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Entrepreneurs have attacked the new Small Business Act for Europe as ineffectual and lacking teeth.

Think Small First, which was published on June 25, sets out the European Commission’s vision to place small and medium-sized enterprises (SMEs) at the heart of European business.

James Murray Wells, founder and chief executive of Glasses Direct, an online spectacles retailer, said: “Apparently, we smaller businesses need to ‘unlock our potential’. We need ‘red carpets’ and ‘launch pads’ and ‘access to help with finance, innovation and training’. Would it be cruel to point out that the first is patronising and the next two are meaningless drivel?”

Organisations such as the EC create more problems than they solve, Murray Wells argued: “They are not the catalyst, but the gooseberry. They are in the way.”

The new act proposes legislation in four main areas: the creation of a new European private company, the Société Privée Européenne, to further enable cross-border trade; an option for member states to apply reduced VAT rates for locally-supplied services; an amendment to the late payments directive proposed for 2009 to ensure payment within 30 days; and a new exemption from regulations on state aid to help SMEs gain access to training, research and development.

However, many questioned how the act would be implemented.

Guy Rigby, head of entrepreneurs at Smith & Williamson, an investment management and accounting company, said the act lacked regulatory teeth. “A lot of this is wishful thinking,” he said. “The document is not a real act as we in the UK understand it. Some of these proposals will be adopted, but not necessarily by every member state.”

Janet Kelly, managing director of media company Free Features, agreed. “This is great in principle, but are the wheels of regulation likely to move quickly or flexibly enough to respond to the needs of small companies?” she said.

“And does the EC have enough understanding of true entrepreneurialism to be supportive? The small business tends to thrive by being lithe and responsive – not something the EC is known for,” Kelly added.

Simon Campbell, chief executive of ViaPost, a mail delivery firm, asked who would police the proposal to tighten payment terms. “Britain has talked about 30-day payment terms being obligatory for some time, but the big companies continue to pay late and the SME continues to have to chase.”

However, Duncan Cheatle, founder of The Supper Club, a networking group, said any move to enforce late payment terms was to be applauded.

The UK government also welcomed the new proposals for reducing the regulatory burden on SMEs. Business minister Shriti Vadera said: “I’m delighted the commission has accepted our own proposals that the impact of regulation on small firms will now be considered before legislation is introduced; possible exemptions will be considered for smaller businesses; and that common commencement dates are agreed.”

Copyright The Financial Times Limited 2017. All rights reserved.

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