When the UK polls open on May 22 in the latest round of European elections, a good proportion of those marking their ballot paper will be small business owners. Politicians recognise the importance of the small business vote, and in recent weeks many have been wooing SMEs, saying that their party will be the one working in enterprise’s best interests if elected to power in Brussels.
But do these elections really matter to SMEs? Well, the Federation of Small Businesses (FSB) says that one in five British small companies exports, and the European Economic Area is the main destination for nine out of ten small exporters. Europe and its rule makers have a real impact on these firms, and much of the regulation that ends up shaping all small enterprises starts life in the European parliament. Added to which, this powerful political entity can drive economic growth, encourage start-ups, and nurture entrepreneurship in Europe. The European parliament itself highlights that it votes on many matters that directly affect SMEs, such as the regulation of the banks, as well as approving or rejecting trade agreements.
The elections will choose 751 Members of the European Parliament (MEPs), with 73 of them coming from the United Kingdom. There are candidates from a huge variety of parties – some of them representing nationalist interests, as well as independent, niche groups. But we’ve decided to scrutinise what Britain’s three main political parties are saying they will do for UK SMEs via Europe. Plus, we’ve looked at the election manifesto pledges of the UK Independence Party (UKIP), since Nigel Farage’s controversial upstart outfit has taken mainstream politicians by surprise with its popularity in recent months.
The Conservative Party
Commentators are predicting that the Tories are likely to suffer on May 22, losing some of their votes to UKIP. It’s certainly the case that the current generation of Conservatives don’t have an altogether happy relationship with Europe, and David Cameron has promised an in-out referendum by the end of 2017 on the UK’s membership of the European Union (EU) if they’re voted back into power at the next General Election. But the party has laid out what its MEPs’ priorities would be for Britain’s small firms while working in the European Parliament.
- Cutting red tape for SMEs is a priority for the Conservatives, simplifying or withdrawing EU rules wherever possible. The party calculates that it can reduce the cost of red tape to small firms by at least £1 billion by 2019.
- The Tories have vowed to strengthen the existing ‘yellow card’ system that allows national parliaments to reconsider new proposed EU rules. It, like Labour, supports the introduction of a further ‘red card’ system to allow countries to join together to halt new regulation entirely.
- Conservative MEPs want to open up new sectors in the Single Market to British firms. They believe UK technology entrepreneurs should be particularly helped to sell their innovations across Europe. The party believes that encouraging free trade deals with the USA, Japan, India, as well as agreements with Mexico and China, could benefit businesses in Britain, too. It also wants to secure better export opportunities for British farmers.
- Energy is another focus for the Tories, with a vow to complete the creation of a single energy market across the EU to help bring down the cost of energy bills for businesses and consumers alike.
The Labour Party
In its European Manifesto the Labour Party has set out what its representatives in Brussels would do for small firms at home.
- Banking reform is a major focus, with ensuring credit provision for SMEs and start-ups being a particular concern of Labour’s.
- Labour is proposing the introduction of a European Commissioner for Growth to give one individual a specific focus on and responsibility for promoting economic growth policies, and also making that person accountable for the progress of such plans.
- Ed Miliband’s party is promising to support free trade agreements, as well as an EU-US trade and investment partnership, both of which have the potential to benefit UK small firms with ambitions to operate at an international level.
- Labour MEPs have pledged to make EU competition policies, particularly those relating to energy, a priority, potentially reducing fuel costs for the UK’s small businesses and householders.
- A ‘red card’ system is also being proposed by Labour, allowing national parliaments to put an emergency brake on proposed EU legislation if it is thought to be too onerous by a third of member states.
The Liberal Democrats
One thing that the Lib Dems are absolutely clear about is that they want the UK to remain in Europe, come what may. But they‘ve also outlined some of the more specific ways that they think the EU could help Britain’s small businesses.
- Lib Dems have promised to use European powers to lessen small firms’ reliance on bank lending, making alternative forms of funding more readily available.
- A promise to ‘Think Small First’ means that Liberal Democrat MEPs will promote measures to improve access to European funding for SMEs, as well as working to reduce unnecessary EU regulatory costs that hit small firms particularly hard.
- Greater access to European research and development funds is proposed to help British businesses to gain access to the capital they need to get ideas and innovations to market.
- The Lib Dems are proposing an easy-to-use EU information portal for small and medium businesses, telling them about exporting opportunities in order to increase the number of UK firms that operate overseas.
- The party’s MEPs are keen to remove any remaining barriers to trade in the EU single market, in particular opening up European online industries, the energy market, and services including accountancy, law and architecture – specialisms in which UK firms excel. It also believes that other areas where British firms are strong, such as environmental and low carbon sectors, could be exploited more.
- The Liberal Democrats also support the EU’s role in securing trade deals with emerging economies such as India and some Latin American countries, as well as developed nations like the USA and Japan, all of which have the potential to benefit British firms.
Euro-scepticism is on the rise in many countries, and the anti-European party UKIP is Britain’s strongest example of this wave of negative feeling towards the EU. One of UKIP’s main campaigning points is a total withdrawal of Britain from the European Union, but that isn’t stopping Farage’s team from trying to win some places in Europe themselves this month. The party’s manifesto offers one solution to almost all of Britain’s – and its businesses’ – ills: leave the EU. How it fares at the European elections with this one policy approach will have to be seen.
It may feel far removed from the day-to-day running of your business, but you’d be unwise to dismiss the influence of the powers that be in Europe on matters affecting your enterprise at home. Whichever is your party of choice, it’s worthwhile making the effort to cast your vote in the European polls on May 22. As the FSB points out, it’s a chance to create a greater culture of entrepreneurship and nurture business growth in Europe, to increase political pressure on the banks to lend to small firms, and to encourage the EU grandees to consider smaller employers first when they’re drafting new legislation. And those are all things that can only benefit British businesses in the longer term.
Image courtesy of xedos4 / FreeDigitalPhotos.net