Despite government promises to make it easier for small businesses to win public sector contracts, it’s plans don’t seem to be working.

The FSB recently surveyed the small business community in the UK and discovered that 37% of SMEs believe that public officials still think larger firms are better.

More than 2,700 members of the FSB were questioned during the course of the research and it transpired that although one in seven SMEs had tendered for a public sector contract over the last 12 months, 41% of them had failed to get any business from their bids.

Of the firms that were successful, 50% said they relied on personal contacts and referrals when it came to searching for contracts, whilst 25% said the government’s Contracts Finder website had proved to be a useful source of information.

SMEs still think the tendering process is too complicated and 38% say the public sector should consider tenders based on ability and experience rather than the size of the competing firms. A similar percentage said the public sector should be actively looking to award contracts to small firms.

John Walker, the FSB’s national chairman, said the government has tried to raise public sector awareness of the value of using entrepreneurs and small businesses but it is evident that more work still needs to be done. Central government is now more inclined to give small businesses a chance, but other public sector organisations also need to undergo a culture change if the government’s initiatives are going to be truly successful.

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4.132m people in the UK are now self-employed according to the latest employment statistics from the ONS. That’s an increase of 136,000 since February 2011.

A further 12,000 people turned to self-employment between December last year and February this year. However, it may surprise umbrella company contractors to learn that the number of women deciding to go it alone rose by 22,000, whilst the number of men turning self-employed actually dropped by 10,000.

When you look into the figures further it turns out that 77.7% of self–employed men work at least 31 hours a week, whereas only 39.6% of their female counterparts work as many hours. The greatest proportion of self-employed women (34.3%) work between 16 and 30 hours each week. 7.3% of go it alone females work less than 6 hours a week suggesting that they have just set up a small business to earn a bit of extra pin money while the kids are still requiring full-time care.

The gender split is still high with men making up almost 70% of the self-employed community, but is the tide changing? As the government makes more public sector redundancies, we could see further increases in the number of women taking the plunge and joining the ranks of the self-employed.

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IT contractors may be interested to learn that industry analyst Gartner has revised its prediction for worldwide IT spending this year.

The company had originally predicted growth of 3.7% but has downgraded this forecast to 2.5%, the equivalent of £2.3 trillion, as companies continue to increase spending on the latest technologies.

In fact the revised prediction is more due to the strengthening dollar than to spending actually declining, according to analysts from Gartner. The dollar has been improving against other worldwide currencies and this this has reduced the predicted growth rate.

Gartner believes that if currencies were balanced, IT spending would grow by 5.2% this year.

Richard Gordon, Gartner’s research vice-president, said there are signs that the global economic outlook is improving despite the on-going global economic unrest. As well as problems in the Eurozone, the global economy is struggling to cope with rising oil prices and there are worries over China’s real estate bubble.

Public sector IT spending is likely to contract slightly throughout the world this year and next as Eurozone austerity measures impact. In the US Gartner predicts that public IT spending will remain flat this year and then contract slightly in 2013.

However, the mid-size business sector is expected to put in a strong performance over the next five years as companies increase their spend on enterprise software. The worldwide telecom equipment sector is expected to display the strongest growth.

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Recruitment agency Adecco recently said that the number of job vacancies was on the increase last month, news that will no doubt delight IT umbrella company contractors.

In fact, the IT sector recorded a 3% increase in job vacancies in March. Furthermore, in a complete reversal of recent trends, the public sector showed a 2% rise in job vacancies. Many of these opportunities were for temporary contracts.

Adecco’s MD, Steven Kirkpatrick, said AWR did not appear to have adversely affected temporary opportunities. There was a slight decline in the number of temporary roles advertised in January, but as this was only minimal it suggests that UK businesses have not changed the way they recruit.

ScotlandIS, the trade body, also recently reported that the technology sector north of the border is still expanding and there remains a high demand for suitably qualified individuals.

Yet another report, this time from ContractorCalculator, shows that the engineering and management sectors are also on the lookout for umbrella company contractors.

There is a general skills shortage in engineering and businesses that are recovering from the recession are now looking to increase their investment in infrastructure and energy projects. Employers also believe that IT contractors can provide them with a competitive advantage when economic conditions remain tough.

The report also pointed out that a third of interim management contracts towards the end of last year were in the public sector, which backs up the Adecco claim that the public sector is staging something of a comeback.

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The REC Healthcare division has welcomed recommendations from the Royal College of Nursing on ways to maintain nurse/patient ratios.

The RCN report underlined the importance of ensuring hospitals had enough staff to meet the needs of their patients, despite the government squeeze on public sector spending.

Tom Hadley, the REC’s director of policy and professional services, said the government should consider a system of nurse to patient quotas in order to maintain minimum staffing levels. He pointed out that similar systems work well in other countries and the UK urgently needs some objective criteria to address the increasing concerns that have been raised over the quality of care provided in some of our hospitals.

Recent reports in the media have brought the problem of insufficient staffing levels into the spotlight. A lot of these reports suggest nursing staff do not have the time to give patients the attention they deserve and set quotas could go some way towards solving that problem.

Specialist healthcare agencies also have a vital support role to play by making sure suitably skilled and properly vetted staff are on hand to fill staffing shortages at a moment’s notice.

It’s not only the patients who complain about staff shortages in our hospitals. Nurses are also very much aware that the shortage of staff, coupled with the endless paperwork they have to complete, means they are left with less time to devote to individual patient care.

The UK used to have a National Health Service that was envied the world over. The government needs to act quickly to solve the problem of staff shortages if it wants to restore the NHS to its former glory.

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The March edition of the REC’s JobsOutlook report showed that employer confidence in February increased to its highest level in 12 months. It also held good news for both temporary and permanent job candidates.

62% of employers said they intend to hire more permanent staff over the coming three months. Only 6% of respondents said they might reduce their permanent headcount over the period. Looking further ahead, 57% expect to increase the size of their permanent workforce and 42% intend to keep it as is. That suggests that only 1% of employers will be making redundancies.

31% of employers also intend to hire more temporary staff this quarter, whilst 54% say they will maintain their current level of temps. 26% will increase their temporary workforce over the longer term and 63% will maintain their current level.

In the public sector, employers are trying to reduce their workforce costs by cutting hours and pay and making more redundancies. In the private sector, almost 50% of employers see no reason to change their workforce plans.

Employers are still struggling to find suitably qualified staff for permanent roles in the computing, IT and telecoms sectors. Temps with skills in engineering and technical are also in high demand.

Roger Tweedy, the director of research at the REC said the latest figures are positive and although business confidence remains fragile, it is improving. We had a similar scenario this time last year, but employer confidence dropped sharply over the summer months. However, confidence in the jobs market seems to be more durable this year.

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Umbrella company contractors who had been hoping to benefit from more government contracts are disappointed that major corporations are still getting the bulk of the work.

According to the UK200Group, 92% of contractual orders are still being awarded to large businesses despite the coalition’s pledge to grant 25% to small businesses.

When the coalition came into power, it agreed to allocate 25% of external orders to the SME sector and put an end to mega IT contracts. But in the third quarter of last year, only 7.8% of state contracts were awarded to SMEs.

The UK200Group said that out of £3.6 billion worth of orders, only £227 million went to smaller suppliers during the three-month period and SMEs have good cause to feel ignored.

Jonathan Russell from Rees Russell accountancy firm said he was not unduly surprised by the results when you consider all the hoops businesses have to jump through to secure a government contract. He claims that government does not understand the way small businesses operate and presumes they have similar policies and procedures to large companies.

He went on to say that civil servants still expect small businesses to ‘sell to government’ whereas they should learn to buy from the SME community. As long as this mindset continues, the Civil Service will carry on wasting taxpayers’ money. The current procurement system is flawed by under delivery, overspending and lack of control.

He ended with a plea to the government to run courses to teach public sector organisations how to buy services.

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No sooner has the furore surrounding Mr Lester died down, it now transpires that the Department of Health has been paying 25 senior members of staff through limited companies. In fact more than £4 million has been paid out in this way.

While the Revenue has been busy tracking down IT contractors caught up in IR35 legislation, senior employees in the Government have slipped through the net, saving themselves vast amounts of National Insurance and income tax in the process.

It is not uncommon for senior executives in the private sector to get a three-year rolling contract and receive payment through a limited company. This trend now seems to have spread to the public sector as well.

The Department of Health is in denial, saying that the individuals concerned are genuine contractors despite the fact that some of them have worked for the Department for several years. Could it be that the Government was struggling to attract top talent and this ruse was the only way they could justify paying them more money? Remembering that the ‘employer’ does not need to pay the employers NI contributions of contractors, this could well be feasible.

But the fact remains that HMRC has been keen to force IR35 onto the contracting community and all the while, senior Government staff have been doing exactly what the Revenue is trying to stop! Are we going to see more departments emerge with egg on their face?

David Cameron says he wants more transparency in the Government. It seems there’s a long way to go before that becomes a reality!

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Contractors may be interested to learn that interim managers working in financial services have been enjoying lucrative pay rates over the last six months.

Latest figures from Russam GMS revealed that interims working in banking, insurance and financial services have been commanding salaries of £737 a day; up from £694 in June last year when the company last conducted its survey.

It obviously pays to be an interim with a wealth of experience under your belt. Those in their 50s are most in demand and command the best rates of pay.

However, women appear to be losing out. They receive an average 13.5% less than their male counterparts, but this could be because they tend to work in charities or the public sector, areas where pay rates are traditionally lower. Only 8% of women interims work in the highly paid financial services sector.

The average daily rate for an interim now stands at £621, but those in the not-for-profit sector are only likely to receive around £477 a day. Public sector interims have seen their pay fall by between 7% and 9% over the last six months, with those in local government receiving £510 and those in central government £609 a day.

Only 13% of assignments now cover instances like maternity leave. The majority of firms want interims with specialist skills to undertake strategic projects or to lead change management programmes. 20% of interims said that part of their role involved coaching and mentoring existing teams.

Russam GMS chairman, Charles Russam, explained that interims are still used to fill gaps but they are increasingly working with CEOs to modernise and progress companies.

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Umbrella contractors may be interested to learn that the Reed Job Index ended 2011 with 17% more job vacancies than the year before.

However, the Job Index ended the year on 121 after falling significantly in December. In November the Index registered 133, a slight increase on the previous month’s 129.

Not surprisingly in light of the government’s spending cuts, the public sector registered the least opportunities. The Index dropped to 36 in December, down from 42 in the comparable month of 2010.

Vacancies in hospitality and catering registered a month-on-month increase of 9 points, whilst opportunities in purchasing and safety & security both rose by 1 point. The engineering sector registered the most significant year-on-year increase – up by 64 points. IT and telecoms came in second with a rise of 50. The biggest losers were banking at -41 and education at -10.

The MD of reed.co.uk, Martin Warnes, said the results are particularly striking when you consider the economic turmoil of recent months. Recruitment activity traditionally drops off in December but it is significant that the number of available opportunities still managed to end the year 17% higher than in 2010.

He went on to point out that skilled technical staff in sectors such as engineering have been much in demand, as have those with skills in IT and telecommunications. IT contractors may be able to take solace from these figures and look forward to a bright future in 2012.

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2012 will be remembered for the London Olympics, the Queen’s Diamond Jubilee, and if one union leader is to be believed, a year of strikes.

According to Brian Sutton from the union GMB, some private sector employees are starting to consider industrial action. Confrontations between management and union representatives at Balfour Beatty, General Electric, Unilever and BMW’s Oxford Mini plant are expected in the early months of this year.

It’s also possible that public sector workers will stage more strikes over pensions. Although the government has made a new offer, there is no guarantee that union executives will accept it. Furthermore, because the government has granted concessions on pensions, employees in the public sector feel more confident that industrial action could also be an effective way to stop redundancies and pay freezes.

There has been a pay freeze in local government for the past two years, and government spending cuts decreed that the public sector has to shed a total of 710,000 jobs.  Around 50% of the total has already been achieved, made up chiefly by people who volunteered for redundancy. However, this means the public sector will now have to resort to compulsory redundancies and that is when union members might start fighting back.

Mr Sutton explained that 2011 was hard, but this year will be much harder. The unions received a real boost on November 30^th with the public sector pensions strike. He said he hoped the government would now be more realistic when it came to negotiating with the unions and appreciate that the public sector is not just there for the taking.

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PAYE umbrella company contractors may find more opportunities in the public sector in 2012 after the REC launches a new Commission.

The Flexible Work Commission will promote the benefits of utilising the UKs skilled flexible workforce to government. David Frost, the former chairman of the British Chambers of Commerce, is to chair the Commission, which will provide the government with practical proposals for re-energising the flexible labour market. A key part of the remit is to demonstrate how using skilled contractors can help government departments get the skilled people they need quickly and hence improve their productivity.

David Frost explained that the UK’s flexible workforce gives us a major competitive advantage.  The main aims of the Commission are to quantify the benefits of flexible working to both business and worker and identify ways to enhance this flexibility. As well as driving the political debate, this initiative will provide employers with practical solutions to maximise the benefits that come with a flexible workforce.

Kevin Green, the chief executive of the REC, said companies have a difficult task ahead if they want to stay ahead of the competition. Many will be looking for people with new skills. By tapping into the flexible workforce, they can respond quickly when new opportunities come around.

The Commission will analyse the latest innovations and trends and advise the government on the right way forward so the UK continues to get the best out of its dynamic, flexible labour market.

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