Françoise Le Bail is deputy director-general and SME envoy at DG Enterprise, part of the European Commission.
To read a shortened version of this interview, please click here.
Is the Commission doing enough to ease the administrative burden on SMEs?
This is the Commission which has done the most to cut red tape and this is to the benefit of SMEs. We have done so in several ways. For example, we aim to reduce the administrative burden by 25% by 2012 and we are well on track to do so. Moreover, we have reduced the acquis communautaire by 10%. Finally, all the Commission's legislative or non-legislative proposals having an impact on business have to undergo an 'SME test' to make sure they are SME-friendly.
There has been criticism from an SME group concerning recent efforts to ease accounting rules for micro-enterprises. How would you respond to this?
What we are proposing is optional. Companies are free to benefit from it if they want to or not. In a number of member states, SMEs have already benefited from reducing accounting requirements – but companies have a choice. If it suits them, they go ahead; if not, they don't.
How has the crisis changed the situation for SMEs?
SMEs are hit hard by the crisis. Big companies were hit first but now SMEs are affected too, particularly having difficulties in accessing finance – the 'credit crunch' – and by the downturn for larger companies. The Commission is helping SMEs at this time of crisis.
Within the framework of the SBA [Small Business Act' for Europe], we have doubled the contribution made by the EIB (European Investment Bank) to SMEs, increasing it from €15 billion to €30 billion over two years. There have also been a number of initiatives that make life easier for SMEs, one of which has just been adopted: a reduction in VAT for labour-intensive services. Our work continues with the 'Think Small First' principle at the centre of our work, and member states have committed themselves to doing the same.
Is European Investment Bank funding coming forward quickly enough?
EIB lending to SMEs was €8.1 billion in 2008, [and] the same level of lending is foreseen for 2009 and 2010, indicating that the €30 billion will be exceeded by 2011. The EIB has accelerated its lending activities during the past five months in comparison to the same period last year, and continues to closely monitor the implementation process.
Is the action that is being taken proportional to the contribution of small businesses to the economy? 99% of companies are SMEs, but it seems multinationals are receiving bail-outs from governments. Is there a contradiction in that?
When the member states invest in, for example, the automotive sector, they are investing not just in big companies but they are also supporting the great numbers of SMEs that work in this particular area. This is one of the objectives we want to ensure: when there is support for a sector, it should benefit not just large companies, but also smaller suppliers.
You mentioned a commitment to cut the administrative burden on businesses by 25% by 2012. Is that on target?
Yes, and we've already done a lot in this area. Measures already presented or foreseen by the Commission could represent savings of about €30 billion for EU business, including SMEs.
The area of public procurement has been highlighted by the European Policy Centre and others as an area that could be streamlined. What can be done to help SMEs access public procurement in a way that's cost efficient?
Public procurement represents 16% of GDP, so it is clearly very important. SMEs' access to public procurement was looked at very carefully when we were working on the Small Business Act. In fact, 42% of all public procurement funds in Europe already go to SMEs. This is in sharp contrast with the situation in the US, where it amounts to less than 25%. So Europe is doing well but can still improve.
In the framework of the SBA, we have developed so far a new code of conduct for public authorities. It is essential to simplify the public procurement process for SMEs by giving them more information. Member states also have to help us implement the SBA in this field.
A lack of oversight led us into the current financial crisis. How do you balance the need to cut administrative burdens with the need for proper oversight and accountability?
Well, cutting the administrative burden means removing what is not necessary – it doesn't mean regulation will become more lax. We are simply removing the duplication of unnecessary administrative work, but this doesn't affect the fact that laws and regulation will have to be respected.
There is certainly a need for regulation, so we have to find the right balance, and new financial regulations will be put in place to avoid such a crisis in the future.
Smaller companies often find it extremely difficult to access European research funding. Are there any measures that can be taken to address this?
There has been an improvement from the 6th to the 7th Framework Programme (FP7) for Research and Development, but there are two structural reasons why it is still difficult for SMEs to access these funds. Many SMEs do not do research, as such. They may be interested in innovation, but research is not natural for the great majority.
Secondly, to take part into a research project, you need to involve partners in other member state,s and this is more difficult for SMEs.
However, in the framework of the SBA, we have tried to improve some of the procedures. For example, if an SME that is benefiting from the FP7 grows beyond the definition of an SME – that is, having 250 employees or less – they will continue to benefit from SME status for the duration of the project. And we will continue our efforts to streamline procedures for SMEs in that field.
How does the Late Payments Directive benefit SMEs?
In Europe, one out of four insolvencies is due to late payment. This leads to the loss of 450,000 jobs each year, adding to the high unemployment level in Europe. This is a major problem for SMEs, and this is the reason why the Commission will soon propose measures to reduce payment delays.
The Lisbon Agenda is due to end in 2010. Do you have thoughts on what might replace it and might there be a focus on innovation and smaller businesses?
With the adoption of the SBA last June, the Commission committed itself to putting SMEs at the forefront of the political agenda, and this will remain valid for the years to come. Innovation will be an important element of Lisbon post-2010, and when we talk about innovation, we are not just talking about high-tech innovation, but about all types of innovation, including innovation in services such as management and design innovation. And, of course, what has to be done in terms of climate change and a low-carbon economy will be a natural part of the new agenda.
What could be done to communicate the Lisbon Agenda to SMEs and help them benefit directly over the coming years?
SMEs may not be aware that there is a big plan called the Lisbon Agenda. However, the SBA is an intrinsic part of the Lisbon Agenda; therefore, as we implement the SBA, SMEs will see the results. This Commission has put SMEs much more at the forefront of the concerns of all member states.
