Donít expect many New Yearís resolutions from Europe

The Forum of Private Business (FPB) says the agenda for the European Commission (EC) for 2007 is disappointing from the small business perspective. Pledges in the EC Work Programme to slice through red tape in the next 12 months are welcome, but the FPBís European spokesperson, Martin Smith, remains unconvinced they will make any real inroads.

The commitment to reducing the regulatory burden on all businesses cannot be questioned. It is stated and on the record. In fact, one could speculate that there are infinite examples of fine words about easing the regulatory burden emanating from the EC. Unfortunately, it does not seem that this commitment is shared, or perhaps fully understood, by members of the commission staff.

The EC will doubtless point to the fact that the number of legislative initiatives (36), is outnumbered by simplification proposals (47), with 10 proposals for withdrawal of legislation on top of that.

Unfortunately, it would be misleading to take this at face value. The legislative and non-legislative initiatives together vastly outnumber the simplification initiatives. The non-legislative actions tend to lead to future legislative actions. Furthermore, Mr Smith says that those proposals to withdraw legislation will have little or no impact on small business.

The instruments being withdrawn may well be obsolete, however they are not likely to have a significant impact on businesses and competitiveness, and their withdrawal should not be counted as evidence of reduction of the regulatory burden.

Conspicuous by their absence
The FPB is concerned that a number of issues have been overlooked by the work programme.

There is no suggestion that the proposal to end opt-outs from the Working Time Directive is to be withdrawn. There is no plan to withdraw the proposals on supply chain security, whose costs threaten to cripple small businesses in the transport sector for little benefit in the fight against terrorism. There is no plan to withdraw the completely unnecessary Consumer Credit Directive. Mr Smith said.

There is also no mention of the damage to UK businesses from an offshore VAT loophole, which is in breach of EU taxation law. FPB is campaigning for action to address a directive which allows VAT exemptions such as Low Value Consignment Relief (LVCR), causing significant competitive distortion in the UK. As a result of this, normally viable independent retailers are facing closure because of unfair competition from VAT-free goods supplied through the Channel Islands.

Not so simple, after all
Judgment must also be reserved on the ECís simplification proposals. What is considered by the commission staff to be simplification, may not be considered simplification at all by small businesses. For many small businesses, only the removal of regulation can be deemed to significantly reduce the burden.

Internal Market
The FPB wants the EC review of the internal market to address the creation of burdensome regulation.

Mr Smith said it would be welcomed by small businesses. Too often, new legislation cites its legal base as the internal market, and the question must be asked: is this fresh red tape really necessary?