Home Opinion Have We Heard The Last of Business Licensing?

Have We Heard The Last of Business Licensing?

by Brian Sims
Peter Webster

Peter Webster

With the consultation period for the Security Industry Authority’s comprehensive Draft Corporate Plan now closed for comment, Peter Webster explains why he hopes that the omission of business licensing-focused comment means we’ve heard the last of the idea.

Friday 11 March 2016 marked the end of the consultation period for the Security Industry Authority’s (SIA) Draft Corporate Plan, incorporating both the Regulator’s Strategic Plan for 2016-2019 and the organisation’s Business Plan covering 2016-2017. Views from across the industry were sought on the proposals put forward such that the next phase of the SIA’s work reflects the opinions and priorities of those who buy, supply or otherwise rely on private security.

Indeed, a range of sensible and worthwhile objectives were outlined in the Draft Corporate Plan, but perhaps the most striking thing about the document wasn’t what was in it, but rather what wasn’t.

Since 2014, when Lord Taylor of Holbeach stated that the Government of the Day expected the introduction of the statutory licensing of private security businesses, the subject has been met with a wide range of responses, from support and dismissal through to attitudes verging on complete indifference. It was widely predicted that the SIA’s Draft Corporate Plan would contain information about how this idea might pan out. Instead, there wasn’t a solitary mention of the subject. It was almost as if the notion had never existed.

What we are to make of its absence in the documentation is anyone’s guess. Perhaps the whole idea has been shelved, or the SIA’s chairman Elizabeth France has now reconsidered her stated determination to push regulation as far as possible. Who knows?

Root of the problem

Lord Taylor’s announcement was by no means the beginning of the business licensing debate. That point occurred back in 2011 after the Government had performed an about turn on its original proposal to abolish the SIA. Rather than keeping the status quo, it set out plans for the phased transition to a business regulation regime with a new individual licensing process.

Given that the stated aim of Government is to improve the transparency, accountability and cost-effectiveness of all public services, this proposal contradicted those objectives.

Initially, it was thought that, as individual licensing was going to be abolished, business licensing would be better than nothing, despite the huge amounts of administrative expense required to implement it.

Then, when individual licensing was reprieved, many of those who had convinced themselves business licencing was a good idea couldn’t backtrack, subsequently opening the possibility for more regulation.

For the record, I wasn’t one of those who ever thought that business licensing was the way forward – and I wasn’t alone. Following the Government’s consultation on a future regulatory regime for the private security industry, which was carried out in late 2012, the summary of responses was published and they highlighted that many industry professionals were dubious about the benefits of change.

A total of 776 replies to the consultation were received and, while 50% agreed with the Government’s proposals for a phased transition towards a business regulation regime, 36% were opposed and the remaining 14% didn’t know. Although those in favour claimed victory, another way of looking at it is that an equal number were not in favour.

No less than 84% of respondents expressed the view that the SIA should continue to issue licences for individuals, suggesting that the existing system has the support of the industry. There was also agreement that the Regulator should continue to issue a licence card: they’re instantly identifiable, minimise the risk of forgery and fraud, maintain public confidence and are recognisable to enforcers of the law.

Crime doesn’t pay

Since then, there have been all sorts of desperate attempts by the pro-business licensing brigade – including, it must be said, the SIA – to find reasons that would underpin its implementation. Perhaps the most ridiculous was the notion that such licensing would help eradicate the number of criminal gangs running security contracts.

A particularly concerning notion, too, as it was based on some seemingly dubious statistics, not to mention flawed logic.

The SIA was quoted as having identified some £3 million of business operated by companies with links to organised crime. Let’s be generous, then, and suggest that the total value of the contracts being carried out by these gangs is worth £30 million.

To provide a sense of perspective, and based on available figures, this works out at 0.1% of the UK’s security contracts. Therefore, it’s a problem that doesn’t really exist.

The whole argument is a smoke screen, as companies are not allowed to employ unlicensed individuals in any case. The idea was to regulate the ‘controlling minds’ involved in security businesses, but organised criminals are fully capable of avoiding direct association.

The SIA has also claimed that business licensing would afford enterprises more responsibility for the individuals that they employ, and achieve a reduction in the regulatory cost and burden placed upon the private security industry as a whole. Having crunched the numbers, we estimate that business licensing would cost Corps Security around £50,000 per annum with no indication of the corresponding reduction in the individual licensing costs.

For those companies – unlike ourselves – that don’t currently pay their employees’ SIA licence fees, the costs involved will have come as a huge shock, while the additional bureaucracy, time, inconvenience and uncertainty caused would be an expense that, as is the case for other organisations in our industry, we would probably have had to pass on to our customers.

Given these factors, it was interesting that the SIA’s Draft Corporate Plan uses the term ‘light touch regulation’, which suggests that the organisation believes its approach to regulation is correct. It’s an opinion that might not be shared among the entire industry it serves.

The document also prominently states that the Regulator’s overriding vision is for a ‘private security industry so committed to improving standards and protecting the public that it needs minimal regulation’. Put these two statements together with the SIA’s backing of a new business licensing regime and its position on regulation seems at best confused and, at worst, rather misleading.

Raising awareness of the ACS

Perhaps another reason for the absence of business licensing in the SIA’s Draft Corporate Plan is that the Regulator has finally realised the needless introduction of two layers of licensing would simply mean swapping a current scheme that adds value for one that, in my opinion, has none whatsoever.

What’s the initiative that adds value? It’s the Approved Contractor Scheme (ACS), which is designed to raise performance standards and assist the private security industry in developing new opportunities for growth.

The ACS was developed in consultation with representatives from across the industry and covers those parts of it that are regulated by the SIA and the Private Security Industry Act 2001. In effect, it’s a type of business licensing scheme – albeit a voluntary one – that already exists and, what’s more, achieves its objectives.

It shouldn’t be forgotten that the ACS is a major revenue stream for the SIA, which receives funding from two main sources. Around 90% emanates from licence fees and ACS subscriptions, with approximately £2.5 million arising from the Home Office as ‘grant-in-aid’ for capital expenditure. In fact, it appears that the Home Office is the only body in favour of business licensing, rather than either Government as a whole or industry.

The ACS is generally a good scheme that’s applied well. Obviously, there’s still much room for improvement in terms of scope and effectiveness. That’s simply a case of evolution. For instance, at the moment ACS scores achieved by security businesses are not published, which means that a company with ten points out of 170 has an equal standing to one with 150 points or more.

In order to drive Best Practice and encourage companies to gain more points and improve their levels of service, a tiered system should be employed. This could be as simple as having Platinum, Gold, Silver and Bronze designations and would offer competitive advantage – without giving away individual scores – by publishing the names of companies currently resident within each group.

In addition, the SIA could do more to raise awareness of the ACS among end users and turn it into a real quality mark. Although all participating companies understand the points system and what has to be proven to achieve each point, there are questions remaining around the consistency of audits undertaken by different bodies. Again, this is an evolutionary improvement that must be addressed.

The SIA should focus its attentions on developing the ACS and maintaining the rigorous standards of individual licensing that have transformed the private security industry.

Peter Webster is CEO of Corps Security

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