The government still hasn’t managed to fine tune the clearance system to make sure it gets the best value IT contractors for sensitive projects.

Ministers have been accused of operating a closed shop when it comes to sensitive projects because only contractors who already hold a valid clearance certificate are let in.

Michael Shryance, the head of the national security secretariat, said recently that the Cabinet Office is committed to addressing circumstances where vacancies specify that security clearance is a pre-requisite.

In response to a criticism levelled by the PCG last October, Shryance said he shared the Group’s concerns that some contractors may be excluded by this bad practice. He also admitted that the government was not getting the best value from sub-contractors.

The latest government guidance states that candidates should only be required to hold valid security clearance at the application stage in exceptional circumstances. Despite this, the PCG found that many top workers are still blocked from contracts they deserve, in favour of people who already hold clearance.

It’s something of a Catch 22 situation, but Mr Shryane said it was impractical to put all vetting procedures on a statutory footing, although it would be worth exploring the policy objectives. It would also be worth drawing up a Code of Practice and make adhering to it a requirement for recruitment and procurement professionals who want to gain other forms of certification.

He also welcomed the PCG’s proposal to start a Security Clearance Forum. This would monitor the actions of recruiters and clients and would be a welcome “challenge function”, he said.

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Contractors sometimes lose the opportunity to secure a government contract because the department in question demands that bidders already have security clearance.

The PCG recently organised a high-level roundtable meeting on the subject and the REC was there to fight the recruitment industry’s corner.

Cabinet Office senior officials were present at the meeting as well as recruiters, security experts and contractors. The discussions mainly concentrated on the role agencies play in implementing the Government’s security requirements when placing contractors in sectors such as interim management and technology.

The heart of the debate surrounded the practice whereby contractors need to have existing clearance before they are considered for assignments. The REC has regularly spoken to the PCG and the Cabinet Office about this and expressed their view that this requirement should not be automatically imposed. However, this cannot necessarily be blamed on recruiters as they are simply following the brief they received from their client.

Tom Hadley from the REC commented that the issue of security clearance is a sensitive area and the Confederation will continue to raise awareness that clearance should not be an automatic pre-requisite. Recruiters are currently stuck in a Catch 22 situation and this needs to be rectified.

The REC will carry on working with the Cabinet Office and the PCG to set out the right balance between opportunities for contractors and effective vetting procedures. Hadley says that the way forward is to speed up the security checking processes and to continue dialogue with all interested parties.

Feedback from the event will be collated and a set of recommendations sent to the Government.

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The chief executive of Hays, Alistair Cox, has some worrying news for those in the public sector who work through umbrella companies and are worried about the loss of their contract.

The government is widely expected to wield the axe on up to 750,000 public sector workers in the next 5 years but the private sector is highly unlikely to be able to create enough new jobs to absorb them.

One measure outlined by Mr. Cox to encourage private sector growth would be for the government to abolish employers’ National Insurance contributions. This would enable companies to take on more staff. The coalition has already gone some way towards easing the NI burden for small businesses start-ups outside the south-east by granting a 12 month NI holiday on their first 10 employees.

The Treasury currently raises around £55bn from employers NI contributions and its abolition would leave a gaping hole in the government coffers.

As if that news isn’t depressing enough, the CEBR has more doom and gloom for people in the north of England. The Centre has predicted that 10% of northerners will be unemployed in the next five years. Economic output in the North-west, north-east, Yorkshire and the Humber and the West Midlands will fall whilst London and the South will get a larger share.

Manufacturing centres such as the West Midlands are already suffering more than other areas. Although the situation has improved strongly in recent months, it is still well below pre-recession levels.

The recruitment market has been showing signs of improvement but a large proportion of that is due to employees changing jobs rather than an influx of new jobs being created.

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The latest public body to come under fire for late payment of invoices is the police force.

Despite repeated directives from the government, suppliers to some of the UK’s police forces have to wait over 2 months for settlement at a time when some SMEs are still facing insolvency threats, according to the FPB.

The best police forces settle their invoices within days but there is a huge gulf between them and the worst performers. The FPB say that some manage to settle over 75% of invoices within 10 days and virtually all are paid within 30 days. On the other hand, some forces settle less than 1% of their invoices within 10 days and more than 50% are still outstanding after 30 days.

Meanwhile it has been revealed that SMEs are now accepting excuses for late payment rather than chasing customers with outstanding debts.

A survey conducted by positivecollections.co.uk found that almost three quarters of SMEs accept late payment excuses. 10% of businesses don’t like chasing debts at all in case they lose business in the future and 17% would like to chase up debtors but think it is too expensive to start legal action.

Micro businesses fare reasonably well in the debt recovery stakes with 45% saying they always receive payment on time.

Although there has been an increasing trend towards late payment since the recession took hold, there are major concerns that SMEs cannot afford to suffer this kind of disruption to their cash flow and some may be forced out of business.

Whilst there will always be instances where late payments are unavoidable, this should never be accepted as the norm and businesses and contractors should try and implement measures to keep their credit control in good shape.

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Most of the UK’s small businesses intend to spend more on IT freelancers and those with PHP and SEO skills will find themselves much in demand. At least that’s what the results of an extensive survey from PeoplePerHour.com show.

There are around 4 million small businesses in the UK accounting for over 60% of the UK’s employment and turnover. Slightly over 6 out of 10 respondents said they intend to spend more on IT. 38% plan to increase their use of freelancers and interestingly, 43% of SMEs think IT is exclusively for freelancers.

59% of small businesses update their website monthly and 31% say they need people with web design skills. 32% say that the Internet has helped raise awareness of their product or service and 20% say social media is their main route to market.

The CEO of PeoplePerHour.com, Xenios Thrasyvoulou pointed out that the Internet has facilitated the boom in remote freelancing and the IT industry has led the charge.
70% of new SMEs say it’s easier to start up a business than it was previously but a mere 5% of them say that’s because it’s easier to get funding. The majority of start-ups would like the government to ensure that new businesses can obtain greater financial assistance in the future.

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SMEs and umbrella companies have been struggling to get much needed finance from the banks and Vince Cable has now put forward the government’s proposals to force the banks to make more funds available for small companies, including limited company contractors.

At the weekend, Mr. Cable had said that the government is very concerned that the banks are not acting in the interests of the nation. “I don’t think they get it” the business secretary was quoted as saying.

Amongst other measures, the business secretary is considering implementing a new tax on the profits of those banks which refuse to support viable businesses. Cable also points out that £50bn of new finance could be released if banks slashed payouts to their staff and shareholders.

Another of the measures designed to help small businesses is the extension of the Enterprise Finance Guarantee scheme beyond the original expiry date of March 2011. The EFG was introduced by the Labour government but lending under the scheme dropped by 23% in the half year to March, compared with the previous six months. In June, the government increased the amount available through EFG to £700m, a rise of £200m.

Also under consideration are regional stock exchanges and new ways to encourage venture capitalists to invest in a broader range of businesses.

Vince Cable’s proposals were laid out on Monday in a Green Paper entitled ‘Financing a private sector recovery’ in which it was acknowledged that SMEs are vital to the UK economy and could contribute significantly to the UK’s economic growth.

The Green Paper was welcomed by employers’ organisations who believe the government should be adopting a tougher approach with business bank accounts. Accounting professionals, on the other hand, were a bit more cautious saying that the economic environment encourages banks to lend, not Green Papers.

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The coalition promised to cut the amount of red tape that umbrella companies and contractors are subjected to and yesterday Vince Cable announced the first stage of the plan.

He admitted that the wave of new regulations had choked off enterprise and said that the government must change tack and realise that excessive regulations are not necessarily the way to solve problems.

Cable has made a commitment to a ‘one-in, one-out’ approach to all new regulations and he is going to create a cabinet committee to ensure that only high-quality regulations are implemented.

The chief executive of the FPB, Phil Orford, commented that the government needs to ensure that it does not create more bureaucracy when it administers the work of the Reducing Regulation committee.

He believes that if the government can indeed limit the creation of red tape, we can look forward to a culture conducive to small business growth as opposed to the restrictive culture we have at present.

The FSB welcomed Cable’s announcement saying that for some time they have been calling for a simplified regulatory system in order to encourage economic growth amongst SMEs.

There are around 4.8 million small businesses and freelancers in the UK and almost a third of the ones that had hoped to expand were put off by excessive regulations. The second most important factor when it comes to closing down or downsizing is the regulatory framework. Retirement of the owner is the main reason.

David Frost, from the BCC, was also delighted to hear that regulations will be reviewed; adding that businesses would face a bill of more than £11 billion if all the new legislation planned for the next 4 years is allowed to come into force.

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