Act set to boost firms on Teesside

Jul 22 2008 by Sue Scott, Evening Gazette

A RADICAL European shake-up of the financial and regulatory landscape in which small businesses on Teesside operate is on the cards.

Chief among the proposals is an option for the UK Government to slash the VAT charged by local companies for locally supplied services, such as hairdressers.

European commissioners have also proposed to relax the so-called ‘state aid rules’ governing who can apply for grants, which have worked against small businesses in the past.

The proposals follow the adoption of a new Small Business Act by the European Commission, which looks set to become law this December.

It recognises the contribution made by entrepreneurs, including crafts, micro-enterprises, family-owned and social enterprises, and sets out to make the idea of starting one’s own business more attractive.

Middlesbrough-based John Wright, chairman of the Federation of Small Businesses, said he was delighted with this ‘first step’ towards putting small firms at the heart of European business policy.

“We hope our Government will adopt these proposals when they come through and we will be discussing this with the Department for Business Enterprise and Regulation when the time comes.”

He said more flexibility in the amount of VAT member states required small business to charge would be particularly welcome.

The Commission also said: “The rather negative perception of the role of entrepreneurs and risk-taking in the EU must change”.

North-east Liberal Democrat MEP Fiona Hall said: “Small and innovative businesses are doing well in the North-east. They have support from regional development agencies and are really allowed to develop their own identity. More defined legislation however would make sure that their contribution to the region’s economy, development, innovation and social cohesion be protected.”

Among other things, the Small Business Act would cut down on the estimated seven hours a week that small businesses spend tied up in red tape.

Altogether, the Act sets out 10 principles which the Commission wants to see adopted at the highest political level along with concrete measures that should make life easier for small firms.

The Commission has also proposed a new statute that would make it simpler and cheaper for small firms to operate across European boundaries and an amendment to the directive on late payments to help to ensure that SMEs are paid within 30 days.

Mr Wright said that while small firms were more flexible in times of economic downturn, they were also more vulnerable and cash flow was critical to their survival.