has been claimed.
Tory councillor and businessman Philip Parkin said that the council’s new Business Charter for Social Responsibility, under which contractors are expected to behave ethically and put something into the local community, may put off smaller firms rather than encourage them to come forward.
He also challenged a clause which asks firms to “pay their fair share of taxes”, pointing out that although there are some high profile outrageous tax avoiders, for many it could be a matter of where you draw the line.
The city council hands out about £1 billion worth of contracts a year. While highways contractor Amey, and IT and call centre firm Capita Service Birmingham are easily the two largest, there are thousands of smaller firms such as independent care homes, catering businesses and cleaning companies providing services.
The charter requires firms with contracts worth more than £200,000 per year, or those with smaller contracts adding up to more than £500,000 a year, to adhere to principles of local employment, buying Birmingham first, working in communities, being a good, green and ethical company.
Coun Parkin (Cons, Sutton Trinity), who runs an industrial tool supply firm, said that too much of the charter seemed focused on big companies.
“It was bureaucratically difficult for SMEs to supply the city council before and now we are making it harder. I fully support the living wage and the idea that contractors have a role to play in the city, but I worry that this charter will just scare SMEs away.”
He said that the £200,000 is not a “massive contract” and would see SMEs affected. I don’t know how the city council thinks some organisations will have time to do what is being asked of them.”
He added that while the big firms, like Amey and Capita, will have departments devoted to social responsibility and staff available to get involved in local schools and community projects, the smaller firms will not. “This could kill off any chance many SMEs have of securing council contracts,” he warned.
On the ethical clauses, such as that firms pay a fair share of tax, support the Universal Declaration of Human Rights, do not accept supplies from firms engaged in child labour abroad, create safe working environments and pay suppliers promptly – he pointed out that some are covered by law anyway, while others would be difficult to challenge.
“Taxes are subjective, one person’s view of a fair tax may not be shared.”
He was commenting as the council’s contract scrutiny committee quizzed the cabinet member for contracts and commissioning Stewart Stacey over the policy.
Coun Stacey (Lab, Acocks Green) replied that the council will not be monitoring or inspecting firms to ensure compliance, but would wait for ‘whistle blowers’ to expose unethical behaviour.
He said: “It may be a judgement call on ‘fair share of taxes’ but our judgement will be on what the lawyers decide can be defended in court. The clause makes it easier to take a contract off a firm which has been found not to have paid a fair share.”
And Coun Stacey defended the impact on SMEs arguing: “We are already taking steps to make sure the contracts are SME friendly. We want to encourage them to bid for contracts, or parts of contracts.”
He agreed that there would be ongoing monitoring of the contract awards to see if SMEs are being encouraged or put off.