UK bosses call for end to SMEs directorate

Date: 04/01/1996

THE directorate-general responsible for developing the European Union's high-growth small and medium-sized enterprises (SMEs) is too weak and should be abolished.

That is the principal recommendation made by the main UK employers' organisation, the Confederation of British Industry, in a report entitled Adding Value - The Role of EC SME Policy.

While the European Commission can only find a role in this area if it supplements policies taken at the national level, DGXXIII “is not influential enough to fulfil this function and should be disbanded”, says the report.

DGXXIII is one of the Commission's smaller units, with a staff of around 100, and is usually the responsibility of the Commissioner for energy, currently Christos Papoutsis.

To its critics, including the CBI, it is a poor cousin of the big-hitting directorate-generals, such as DGIII for industry and DGXV for the internal market, which boast higher-profile Commissioners.

This, they say, undermines the emphasis put on the sector by the EU as it looks to industry to create jobs for Europe's 18 million unemployed.

The SME sector, which already employs 70 million Europeans, is growing quickly, while traditional big business is either developing slowly or actually shedding jobs.

However, the CBI feels this only tells part of the story. In fact, only 4&percent; of the huge SME sector is creating 50&percent; of the new jobs, while the craft sector is dominated by owner-managers who have little desire to expand their businesses. As a result, craft representation with the Commission should be phased out and time and effort should be concentrated on the 4&percent; high-growth sectors which will generate jobs and stimulate cross-border trade and investment.

The Commission should set its mind to helping SMEs benefit fully from the single market by removing barriers to trade and encouraging the removal of unnecessary regulations, says the CBI.

It argues this would be much better achieved by merging parts of DGXXIII into DGIII and DGXV, while the question of deregulation is so important that it should be handed over to a special unit under the responsibility of Commission Secretary-General David Williamson.

“The Commission must not be distracted from the key objective of encouraging cross-border trade and deregulation,” said John Parsons, chairman of the CBI's SME Council, in a statement.

“The need for change in SME policy is essential, as the present state of affairs is unsatisfactory for firms across the Union. Current Commission policy is too disparate and under-achieving. Our proposals will let the Commission make a valuable contribution by helping SMEs to prosper and grow.”

But the SME lobby group, the Forum of Private Business, has hit back by warning that handing over SME policy to DGIII would be a mistake. “DGIII has responsibility for the internal market and industrial affairs,” said the FPB's David Harrop. “By definition, these areas are significantly more concerned with big business rather than small business.”