Select Committee on European Union Fortieth Report


Letter from the Chairman to Rt Hon Alun Michael MP, Minister of State for Industry and the Regions, Department of Trade and Industry

  Thank you very much for Explanatory Memorandum 7721/06 on the transfer of businesses when their owners die or retire. This was considered by Sub-Committee A at their meeting on 13 June and was cleared from scrutiny.


The Committee have taken an active interest in the Lisbon Agenda for Growth and Jobs and consider Commission documents of this nature to be important in helping to promote best practice across Member States. To this end, and given your acknowledgement that "more could be done to further facilitate the successful transfer of viable, small businesses" what steps have the Government taken to assess the policies of other Member States for their benefits vis a" vis those in the UK?

14 June 2006

Letter from Rt Hon Margaret Hodge MP, Minister of State for Industry and the Regions, Department of Trade and Industry to the Chairman

  Thank you for your letter of 14 June to Alun Michael, about the Explanatory Memorandum (EM) 7721/06 regarding the Commission of the European Communities Communication on business transfer. I am replying as this matter falls within my portfolio.

  I am grateful to the Select Committee for clearing the EM and note its request for information on the steps the Government has taken to assess the benefits of business transfer policies of other Member States.

  As indicated in the EM, in an effort to ensure a smooth succession of business ownership, the Government's 2004 "Passing the Baton" report sought to assist the business transfer process by identifying the nature, extent and impact of succession problems affecting businesses and made recommendations for future action. The report was underpinned by research into the international evidence on business transfer issues, both in Europe and beyond.

  Subsequently, the Government has been working with stakeholders in taking forward the report's recommendations. In the EU fora, the UK has actively participated on a number of Expert Groups concerned with the business transfer agenda, particularly that for buying and selling businesses. Specifically, the UK has been reviewing the research that led to policy intervention in other Member States and any evidence that established the value of those interventions. We have found that Austria, the Netherlands and Sweden, with the UK, lead in terms of quality of their research and evidence on this subject. Other countries have tried specific policy interventions with a more limited evidence base, but the resulting interventions rarely demonstrated significant positive effects. The UK is however continuing dialogue with the more "evidence-based" Member States in order to constantly improve and refine policy direction in this area. Moreover, further detailed UK research on the workings of markets for buying and selling is due shortly. We will be sharing and discussing the implications of this research with EU colleagues.

  Through existing and future research, the UK is benefiting from broader learning that has taken place on business transfer across Europe and beyond and is using it to shape UK business transfer policy and developments. We hope that this policy will pave the way for a more vibrant business transfer market; with sellers rewarded for their efforts, buyers owning a business that has a customer base and trading history and the UK benefiting through a further boost to productivity.

1 July 2006

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