John Perry (Sligo-North Leitrim, Fine Gael) | Oireachtas source

I thank Members all for the kind invitation to address the Chamber on the important work to which Ireland is contributing at a European level to assist SMEs across Europe to grow and develop. If I may, I would like to start by informing the Chamber of how and why the SME envoy network was established in the first place.

SMEs are the backbone of the EU economy and a key driver in the EU economic landscape. SMEs provide millions of jobs and are continuously innovative in the provision of their goods and services. Some 98% of all businesses in the EU employ fewer than 250 people. This figure can be similarly applied to Ireland. Some 85% of new jobs have been created by SMEs. This is evidence that SMEs are the force behind job creation in Europe. There are 23 million SMEs in the European Union. If each SME were to take on one extra employee, the unemployment crisis in Europe would be over.

The Commission and the member states wanted to respond to the needs of SMEs by removing barriers for start-ups and through the introduction of the Small Business Act for Europe, SBA, which includes a wide range of measures which have been developed to make life easier for small businesses. Vice President Tajani invited all member states to appoint a national SME envoy. It is thanks to the close co-operation between the Commission and the member states that we have made concrete progress in the implementation of the SBA.

In 2008, at the start of the downturn, member states, along with the Commission, agreed to adopt the SBA. Given the events over the past six years, it was a very challenging time and environment in which to implement a small business policy agenda. The SBA is a set of ten principles which aim to guide the design and implementation of policies at both EU and national level. The work is essential in order to ensure there is a level playing field for SMEs throughout the EU and to improve the administrative and legal environment that will allow these enterprises to unleash their full potential to create jobs and growth.

The policy-making process in the EU sees legislative proposals from the Commission debated both by Members of the European Parliament and by representatives of member states' Governments within the European Council. Generally, the Commission consults with interested parties on a formal and informal basis before it draws up its proposals, as was the case with the SBA. This provides an opportunity for those that may be affected by policy to make their views known at several stages in the process.

There are a number of clear difficulties involved in ensuring that SMEs are in a position to put their views across to policy makers. SMEs do not usually have the resources that large firms dedicate to influencing policy making or lobbying. It is for this reason that the Commission appointed an EU SME envoy and encourages effective and wide-ranging consultation of SMEs as one element of its principle of thinking small first.

Following a review of the SBA in 2011, the Commission asked each member state to appoint a high-ranking government official as the national SME envoy. The Government, in showing how important the role of small business is to our economy, nominated me, as Minister of State with responsibility for small business, to be that envoy. Ireland is one of the few countries in the network to nominate a Minister of State as envoy and I know, from speaking to my colleagues in the Commission, that the decision has been welcomed.

The purpose of the SME envoy is to ensure that Government bodies at all levels integrate the SBA principle into policy making, regulatory proposals and funding programmes. SME envoys are the main channel between the Commission and national policy makers for contributing towards the dialogue on SBA implementation. The SME envoy network also provides a great opportunity to learn from each other and helps in the exchange of good practices.

The SME envoy is an active interface with the SME business community, considering their specific interests and needs in EU programmes and policies. The main objective of this function is to establish a close, direct link between the Commission, SMEs and their representatives. The SME envoy network is supported in its work by the Enterprise Europe Network, which is the local entry point for SMEs looking for advice. The Enterprise Europe Network provides information and advice on EU funding opportunities or on market opportunities in the language of the SME. It also helps SMEs to find business partners in other countries and gives advice on how to overcome regulatory obstacles.

The SME envoy network ensures that SME interests and needs can be better identified at an early stage and highlighted to the relevant services, ensuring that their concerns are taken into consideration, that adequate and efficient measures are implemented, and that overall EU and national policy is more SME friendly. Particular attention is given by the SME envoy network to the craft sector, small businesses and sole traders because of their specific needs.

The basis of the work programme for the network is delivery of the ten SBA principles of interest to SMEs. These include entrepreneurship, second chance, the principle of thinking small first, responsive administration, state aid and public procurement, access to finance, the Single Market, skills and innovation, the environment, and the internationalisation of SMEs. The SBA has been instrumental in putting SMEs at the centre of EU action and SME policy is now a top priority for all member states. The Commission has given particular priority to the issues of access to finance, cutting red tape and expanding into growth markets outside the EU.

The European Commission reports annually on each member state's performance in implementing the SBA. The latest available report for Ireland was published in 2013 and relied mainly on 2012 data. The report shows that Ireland has a positive SBA profile and that we are above the EU average in eight of the ten areas concerned. We are the top performer in Europe when it comes to second chance. The report acknowledges that Ireland offers a friendly business environment, supported by an efficient administration which is responsive to business needs and that Ireland has an innovative and entrepreneurial business culture. The Commission also acknowledges that Ireland has not adopted a specific strategy for implementing the SBA and that we do this through our Action Plan for Jobs process. The report also references the Government's positive engagement with small business through the advisory group on small business and the high-level group on business regulation, both of which I chair.

In the area of entrepreneurship the report shows Ireland is at or above the EU average in seven of the nine indicators identified under this heading. These positive results cover issues such as self-employment rate, entrepreneurship rate, opportunity driven entrepreneurship, preference for self-employment, feasibility of becoming self-employed, the share of adults who think successful entrepreneurs receive a high status in society and media attention for entrepreneurship. We are behind the EU average on two issues covering entrepreneurial intention and the share of adults who agree that school education helped them to develop an entrepreneurial attitude.

As Members of this House will be aware, the Government has supported the development of the national entrepreneurship policy statement - there are published documents in the antechamber if they wish to take them. In order to help us in this work we established an Entrepreneurship Forum in May 2013, tasked with examining the current environment and policy framework and making recommendations aimed at further supporting entrepreneurship and business start-ups. The membership of the forum consisted of entrepreneurs and academics, with representatives from my Department and Enterprise Ireland. The forum considered all 74 submissions from a parallel public consultation process, as well as the outcomes of meetings with stakeholders in the development of its report. The report contains 69 recommendations and is an important contribution to our current consideration of new policies to drive entrepreneurship in Ireland. With a view to delivering a whole of government response to driving entrepreneurship, we are undertaking a cross-governmental feasibility and operational assessment to facilitate informed decision making on the recommendations made in the forum's report and their suitability for inclusion in the forthcoming national entrepreneurship policy statement. We hope to be in a position to publish the policy statement shortly.

On the issue of a second chance, the report acknowledges Ireland as being the best EU performer. This heading measures issues such as the time it takes to close a business, the cost of closing a business and the degree of support for a second chance. In all three measures we are ahead of the EU average. This area was helped by the introduction of the Personal Insolvency Act 2012 and the Civil Law (Miscellaneous Provisions) Act 2011, both of which deal with debt difficulties.

On the Think Small First measure, the report suggests Ireland performs slightly below the EU average and that at the same time the administrative burden on business regarding compliance with Government regulations is quite low, while the communication and simplification of rules and procedures are above average. However, according to the report, Ireland is below the EU average when it comes to information on licensing and permits. It should be noted that this indicator is based on the position in 2008 and I am confident this is no longer the case. In 2012 my Department launched a business regulation website - businessregulation.ie- to help start-ups through relevant legislation on setting up a business and which provides tools and guidance for start-ups.

As part of An Action Plan for Jobs 2014, we are working on developing the single portal for SME retailer licences. This portal will be a one-stop-shop integrated online system for a key sector of the economy. Ultimately, the aim is to reduce the administrative burden for retailers. It is hoped we will eventually roll it out to other sectors of the economy. The Commission and other member states are eager to hear about our experience regarding licences and I intend to provide an update on the Irish experience of the SME envoy network in Naples during the year. It will allow, where there are up to 23 licences and 15 State authorities involved, one portal where a person can access a one-stop shop for the issuing of licences.

Also, a number of Departments and agencies have attended the Taking Care of Business events which have taken place around the country. The purpose of these events, the first of which was launched by Senator Feargal Quinn in Dublin Castle, is to provide advice and support for SME operators from a number of State bodies covering different regulations that may be of interest on general SME Government supports, including financial training. The first event was held in Dublin last year and followed by events in Limerick and Galway. The latest, which I attended, was held in Cork on Tuesday, with further events planned for later in the year. One example of good engagement at these events is the National Standards Authority of Ireland. As Senators will be aware, the NSAI is continuously encouraging SMEs in developing best practice and standards. This is being undertaken to ensure our SMEs are the best in the world when it comes to standardisation which can assist in their internationalisation. This work ties in with that of the Commission and the SME envoy network on standards.

There is no need to put in place a formal policy on the Think Small First principle. Everyone is aware, across all levels of government and agencies, of the importance the Government places on job creation. We have An Action Plan for Jobs which is now our yardstick for measuring the improving environment for businesses to create and sustain the jobs people so badly need. The Government has designated 2014 as the year during which it is all about jobs. It is also important to note that every memorandum for the Government contains a competitiveness test which covers many of the issues contained in the SBA. In addition, all legislation being proposed must be subject to a regulatory impact assessment.

The report shows Ireland has again outperformed the EU average in the majority of the responsive administration indicators and that Ireland has a business friendly administration. It goes on to compliment the low cost and speed in creating a firm in Ireland and the relatively few bureaucratic hurdles to be jumped to create a business. It also acknowledges the introduction of the Companies Bill 2012 which will establish the basis for a new legal framework for companies in Ireland. The Bill will reduce red tape for small businesses and make it easier and cheaper to set up a company in Ireland.

There are two indicators identified which show Ireland performing below the EU average. These are the time it takes to transfer a property and the cost to enforce contracts. On the contracts issue, it is important to note that the Small Claims Court can now deal with business-to-business disputes up to the value of €2,000.

Overall, Ireland scores above average in the indicators for State aid and public procurement. This area also covers the issue of prompt payments and the indicator shows the average delay in payments from public authorities is well below the EU average. My Department acts as a first contact point for businesses which want information on their rights under the prompt payments legislation. If the problem lies with a public authority, my Department tries to resolve the issue with the public authority before an escalation occurs. Furthermore, my Department is involved in a public information campaign on prompt payments as a result of the directive on late payments in commercial transactions. This campaign started in December and is continuing at the one-stop shop events. I encourage anyone with any issue with prompt payments to attend future events as the officials from my Department are there to help. Alternatively, my Department can deal with their queries directly.

The report shows Ireland is below the EU average regarding the SMEs' share of the total value of public contracts awarded. However, An Action Plan for Jobs aims to address this issue by identifying 13 actions which would be relevant to SMEs in having greater access to procurement opportunities. Issues such as maintaining and updating the standard suite of tender documents to bring about a more consistent approach to procurement are being dealt with. An Action Plan for Jobs will also transpose the new EU procurement directives and then revise procurement Circular 10/10 to encourage SME access to procurement. The Office of Government Procurement will, with the Competition Authority, also provide information for SMEs on approaches to multi-party tendering from a competition and procurement perspective.

I am sure it will come as no surprise to Members of this House to learn that access to finance is the most difficult measure, not only for Ireland but for many other member states in the network also, on which to get a handle. Although some of the data measuring the indicators are based on 2011 and 2012 figures, the results show Ireland is above the EU average in five of the 11 indicators dealing with issues such as the length of time it takes to get paid, the percentage of lost payments, venture capital investment, the strength of legal rights and depth of credit information index.

The other six indicators are areas where we fall short of the EU average and include the number of rejected loans, access to public financial supports, including guarantees, willingness of banks to provide a loan, the difference in interest rates, the percentage allocation of European Union regional funds and percentage allocation of EU funds for business creation and development.

The report acknowledges the attempts made by my Department and others to address this important issue, including the introduction of the credit guarantee scheme and the establishment of Microfinance Ireland. Support is now available to locally-traded sectors, given their crucial role in job creation. The latest figures I have to hand show that the credit guarantee scheme has 84 live facilities in place with more than €11 million available. The credit guarantee scheme is increasing or maintaining almost 700 jobs. According to the latest figures to hand, the Microfinance Ireland fund shows 192 jobs increased or sustained with a total approval value of more than €3 million.

In 2014, through the Action Plan for Jobs, the Government is trying to further improve the access-to-finance environment for small business by expanding the activities and reach of the Credit Review Office, enhancing the take-up and impact of the credit guarantee scheme, improving the take-up and impact of loans from Microfinance Ireland and involving the National Pensions Reserve Fund and Enterprise Ireland in the developing investment opportunities aimed at small to medium-sized enterprises, SMEs. In addition, the Government has put in place a number of measures aimed at developing new sources of finance, together with raising awareness of the supports available among the SME community.

The Commission itself supports access to finance by using financial instruments under the competitiveness and innovation framework programme. These financial instruments include both loan guarantees and equity finance. These instruments are implemented by the European Investment Fund via financial intermediaries in the member states. The leverage effect of such instruments has shown that with €1 billion of EU money, a further €30 billion of new lending to SMEs can be leveraged. By the end of 2012, €13.2 billion in loans had been granted to more than 220,000 SMEs under the competitiveness and innovation framework programme. The same programme has also helped venture capital funds to raise more than €2 billion in venture capital. It is important to note that 99% of SMEs benefitting from competitiveness and innovation framework programme, CIP, financial instruments are either micro or small enterprises. The new competitiveness of enterprises and small and medium-sized enterprises, COSME, programme for 2014 to 2020 is the first ever specific programme for SMEs. A total of 60% of the COSME budget is earmarked for financially supporting SMEs.

Ireland performs above the EU average on indicators such as the number of Single Market directives not transposed, the number of directives overdue and the average transposition delay for overdue directives. On the skills and innovation side, Ireland ranks above the EU average on these indicators. Ireland is particularly successful at participating in EU-funded research and in selling and purchasing online. The areas for improvement include SMEs introducing product innovations, SMEs' collaboration and employees' participation rate in education and training. Again, however, it is important to note that some of these indicators are based on 2008 data. The report gives a positive welcome to the ICT skills action plan, the most recent version of which was announced by the Ministers for Education and Skills and Jobs, Enterprise and Innovation. The Commission also acknowledged the report of the research prioritisation group, as well as the Management 4 Growth programme. In addition, a number of training and mentoring opportunities have been identified for action in the Action Plan for Jobs. In particular, a pilot project has just been launched by Skillnets, which seeks to develop the financial capabilities of SMEs and assist them in accessing finance.

On environmental issues, Ireland's performance is slightly better than the EU average. Ireland's SMEs are keen to take on resource efficiency measures and offer green products or services in their own right. Irish SMEs also have a higher proportion of their turnover being generated by green products or services. The Commission acknowledges the publication of the Government's policy statement on growth and jobs in the green economy, namely, Delivering Our Green Potential. Further actions emanating from this report are being dealt with under the Action Plan for Jobs 2014, including one that aims to develop an Internet resource signposting the range of supports available to Irish enterprises to help them to reduce energy, materials usage, water and waste and to develop new and innovative green products and services. This action should help to address the one indicator in this heading where Ireland came in below the EU average. This indicator provided details of the number of SMEs that have benefitted from public support measures for their resource efficiency actions.

The European Commission has claimed that Ireland is slightly ahead of the EU average on internationalisation issues. We are ahead on issues such as the number of documents required to import, the time required to export and the number of documents required to export. On the negative side, it costs slightly more to export from Ireland and the time taken to import is slightly above the EU average. In addition, the cost required to export also is slightly above the EU average. I am sure this is partly due to a cost competitiveness issue, in part because of the additional cost arising from the necessity to use sea and air to import and export goods.

Access to markets continues to be a key element of the Small Business Act for Europe, SBA, either within the EU or outside its borders. The Commission has strengthened its contacts with strategic partners on SME policy including the US, China and Russia. Such co-operation led to the memorandum of understanding on co-operation throughout the world between our business support organisations on the ground, the Enterprise Europe Network and the US international trade administration. The Commission has also established intellectual property rights, IPR, helpdesks, including in China, to help industry but particularly to protect SME innovation. Numerous missions for growth have been organised by Commission Vice-President Tajani, combining high-level political meetings with business matchmaking and participation of EU SMEs in commercial fairs and conferences.

The most recent meeting of the SME envoy took place on 10 March in Munich. Issues that were discussed at this meeting included access to finance, with the discussion focusing on equity finance as an alternative to bank lending, helping SMEs to access EU framework programmes and implementation of the banking union. As for burden reduction, more exemption and lighter requirements for SMEs were discussed, as were decreasing the burden on microenterprises, the exchange of best practices and focusing on compliance costs. In respect of entrepreneurship, further actions on transfer of business and second chance are needed. There is a need to promote entrepreneurship and innovation to increase productivity and create jobs. As for access to markets, there is scope for further action in the energy markets and further actions required to help SMEs tap into global business opportunities should be continued. In addition, new priorities were suggested such as skills, qualifications, education and training and promoting growth, as well as scaling up in terms of employment.

I believe the work of the SME envoy network and the implementation of the SBA are delivering for Ireland and for Europe. I also wish to mention that the European Commission has started the discussion on the future of the SBA among the SME envoys. In my opinion, the informal nature of the SME envoy network works well and this should continue. The network should also continue to feed into the work of the informal Competitiveness Council but above all, it is important that one continues to think small first. It is clear from both the SME envoys and the Competitiveness Council that tie four priority areas of the SBA, namely, access to finance, access to markets, reducing administrative burden and entrepreneurship, will remain the basis of the future SBA. I acknowledge the work done to date by the SME envoy network in the important area of access to finance. Indeed this was high on the priority of the SME envoys' work from the outset and in 2013 in particular, with the publication of SME envoys' paper and discussion, Where next for the SME Access to Finance landscape? The Commission also hosted a seminar in Dublin during Ireland's Presidency last year, which presented the EU financial instruments to which SMEs have access from 2014 to 2020 under the COSME programme, as well as the Horizon 2020 and the European Structural Investment, ESI, funds. In showing the importance Ireland places on SMEs, during its Presidency of the Council last year, the Government held an informal Council meeting dealing with access to finance and the internationalisation of SMEs. The Council discussed the use of venture capital in global trading companies and the internationalisation of SMEs and the opportunities for EU enterprises in global markets, along with discussing how cities and regions are drivers of entrepreneurship and innovation.

On the issue of access to markets and internationalisation, I acknowledge the work of the enterprise Europe network, EEN. The EEN is a valuable network for providing information to SMEs on doing international business. The promotion of clustering initiatives to help SMEs to internationalise and integrate into global value chains is an opportunity of which Ireland should take full advantage. I acknowledge the work and co-operation of my fellow SME envoys throughout the SME envoy network and, in particular, the work of the EU SME envoy, Daniel Calleja Crespo, with whom I have a close professional relationship, and his colleagues in the European Commission. However, as I have noted, we need to do more because neither the Government nor the European Commission have all the answers on how best to assist SMEs in growing and sustaining their businesses. While the vast majority of the measures contained in the Action Plan for Jobs impact on SMEs, we would welcome Senators' thoughts on how we can better support our SMEs in accessing the supports they need to grow their business and ultimately create more jobs for our people.