Cutting EU red tape

The Commission this week finally published its long-awaited proposals for cutting red tape and minimising the costs and burdens of EU legislation for Europe’s SMEs via its Small Business Act. This follows a wide public consultation earlier in the year.

According to the Commission’s press release, the Small Business Act aims to promote and encourage entrepreneurship, make legislation more SME friendly by way of ensuring that all new EU proposals are subjected to an “SME” test in order to assess their implications for SMEs. These are part and parcel of 10 common principles and essentially its about ensuring SMEs can compete within the EU on a level playing field.

The Small Business Act outlines the need for EU and national-level action in a number of policy areas, which should make it easier for Scotland’s small businesses to access the single market as well as finance. Included in the package is a proposal during 2009 to revise the late payments directive so that SMEs can be paid within 30 days. This is a welcome move. The issue about collecting late payments from customers in another EU country is one which has been raised with us and which we subsequently raised with the Commission to see whether any action had been taken or would be taken to develop more streamlined methods for helping companies collect payments from both EU clients and non EU clients.

Also of some interest will be the proposal providing member states with the option of applying lower VAT rates for locally supplied goods and services. Public procurement accounts for some 1800 billion euros within the EU (16% of EU GDP) so being able to source goods and services locally can only be good for Scotland’s economy and its environment.

Other proposals include a new General Block Exemption Regulation on state aids which will increase the aid intesity for SMEs and make it easier for SMEs to benefit from state aid for training, R&D, environmental protection and other types of aid as well as a new single statute for a European Private Company allowing a "Société privée européenne" (SPE) to be created and which would operate according to the same uniform principles in all Member States. I think on the latter proposal lets wait and see what the Commission actually brings forward.

There is much in the package that is good for Scotland’s small businesses and while the Small Business Act is set to be adopted by EU leaders meeting in the European Council in December 2008 the real challenge is to ensure what is being proposed actually happens.