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European Standing Committee C Debates

Better Environment for Business

European Standing Committee C

Wednesday 14 May 2003

[Mr. Peter Atkinson in the Chair]

Better Environment for Business

[Relevant Documents: European Union Documents No. 13982/02 and Addenda 1 to 3, Commission Communication and Staff Working Papers on a better environment for enterprises in the European Union, and No. 5765/03, Commission Green Paper on Entrepreneurship in Europe; No. 5454/03 and Addenda 1 and 2, Commission Communication on the Lisbon strategy; and No. 5748/03, Commission Communication on measures to benefit small and medium-sized enterprises.]

2 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths): Thank you for agreeing to chair this Committee, Mr. Atkinson. I thank Committee members not just for attending, but for taking a keen interest in these issues, because they affect the economy and their constituents.

The documents under scrutiny are the Commission communication and staff working papers on a better environment for enterprises in the European Union, and the Commission Green Paper on entrepreneurship in Europe. The tagged documents also relevant to the debate are the Commission communication on the Lisbon strategy and the Commission communication, ''Thinking Small in an Enlarging Europe''.

The Lisbon agenda, as Members know, concerns the EU becoming the most competitive and knowledge-based economy in the world by 2010. We lag behind the United States and we have to make up for lost time. The documents highlight the key points of progress towards the Lisbon targets that have been made, and what needs to be achieved. They also highlight the importance of small and medium enterprises in achieving the Lisbon goals and the UK's good performance on the Lisbon objectives, such as consultation with SMEs. The UK is playing a full part in driving the process along to make the Lisbon agenda a success.

On employment, the UK has already reached its 2010 target of a 70 per cent. participation rate. On company law reform, the work on corporate governance and the reform of the takeovers regime has preceded and reflects the thinking in the Enterprise Act 2002 and the Higgs report. On competitiveness, we have played a leading role in modernising European competition law, and we have been influential in setting up the horizontal Council on Competitiveness. Although we have a creditable record, we certainly have no time for complacency.

Members will be well aware that economic growth across the world has been slowing, and is in reverse in key countries. The document before us suggests that the pressure for reform should not slow during such bad times, but be speeded up. We have to drive growth

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and job creation in flexible, strong and open markets. That is the key to the future prosperity of Britain and the wider EU. Enlargement of the EU reinforces the case for accelerating progress.

The entrepreneurship Green Paper stresses the need to create the right environment in which entrepreneurs can thrive, which is a crucial element in achieving the economic goals of the Lisbon agenda and a crucial goal in achieving the objectives of the Department of Trade and Industry document ''Prosperity for All''. Considerable steps have been made towards achieving those goals, but there is much to do, which is why the Government warmly welcome the Commission's entrepreneurship Green Paper. It recognises the importance of small firms in achieving the goals set at Lisbon and in strengthening Europe's economy in general. It has the potential to improve significantly the environment for SMEs in Europe by identifying those barriers that prevent current or future entrepreneurs from reaching their full potential, but identifying the barriers is simply not enough. That analysis must be followed by action, which is why we support a robust action plan with concrete timetables. We want to break down the barriers and help our small firms.

On our response to the Green Paper, the UK has been at the forefront of the debate. We have contributed to the Green Paper, and we are now consulting across Whitehall and, just as importantly, in the SME community to inform the action plan. I talked to Commissioner Liikanen of the enterprise directorate-general yesterday and discussed possible proposals for inclusion in the UK's response. I outlined to him, and he greatly welcomed, the full and proper implementation of the better regulation action plan, which we are stressing. We are championing the improvement of the voice of SMEs in policy making at member state and EU level. We also want to address key market failures that impede SMEs, such as access to finance, and to ensure that there is appropriate support for under-represented groups and disadvantaged communities in every part of the country. On state aid reform, we want to ensure that we have a flexible system to prevent damaging anti-competitive behaviour.

The United Kingdom is one of the best places in the world in which to do business. The UK was ranked second in the world at attracting inward investment in 2001, which is a clear vote of confidence in the UK's enterprise environment and an important factor in raising productivity. I greatly welcome the recent comments of Digby Jones, the director general of the CBI:

    ''I would much rather be doing business in Britain than anywhere else in Europe . . . we are still the most successful economy in Europe.''

Our job today is to make recommendations on and improvements to the entrepreneurship Green Paper. We have made considerable progress, but we have a long way to go. I therefore welcome the opportunity to hear Members' views on the two documents, and to feed those thoughts into the wider debate and the UK's response to the entrepreneurship Green Paper.

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The Chairman: If there is a Division, as I believe there will be quite shortly, I shall suspend the Committee for 15 minutes. The good news is that we get injury time, so we can continue. I am sure that Members know the form. We have until 3 pm for questions. May I remind Members to keep their questions brief and ask them one at a time? There will be plenty of time to ask as many questions as people want. After that, we will have a debate.

Mr. Henry Bellingham (North-West Norfolk): It is a great pleasure to be under your chairmanship, Mr. Atkinson, and I am grateful to the Minister for the way in which he set out the salient points. He mentioned Digby Jones, who made a favourable statement the other day, saying that Britain is still a good place to do business. Will the Minister tell the Committee his reaction to Digby Jones's comments on the agency workers directive, which Digby Jones believes will destroy jobs? What is the Government's up-to-date position on that directive? I understand that they are doing their best to extract at least the most damaging teeth from it.

Nigel Griffiths: During the drafting stage and when the directive was going through the European Parliament, my Labour colleagues such as Claude Moraes, with strong support from colleagues of all parties, were at the forefront of raising SME concerns about the impact of the directive, if implemented in the way initially outlined. If nothing else, they secured time so that the implications of implementing such a directive could be more fully considered and so that it could be ensured that any final implementation would be least harmful to business opportunities. I take the hon. Gentleman's concerns to heart.

Dr. Stephen Ladyman (South Thanet): Creating the world's leading knowledge-based economy by 2010 is ambitious and will presumably require us to improve the quality of and access to higher education. What does the Green Paper have to say on that? Does it recommend that we should be cutting 100,000 higher education places, which is the proposal that the Leader of the Opposition came out with yesterday?

Nigel Griffiths: Quite clearly, there is a need to ensure that the UK's skills and knowledge base is equal to those of some of our key economic competitors, including some of our neighbours in Europe where 50 per cent. of the population achieve a high level of university or equivalent skills. It is important to look at how that is achieved. As a Member for a university constituency, I recognise the vital importance of further education establishments as well as higher education establishments. I would not be speaking the truth if I denied that we are yet to get the balance right, but the notion that we should be improving our competitiveness by deterring anyone from bettering themselves and entering, in particular, higher education is a fallacy. My hon. Friend is right to highlight that point. The Green Paper on entrepreneurship is clear in its analysis of our competitive position in Europe, vis-à-vis our global competitors, when it says that training, skills and education are a core part of achieving our objectives by 2010.

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Brian Cotter (Weston-super-Mare): I thank the Minister for showing his usual assiduity and for addressing the portfolio, but notwithstanding that, there are several points to raise. I want to mention quantitative targets.

The Minister will be aware that annexe 2 of one of the papers gives quantitative targets for the enterprise policy. I am somewhat concerned to see that in a number of instances the UK does not seem to fare especially well. For example, under ''Entrepreneurship'' and ''Current position'', the UK has nothing—a space—whereas for many of the other countries at least some idea of the current position is given. Under ''Entrepreneurship'' and ''Target (year)'', the table says for the UK, ''Raise''. Well—raise the Titanic, or raise levels, or what? For every other country listed, there are numerical targets of one sort or another. I might return to other aspects of the targets, but I would be interested to hear a response on that one.

Nigel Griffiths: The quantitative targets have been included in the scoreboard for the first time this year—this is the first time that the annual Commission publication has included them as indicators of progress in member states. That follows the agreement in the Stockholm Council. We are concerned overall that a number of member states—about 12—have declared targets, as the hon. Gentleman says, whereas others have adopted the approach that we have taken, which is to use targets that we have published domestically, rather than trying to fit ourselves to the Procrustean bed of EU targets. To do that, if I may be mildly critical, could lead not just to duplication, but to the extension of our targets into fields that are not our No. 1 priority. That is not to devalue the EU targets, but they would certainly add to bureaucracy and to the work load of the Commission and of our internal staff. Also, they might involve us asking small businesses for even more information on even more forms.

I do not want to be overcritical of the scoreboard and the new quantitative targets. They are of value, but we take the approach, as do some other member states, of using our own domestic targets. That tells the Commission that there is much of value in those and that we do not want to duplicate them by requiring even more filling in of forms.

Other member states, which have not taken the approach of this and previous Governments on firm monitoring domestically, have started from scratch. That is one reason why the Commission required these targets and published the indicators. However, we believe that our information is among the fullest, most frank and accurate, and is the most helpful to SMEs and, more importantly in Parliament, to policy makers of all parties. The domestic targets that we have in place are more comprehensive than elsewhere, and they better inform our debate and how we go forward.

 
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