Examination of Witnesses (Questions 80
- 99)
MONDAY 2 JULY 2007
Ms Karen Clements and Mr Clive Davenport
Q80 Lord Haskel: With the
new Member States, you have the advantage of a low cost manufacturing
sector area and also the influx of labour. You have not had any
problems with the implementation of Directives or slowness in
the new Member States, or has this been an advantage to you in
that it is easier to make arrangements to have products made more
cheaply there?
Ms Clements: There are instances of slowness
to implement but it varies very much from country to country.
There are instances of corruption, obviously, and that is a deterrent
to a lot of businesses. I would say that very few of our businesses
have actually said candidly that they have found slowness of implementation
or indeed corruption to be an opportunity rather than a hindrance.
Mr Davenport: I would agree with that.
Q81 Lord Haskel: Have your
members had any problems with corruption, Mr Davenport?
Mr Davenport: Not that we are aware. They have
never mentioned it anyway if they have had any. Perhaps they would
be embarrassed to do so.
Q82 Lord Geddes: How big a
factor does language play in this?
Ms Clements: In a survey that we carried out
two years ago now, over half of the businesses that responded
said that linguistic barriers were a problem for them and they
felt that they did not have access to employees who had linguistic
capabilities, and an overwhelming 90% said that they thought the
Government should do more to improve the quality of language training
in schools and further education. To take an example in the new
markets, if one company is up against a German company in Poland,
for example, it is very likely that the German SME will have a
Polish speaker who is able to conclude the contract and they then
win that contract. Even if the services they provide offer rather
better value for money, they are certainly discriminated against
if they do not speak the language.
Mr Davenport: Yes, I think that, from a small
business perspective, e-commerce is probably the biggest route
forward because the language for e-commerce is English. So I think
if there is a route with less difficulties in it, it is the e-commerce
route, where you are selling a product to someone abroad and that
is done through the English language. Actually going into areas
with different languages does exactly as my colleague says, it
presents a lot of problems because we speak more loudly and that
is how we get over it.
Q83 Chairman: Just for the
record, can we be clear about the rather alarming statistic that
Mr Davenport gave us that only 2% of your members are actually
doing business in other states of the European Union.
Mr Davenport: Not 2% of our members; two% overall,
2% of all SMEs.
Q84 Chairman: That is a staggering
figure.
Mr Davenport: It is extremely small.
Q85 Chairman: Is that borne
out by evidence from BCC?
Ms Clements: As I say, we have not carried out
any research of our own in that respect. It still seems to me
an alarmingly small amount.
Q86 Chairman: Would you say
that figure is going to be replicated if we look at the reverse,
that is to say, other European states' small and medium size enterprises,
using the same definition, doing business in Britain? I am excluding
Polish plumbers.
Mr Davenport: I do not have any knowledge of
it but it would not surprise me that it was an extremely low amount,
very low.
Ms Clements: I certainly know from being a member
of an umbrella organisation called Eurochambres that regroups
all the chambers of commerce not only of the European Union but
wider Europe that there is a great deal more, particularly in
the public law systems, where every business is required to join
a chamber by law, that there is a great deal more support from
government and from the chamber for the small and medium size
business and that that would probably account for what I cannot
confirm in statistical terms but what seems to me to be a perception
that there is a great deal more trading activity going on on their
part necessarily than there is on ours.
Q87 Baroness Eccles of Moulton:
When you talk about the 2%, are we talking about the countries
that are newly joined or are we talking about all 27?
Mr Davenport: I am not sure when the statistic
was carried out. I think it was just before the influx of new
countries.
Q88 Baroness Eccles of Moulton:
I see. So it applies to the 15 rather than the 27.
Mr Davenport: Yes. It is not the last 12 months.
It is slightly beyond that.
Q89 Baroness Eccles of Moulton:
There is quite a substantial difference, is there not?
Mr Davenport: Yes.
Q90 Lord Lee of Trafford:
Mr Davenport, particularly given that it is obviously easier for
larger companies with greater facilities and a much better strategy
to deal with Europe and European legislation, with designated
departments to handle tenders and bidding processes, do you have
any evidence that any of the larger companies are helpful to your
smaller businesses? In other words, is there any specific example
of piggy-backing in terms of your members being helped, as it
were, by those who know the European ropes perhaps rather better?
Mr Davenport: I do not have any statistics on
that at all. Personally, I have had experience of that myself
from my business. It can be advantageous but it depends on your
relationship with the company that you are dealing with. I think
really that is where things improve but we have no overall statistics.
That is purely a personal one-off, which is hardly a statistic.
Chairman: May we move on to enforcement, which
is one way we can perhaps help SMEs.
Q91 Lord Geddes: I think to
an extent, Lord Chairman, the question may have been answered
by that 2%. The question, for the record, is: are the current
remedies available to the Commission to enforce the Single Market
legislation adequate and are they used effectively? I just have
a feeling that if only 2% of SMEs are doing business, I am not
quite sure how you are going to answer that.
Mr Davenport: The Commission does have the power
to take Member States to the ECJ if they contravene rules that
are set down but we do not get much use of that. We do not even
have name and shame.
Ms Clements: I would like to say that the infringement
proceedings could be a great deal more transparent, to echo Mr
Davenport, and that they could be speeded up. The agency we have
found most useful is SOLVIT, and certainly some of our members
have used their services. It is an informal way of resolving problems
that businesses are encountering in the Single Market or indeed
consumers, and they have a ten-week target by which to resolve
the case without recourse to legal proceedings, which they usually
meet, and more often than not they meet it earlier than that.
They have solved 75% of the cases they have been presented with
since they were set up. We would certainly love to see that agency
strengthened and given more resource and more support, particularly
in the Member States. At the moment the European Commission acts
as a portal and sends out the cases to the national authorities
where it is relevant. We would like to see those beefed up so
that it could perhaps—we will probably be going on to the
Services Directive later or indeed the Commission's proposal on
mutual recognition, but it could be a source of information and
not just redress for SMEs. Our members have certainly found that
extremely useful. When it comes to the infringement proceedings,
as you said, very few of our members have actually got that far,
not least because they do not have the time and the money to do
so.
Q92 Lord Geddes: Who or what
are SOLVIT and where are they?
Ms Clements: SOLVIT is an online service and
it is run by the European Commission. If you have a problem, you
go on to the website and you click on your Member State; so you
are a UK-based business and you are encountering a problem and
you file a complaint, which goes to the DTI at the moment or the
new Business Regulatory Reform Department, and they then get in
touch with their counterparts in the Member State in question
and try to resolve the problem between themselves. If it is a
national rule that is illegal, the Member State in question agrees
to disregard that national rule until such time as it can be taken
off the statute books.
Q93 Chairman: Lord Geddes
may be just about to ask this, but in which directorate general
is that? Is it the Competition Commission?
Ms Clements: No, I believe it is DG Markt. I
am not entirely sure but I believe that is the DG that runs it.
Chairman: I think you have just given us an
extra appointment in Brussels. Thank you very much for pointing
us in that direction. That is extremely helpful.
Q94 Lord Geddes: Can I very
quickly twist it round the other way. I can appreciate that there
is not much experience of UK companies running into problems on
continental Europe because they are not doing very much business
with continental Europe. Have you any evidence, anecdotal or not,
of the reverse side of it?
Ms Clements: Yes. The European chambers that
I mentioned earlier recently put a position paper together on
the Commission's proposal to boost the mutual recognition principle
and its annex lists the barriers that companies from Germany,
Poland and Austria—only three countries but still three
nevertheless—have encountered, and Great Britain is mentioned
in all three cases, largely to do with having more stringent fire
safety regulations than most other EU Member States, or applying
more fire safety. The concentration of gold and silver is a huge
issue, apparently, where products are stopped from being sold
in this country—illegally, I might add.
Q95 Lord Geddes: Illegally
stopped or illegally sold?
Ms Clements: No, illegally stopped.
Q96 Lord Haskel: Because of
definition?
Ms Clements: Yes, and there are several cases
of over-implementation of Directives. If you look at the list
of countries and products that are being stopped, I would not
say that Great Britain is the greatest offender; it is probably
second on the list, but that is obviously only three Member States,
and it may indicate why the UK Government is fairly lukewarm towards
the proposal for a regulation that is being discussed in the Parliament
at the moment.
Chairman: That is very helpful. Shall we move
on from enforcement now to regulatory authorities.
Q97 Baroness Eccles of Moulton:
The question is, is there a need for greater co-operation between
national regulatory authorities and would this benefit businesses,
in particular the SMEs, if they did co-operate more closely?
Ms Clements: Absolutely. SOLVIT—again,
you might think I am in its employ, and I am not, but it does
just that; it puts national authorities together in an informal
way and helps them to solve the problems without going through
the formal complaints procedure. This obviously helps SMEs tremendously
in terms of the time involved and the fact that it is a free service.
Again, the proposal on mutual recognition suggests that there
should be so-called product contact points so that you may go
anywhere in any Member State and, because of a fantastic website
where all the national authorities are talking to each other,
you will know exactly which products you can sell, where you can
sell them and why you cannot if you cannot. All these initiatives
by the Commission are to be welcomed.
Q98 Baroness Eccles of Moulton:
Does this fantastic website exist?
Ms Clements: It does not. It is a hope.
Q99 Baroness Eccles of Moulton:
It is a hope, but it could?
Ms Clements: It could, but obviously there is
a question of resources and where you put it, who services it,
all those sorts of issues, which in fact are proving to be some
of the more complicated but extremely important issues in the
implementation of the Services Directive.
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