Marching to the same beat

The Federation of Small Businesses is the UK's largest campaigning pressure group for small business owners and the self-employed. Formed in 1974, the FSB now has more than 185,000 members. It is non-party political but applies pressure to MPs, the government and Whitehall via its lobbying arm, led by its Westminster press and parliament office.

During the past three years, lobbying has had a demonstrable effect on the government. It helped to ensure a moderate minimum wage level, much lower than the unions wanted. It also encouraged budget boosts by the Chancellor for many small businesses, including a new corporation tax rate of 10% for small companies and a 100% allowance for investment in new technology.

Putting pressure on the government has helped small businesses win exemptions under union recognition proposals and stakeholder pensions. FSB members were saved more than £18m when plans to charge small shops a levy to pay for the Food Standards Agency were shelved.

The FSB has seats on several government advisory groups, looking at issues such as deregulation and the preparations small firms may have to make as regards the euro. In addition, it has the funds to take test cases of major importance to small businesses through the courts. The FSB's members are spread across 31 regions and 300 branches, and the FSB is keen to help regional members lobby their local governments too. To this end, the FSB has appointed regional area policy development officers to respond to the formation of the government's regional development agencies.

These officers will work alongside the FSB's area policy units to further FSB influence at the local level.

The future will see further lobbying and issues currently affecting small business include the government's plans for road tolls, employee parking charges, the continuing burden on employers in administering the Working Families Tax Credit, and the crack down on contractors under the IR35 proposals.

Member campaigns

About 2000 of the FSB's members are financial services intermediaries, including brokers with up to 10 staff. The FSB campaigns separately for these members and has regular meetings with the Financial Services Authority.

The FSB's major concern regarding the FSA is the level of capital adequacy it is proposing for insurance brokers. A number of FSB members have raised this issue and the FSB is lobbying both the FSA and individual ministers.

In 2003, the FSB was actively involved in the heavy lobbying on the employers' liability crisis. The organisation regularly conducts the largest non-governmental surveys on small businesses in the UK and in June 2003 surveyed members on this type of insurance cover.

The survey results made for stark reading. A staggering 25% of employers reported that they had found compulsory EL insurance difficult or impossible to secure, despite vigorous efforts to find cover. Indeed, 8% reported that they had started to trade without this cover.

Small firms were not being given a sporting chance to arrange cover.

Half of the small business owners surveyed said they had been given two weeks or less notice to find new cover, and reported they needed a minimum of three weeks to find it. Of those firms able to find cover, 20% reported that premiums had at least doubled in a year. In fact, increases of 300% were not unusual.

As a result of this survey, the FSB recommended that firms be given three weeks' notice of renewal, and joined forces with sector-specific trade groups such as the Association of British Insurers and the British Insurance Brokers' Association to lobby the government.

The group has been thrilled with the results. The ABI now recommends that its insurer members give clients 21 days' renewal notice of their insurance and the government has proposed that more than 300,000 small limited liability firms be made exempt from compulsory EL. In these firms, the only members of staff are directors and they should not be forced into the ridiculous position of suing themselves over their lack of compulsory EL. The FSB is particularly pleased the government is also postponing for a year new rules that allow the NHS to claim back the cost of treating injured staff from employers.

The FSB believes it can help brokers with these issues in different ways to the ABI and BIBA. For example, the ABI and BIBA also lobbied for the changes to EL, but where a BIBA warning might be treated as industry-specific, an FSB query can make front-page news. Indeed, the government's own EL review stated its intention to work closely with the FSB to resolve the problem.

However, the issue does not stop there. The government will not take more drastic steps until it is convinced there has been a widespread market failure. The FSB continues to lobby that there has been a general failure in this market, given that a number of businesses with no claims history have been, and are still being, faced with huge increases for compulsory EL.

Internet service

While centrally important, lobbying is not the only service the FSB offers to members. The organisation has run an internet service for the past five years, helping members get an internet presence for free.

The organisation operates a 24-hours-a-day legal helpline that received more than 100,000 calls in 2002. The majority of these calls asked for advice on employment matters but the FSB also fielded calls on commercial contract, landlord and tenant, consumer, tax and benefits. The FSB also protects members against prosecution in connection with the Health and Safety at Work Act, Consumer Protection Act, Data Protection Act, damage to property, and personal injury.

In addition, the FSB operates member insurance schemes, which are sold via brokers. The organisation assigns one financial intermediary to each of its regions, selling legal and professional insurance of up to £1m to protect businesses against Inland Revenue investigations, VAT tribunals and appeals, industrial tribunal costs, employment disputes, statutory sick pay audits and PAYE audits. Brokers that sign up might find the FSB benefits their business in more ways than one.