Small Businesses Big Issues

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The passing (in reality 'rubber stamping') of the European Commission's Small Business Act (SBA) in the European Parliament last Wednesday has been met with comments of disappointment by groups representing entrepreneurs across Europe.

Well the Act has been a long time coming and has been subject to the EU's so called consultation process - so why disappointment should be expressed at the inevitable this blog editor for one fails to understand.

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The EU commission in the well tried and tested style of its established propaganda methods stated that the new law ''Underpinned by the principle 'Think Small First' ''. The Commission's spin machine trumpeted Wednesday's introduction of the legislation as a "crucial milestone" which will slash red tape, make public authorities more responsive, drive up access to finance and boost training and innovation. It will of course in reality do the complete opposite; it can only fail to get better.

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In a Goebbles like statements the Commission's 'sales agents' stated that : ''alongside initiatives aimed at making it easier to set up a company in different member states and measures to tackle late payment, commissioners promised to cut administrative burdens by 25% over the next four years.'' The needs of small firms, they said, will be taken into account during the planning of new regulations. Oh really, so it takes new regulation to reduce mass regulation! Now is that Orwellian, Kafkaesque, or Huxlian - perhaps all three ?

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The total nonsense of this new EU law was confirmed by the reaction of small business lobby groups who had thought (but not deeply enough) that by taking part in the EU's consultation process they were making a difference. How very silly of them, they must have been very well wined dined and sponsored in the long process by the agents of the EU such as the Regional Development Agencies and other EU quango organisations beforehand. When they sobered up from the reality that is the EU regulatory system has hit them hard.

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"The desire to think small first is a welcome development but this publication is unlikely to produce the shift in policy we were led to expect," said David Frost, director general of the British Chambers of Commerce. "This is a mish-wash of watered down proposals and initiatives with a questionable amount of political will attached to it from the member states."

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UEAPME, which represents small firms across Europe, meanwhile questioned whether sufficient financial support is available to back the Act's "ambitious aims" and credit management service provider Intrum Justitia criticised the commission's approach to tackling late payment, a problem which cost European SMEs €250bn in 2007.

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"The SBA only points out that an amendment to the [Late Payment] Directive is prepared," the company said in a statement. "The work to prepare an amendment has actually been underway for more than a year. Therefore the SBA has failed to include new and substantial solutions to the ineffective directive."

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In its response, the Forum of Private Business (FPB) called on the UK government to "go one step further" than the Act and prioritise the concerns of the UK's smallest firms.

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Though of course what the UK government can if fact do without falling foul of EU regulations is very limited and going one step further would find the UK government summoned before the European Court of Justice and undoubtably fined!

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Additionally all of the comments are missing the salient point. The cause of the problem is the EU regulation machine which has to produce more regulation, that is its purpose; it serves the Napoleonic Code of law making that underpins the EU. To expect that the EU will produce a regulation to produce less regulation is a paradox - or if one prefers just plane stark raving bonkers.

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The reality of the number of regulations from the EU which effects all of us especially the small business community (witch counts for over half of the UK economy) is not often discussed in detail. Back in 2002 the Commission produced 44 directives, 602 regulations and 610 decisions while the Council produced 149 directives (inc.36 with European Parliament - EP), 164 regulations (inc.24 with EP) and 57 decisions (inc.6 with EP). That makes a total of 193 directives, 766 regulations and 667 decisions, that is a grand total of 1,626 pieces of legislation in just one year.
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The numbers in 2003 and 2004 went down, then started climbing again in 2005. In 2006, though they shot up again. The Commission produced 76 directives, 1,795 regulations and 781 decisions; the Council obliged with 101 directives (inc.38 with EP), 238 regulations (inc.43 with EP) and 264 decisions (inc.21 with EP). That gives us a total of 177 directives, 2,033 regulations and 1,045 decisions or, in other words, 3,255 pieces of legislation, most of which have not been implemented into British law yet and will not be for some time to come., though they will without doubt eventually impact on the
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Meanwhile a poll of 9,000 small businesses reveal 96 per cent are disappointed by Gordon Brown as Prime Minister; well no surprise there. As the PM reflects on his first year in power, a poll by the Federation of Small Business (FSB) showed the extent of small businesses disillusionment in Mr Brown's performance.

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At the head of the discontent is the handling of changes to capital gains tax, the axing of the ten per cent taper rate, followed by recent huge petrol/diesel price increases at the pumps - 32.5 per cent since December '07.“With the end of a period of relative stability, small business confidence in the government has plummeted in the last couple of years," said John Wright, FSB national chairman.“Employment, tax and fuel policies have left many small firms feeling that their concerns are not being taken seriously enough." added Mr Wright.

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Well fair enough, but Mr Wright forgets who actually governs Britain. As far as fuel tax policies are concerned there is in reality nothing the the UK Government can do other than increase taxation!

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EUfin, the EU finance ministers organisation which is a part of the EU governing structure (and thus an organisation that that governs us in the UK) ruled back in 2000 that no member state is permitted to reduce taxation (Excise Duty or VAT) on vehicle fuel - taxation can only be increased. This decision followed a French Government decision to lower fuel taxation in response to revolting French farmers an haulers in August of that year.

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Whilst the only option available to the UK is possibly to alter VAT to be levied only on the manufactures price of fuel at the pumps and not to include (as it does currently) the retail price at the pumps plus duty. This change would reduce petrol by about 6.5 pence per litre.

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Whilst it is good that John Wright as National Chairman of the 220,000 member (and expanding) FSB raises in the media the vital issue of fuel taxation, it would clearly be better if he were demanding of the UK Government something that they are able to implement (though what becomes increaingly limited). We in the UK remain governed principally by the EU in Brussels not our elected politicians in Westminster; a vital point that business leaders clearly still do not understand the full implications of.

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