Oireachtas Joint and Select Committees
Wednesday, 11 June 2014
Joint Oireachtas Committee on Jobs, Enterprise and Innovation
EU Supports for SME Sector: European Commission
On behalf of the committee, I extend céad míle fáilte - 100,000 welcomes, as we say in Ireland - to Mr. Daniel Calleja Crespo, Director General for Enterprise and Industry at the European Commission. We are delighted that he was able to accept our invitation to come to Dublin. I also welcome Mr. Stephane Lebrun, head of unit at the Directorate General of Enterprise and Industry, and Ms Barbara Nolan, head of representation of the European Commission in Ireland, whom we have met before on several occasions.
When we visited Brussels in January, we discussed a range of EU policy issues within the joint committee's remit, including access to finance for Irish small and medium enterprises, Horizon 2020, the EU semester process and relations between national parliaments and the EU institutions. Mr. Calleja Crespo's visit here is a result of our meeting with him in Brussels and is a further step in strengthening relations between our Parliament and the EU institutions.
As mentioned, eight members of this joint committee travelled on that occasion and found it very worthwhile and informative. We are in a better position to engage with EU institutions as a result and we will inform our colleagues on other committees that they should do likewise. I know that Mr. Calleja Crespo is encouraging such initiatives.
As part of its work programme for 2014, the joint committee has, in recent months, examined the issue of access to finance for small and medium enterprises, SMEs, in light of growing concerns in the sector that such access is extremely difficult to achieve. We have engaged with a wide range of stakeholders to elicit their views and have thus gained valuable insights into the current situation relating to access to finance for SMEs. We have examined initiatives to assist SMEs that have emerged since the banking crisis. Difficulty accessing finance has had an impact on entrepreneurship and growth. The joint committee has also heard presentations on alternative sources of funding, such as crowd funding. We intend to compile a report with recommendations on policy initiatives to support SMEs in Ireland and throughout Europe. We hope this report will be completed in July.
This meeting today will provide an opportunity to engage further with these issues. In particular, we will discuss what Europe is doing to support SMEs as it is widely acknowledged they contribute substantially to employment growth and economic prosperity. SMEs have a vital role to play in the economic recovery of Ireland and Europe. Access to finance is crucial for the survival of SMEs and therefore we must ensure everything possible is done to create and maintain an environment supportive of this vital sector of our economy.
I wish to advise that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. If witnesses are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.
A short meeting between Mr. Calleja Crespo and the Taoiseach is scheduled for 2 p.m. so this meeting will end at 1.55 p.m. There will be time to engage over lunch if the Taoiseach releases Mr. Calleja Crespo.
Mr. Daniel Calleja Crespo:
I am pleased to participate in this session of the joint committee. When I received the invitation to attend the Joint Committee on Jobs, Enterprise and Innovation of the Irish Parliament I had no hesitation in accepting. The meeting in Brussels in January was so successful that I promised to come over, if invited, to continue our discussions. In the European Commission growing importance is attached to relations with national parliaments. It is very important that European policies are closely linked to the activities of national parliaments. It is very important to explain what the Commission does but also to learn the main issues and challenges facing national parliaments.
On Monday I appeared before the committee on jobs of the Spanish Parliament and we discussed the key challenges faced by young people there including job opportunities, policies for SMEs and entrepreneurship.
This meeting is taking place at a very particular moment. Some days ago the Commission issued its country-specific recommendations relating to countries in the framework. A specific process was provided by the annual growth survey in November. In the country specific recommendations process we engage in dialogue with member states and try to point out issues that require more work to each country. We aim identify the most pressing problems that hamper growth and work together to address them. This process will reach an important point in June when the European Council will meet and formally adopt the Commission's proposals.
There were seven country specific recommendations relating to Ireland and they addressed topics such as public finances, health care, the labour market, education and, as rightly mentioned by the Chairman, access to finance for SMEs. I will come to the topic of SMEs but I do not want to take long so I will highlight the priorities of the Department of Enterprise and Industry at the European Commission. There are two major areas of work at that Department, enterprise and industry. On the one hand there are enterprise, SMEs and entrepreneurship and on the other hand there are industrial strategy and industrial competitiveness in all sectors of the economy, from the automotive to the aeronautical to the chemical to the mechanical and so on.
To outline the main priorities of our policy I will first stress the fact that Europe in recent years has seen the most serious economic crisis since the Second World War. Millions of jobs have been lost and there has been a major decline in industry. Thousands of SMEs have closed and we are emphasising the need for a renewed industrial strategy. Industrial competitiveness must be prioritised in the coming years and we must mainstream competitiveness in all areas of the economy. We must make our productive sector the engine of the recovery. For many years it was thought the best industrial strategy was that which did not exist. We have seen that the countries that best survived the crisis are those that did not dismantle their productive sectors. Every country with an industry and manufacturing sector is doing better than those that do not because each job in manufacturing means two or three more jobs in the service sector. This is why we emphasise the importance of industry and manufacturing. It is important that the EU has a strong industrial base as it is a region that can attract investment and have a dynamic, flourishing economy.
However we look at all this we reach the same conclusion: we must work for our SMEs. SMEs are the backbone of the economy and the main source of job creation. In Europe there are 23 million SMEs and they have created 80% of new jobs in the past five years. In the private sector two out of three jobs are in SMEs. If we ignore the importance of SMEs we will not address the needs of our citizens and the real economy. More than this, SMEs are the key factor in social and economic cohesion across Europe. My Department and the Commission seek to place SMEs at the centre of strategy because growth depends on competitiveness and SME policy being in the mainstream.
I will now mention some of the main areas where our actions will focus. I meet representatives of SMEs every day throughout the European Union and they say the most pressing issue they face is accessing finance. The credit crunch and economic crisis have seen many problems emerge for SMEs. The European Central Bank regularly conducts a survey on access to finance and, according to the latest statistics they have gathered, 23% of Irish SMEs find access to finance to be their biggest concern.
That compares to an average of 14% in the euro area. In Ireland it is a very important issue. Some 50% of the surveyed Irish SMEs did not manage to get the full amount they had planned for during the previous six months and 23% of their loan applications were rejected. Some 19% of companies received less than they had applied for. An important first challenge is to make sure that the credit goes back into the real economy. In this respect, we believe that the situation will improve. The measures adopted by the European Central Bank last week and the announcement by Mr. Draghi of €500 billion being put into the real economy and the reduction of the rates will have a positive impact. With the growth in our economies, the conditions in terms of gaining access to finance will improve. However, we need to make a big effort in the coming years to mobilise all the instruments, banking and non-banking instruments. This is precisely one of the recommendations that the European Commission is putting forward. In the case of Ireland we believe it is very important to develop further policy initiatives to address the availability of bank and non-bank financing and, in particular, to improve SMEs' access to bank credit and non-bank finance. I will be more precise about this. There are two important issues that must be addressed. The first is the disseminating of information. SMEs are small micro companies and it is difficult for them to have access to the various financing sources. We need to make a special effort to disseminate information on the possibilities for financing and we need to reach the SMEs. We introduced a pilot programme with the Spanish Banking Association in Spain last Friday in order that the SMEs, even if they are in located in the most rural areas, will always have access to a bank and they will be linked into the information on all the EU financing programmes - this information will be channelled to them.
A second issue that is important in Europe is that we need to do more in respect of non-banking activities. I am speaking about venture capital, business angels and crowdfunding. We must mobilise all the instruments. We have new programmes which we will start this year, 2014, such as the 2020 programme, which will be targeted at SMEs. The COMSE programme is a programme that for the first time in the history of the EU is exclusively reserved for SMEs. Two thirds of the funds will be for loan guarantees and venture capital. This is a programme which offers many possibilities. Horizon 2020 is a programme for innovative SMEs. We will also have an important SME instrument. We will have new possibilities and it is important that we disseminate the information on these new programmes to the various SMEs. I call for members' co-operation in raising awareness of these programmes. I discussed with the Minister of State, Deputy Perry, who is the SME envoy, the possibility of providing more information and assistance to the SMEs. It is important to link with the European Investment Fund which will manage these programmes in order that we will be able to make an important effort in the coming months.
With regard to regional funding, there will be €325 billion available in regional funds for the whole of European in the next seven years. We have built a good deal of infrastructure in Europe. The priority must be SMEs, innovation and new technologies. There are possibilities that can be mobilised.
The late payments directive is an important instrument. One out of three companies which has failed in Europe has done so due to problems related to late payments. We need to have more action on this both from the public authorities and from the business community. I can provide further information in writing on this important challenge, or the members can put questions to me on it.
The second important challenge is internationalisation. We need to do more on this and we would like to work closely with Ireland in this respect. In Europe only one out of four companies is using the Internal Market. This means that three out of four are remaining in the country and only one out of eight is going outside the EU in terms of their operations. The growth with the emerging economies is outside the EU. Internationalisation is a must. We will push very hard in the direction of improving this situation in the coming years. If a company is not global it puts at risk its survival. The world is too big for companies to remain in local markets. There are important opportunities coming up and I will mention some of them. First, there is the free trade agreements, which the European Union is negotiating throughout the world and in particular the Transatlantic Trade and Investment Partnership, TTIP, agreement. It will be a great opportunity. It can inject into the economy €60 billion, 1% GDP additional growth. Ireland is very well placed and Irish SMEs can benefit from this agreement. It is a very complex negotiation, covering tariffs, public procurements and regulatory co-operation but it is an important area and we have to negotiate also with Japan, Canada and India. We need to offer our companies more opportunities but we also need to support SMEs and provide them with more information. The Enterprise Europe Network brings together more than 600 business organisations in more than 50 countries. In Ireland there is currently one enterprise network consortium with partners in the chambers of commerce of Dublin, Galway, Sligo, Cork and Enterprise Ireland in Dublin. This is a consortium that is functioning well. Over the coming years we will be financing it and the idea is to provide information, disseminate opportunities, facilitate contacts and provide opportunities for joint ventures. This will be an very important area. I am referring to internationalisation within and outside the EU.
However there is a third very important priority. It is not only important to gain access to finance and markets but probably one of the biggest challenges facing Europe is promoting entrepreneurship. Only one out three Europeans sees becoming an entrepreneur as a career prospect. This means two out of three would never do it. In China it is exactly the opposite. Two out of three see it as the most important prospect. More than half of Americans view creating their own business as a very good career prospect. Our Entrepreneurship 2020 Action Plan is an effort to work with the member states and the business community to change the situation. There are many reasons. Our society is ageing and it is risk averse. We risk losing an entire generation of entrepreneurs if nothing is done. We need to work first at the education level, starting in the primary schools because this is what delivers the best results. We need to eliminate problems in society. I am speaking about people getting a second chance when an honest entrepreneurship fails and the finger is pointed at him or her. We must facilitate people to get quickly out of bankruptcy procedures. Another issue is the transfer of business. Every year Europe is losing 150,000 businesses and 450,000 jobs because we do not have a good system of transfer of business - of succession. Companies are dismantled. It is much easier for a person to continue an existing company than it is to start up a company from scratch. We will address these issues in this initiative as well as promoting targeted action in favour of certain groups of the population in terms of an Erasmus of young entrepreneurs. A young entrepreneur will be able to spend up to six months in another country. We expect to reach the 10,000 exchanges.
We would like to have more Irish entrepreneurs participating. Entrepreneurship among women is also a vital area. In Europe only 34% of business people are women and there is great potential for growth. Mentoring and coaching programmes are important. Senior entrepreneurs are needed to advise young entrepreneurs. All of that will be part of the entrepreneurship action plan 2020. We are trying to work very closely with the 28 member states. We have the network of SME envoys, which I chair. Ireland is represented by the Minister of State, Deputy John Perry, with whom we work very well. We have the business associations working together in implementing the small business legislation.
There are many initiatives. I do not wish to forget about cutting red tape, administrative simplification, reducing bureaucracy, simplifying the creation of companies, and licensing. There are initiatives in this country in that regard. The Parliament should please do all it can to help. When I speak to SMEs they tell me they spend more time filling in forms than doing their work which is selling products and performing services. It is very important we mobilise our efforts in the coming years. There is nothing more important than confronting this challenge. Europe will not ensure a sustainable recovery and we will not sustain growth and jobs if we do not put our companies, SMEs, and entrepreneurs at the centre of our priorities.
I have exceeded my time. I get carried away when I discuss these issues. Members will have many questions. I wish to conclude with a final message. It is one of confidence. I am very confident that if we work together with the member states, the European institutions, the national parliaments and the business community, we can improve the situation dramatically. We have identified a strategy and there is no disagreement on the problems. I have never heard someone say in any discussion that what we outline is wrong, for example, that access to finance is not important. We know the issues and what we must do in the future is implement a strong strategy to tackle the problems. We must use the new funds we have and seize the opportunity of the recovering economy to change the situation and to provide a favourable environment for entrepreneurs and SMEs so that we can succeed in creating jobs and deliver more prosperity for citizens. That is the challenge. I welcome co-operation from all member states, including the Irish Parliament, to work together to succeed.
I thank the director general for his comments. I welcome all the initiatives he outlined to fight the cause. Those members who were not present will find the submission informative and useful. There is no doubt the director general is trying to champion many of the causes encountered by the committee. It will certainly help the cause if Europe is at one with what we are doing nationally.
I will be very brief because I am conscious that the director general must leave by 1.55 p.m. He is very welcome to Dublin and Ireland. The committee has focused very much on SMEs and support for them. During the visit to Brussels the meeting with the Director General was one of the best exchanges we had.
One of the big issues facing the SME sector in this State is the level of indebtedness. It has been acknowledged as a serious problem when the matter was discussed by economists and the SME sector. What is Mr. Calleja Crespo’s understanding of the problem in this country compared with other member states?
We invited organisations representing SMEs generally and the banks to discuss barriers to credit and how to access credit. There is a clear difference between what the banks told us and what the organisations that represent small businesses told us, namely, the latter find it difficult to get access to credit. A lack of appetite for risk is evident within the banking sector. What is Mr. Calleja Crespo’s view? How prevalent is that situation across Europe? Does he have any comparisons between banks’ lending to SMEs in this country compared with other European countries?
Issues arise in terms of formal applications being made where there is a discrepancy between the number of loans approved and the number drawn down. How big an issue is that across the EU? We have put a considerable effort into upskilling and retraining employees, which is hugely important, but there is also a need to train and upskill employers, especially in the SME sector. What policies are in place and are envisaged at European Union level to support that aim as well?
It is a pleasure to meet Mr. Calleja Crespo. I was chairman and vice chairman of EuroCommerce for a number of years. One of the challenges to SMEs is the one he touched on, namely, bureaucracy and red tape. What can we do to reduce it? I understand in France and perhaps in other countries that such red tape does not really come into being until one has 50 employees. We in this country have the same rules for someone with 2,000 or 10,000 employees as we have for somebody with four employees. Is there any example that Europe can set to reduce the red tape and bureaucracy for small companies, in particular start-up companies? That would be a huge benefit.
Mr. Daniel Calleja Crespo:
I thank the members for raising two such important issues, access to finance and cutting red tape. It is true that the level of debt is an important issue in terms of access to finance. Because of the financial crisis and the banking crisis we have seen many companies heavily in debt. Credit was easily obtained and in many countries the private sector has a huge amount of debt which has put their situation at risk. Many companies have failed. Another problem we have seen is that those who were unable to repay and who entered into bankruptcy proceedings are still involved in such proceedings. One of the big problems we have is the lack of effective bankruptcy procedures throughout the European Union which means that an honest entrepreneur who fails cannot get through the bankruptcy procedure quickly.
In addition, following the banking collapse, banks have become very careful and risk averse. To make things worse – this is a special feature of Europe – in Europe we have an excess of dependence on the banking sector. In other countries when a company wants to finance a project it goes to a bank, a fund or seeks venture capital but in Europe we have less venture capital than ten years ago. When the banking sector collapses then the economy collapses. That is why we strongly recommend the development of the non-banking sector because it allows one to have a more diversified system. That is the reason venture capital is so important and it is why in the European programmes we will have loan guarantees but we will also have the equity facility to facilitate venture capital, business angels, crowd funding and various other instruments.
As to what we can do about it, the macroeconomic situation will improve things. Everything has to be seen in an overall framework. The efforts which Ireland and all the other countries are making in pursuing the control of public finance will also have a positive impact on the economy. There have been reforms in the labour market and in the financial systems and they are having an impact on recovering from the economic situation, but that is not enough. We need to work together with the banking sector and with the business community to develop further possibilities. That is where action in terms of information comes into place.
We need to understand the needs of the small and medium enterprises and the position of the banks to see if we can together identify what would be the best practices and the best way forward.
The European programmes will play an important role. That is the reason I discussed with the Minister of State, Deputy Perry, this morning action in terms of information specifically directed to Ireland, if there is such a need. I was looking at the figures and Ireland did not use many of the previous programmes. There were only two operations since 2007. The first step was the micro credit guarantee and the Fountain Healthcare Partners fund. Those were the only two operations. The new programmes will come into place in the second half of the year, 2014 to 2020. They are not preassigned. If we have projects and there are opportunities, they can benefit. This is an important effort.
The issue of training was highlighted. Training for employees is very important, as is training for employers. In terms of the policies at European Union level, I point out that the issue of training is critical. It is also a challenge for an SME but skilled people are very important in terms of developing our business and our productive sector. We are facing a paradox in Europe. We have an unemployment rate for young people below the age of 25 of over 50% in many countries, including the southern countries, and a deficit of 1 million skilled workers in ICT. There is something wrong in our economy.
An effort has to be made to match the needs of business with the education sector, and some countries are doing that very well through the dual system. We need to anticipate business needs and get businesses closer to the education sector so that what the education sector delivers has employability opportunities in terms of the economy. We are doing that through best practices among member states but we have the European Alliance for Apprenticeships and the ERASMUS+ programme. There are many initiatives, and we are urging member states to improve that connection.
In terms of employers, the biggest challenge we have now is the digital divide. E-skills and the digital economy can multiply the chances of business for SMEs. We are putting in place programmes to facilitate access by SMEs to the e-economy. I met entrepreneurs recently in Barcelona who are starting up a company. One of them told me they had discovered, thanks to the digital economy, that they can multiply their business. They inherited a company that was selling paints to Morocco but they are now selling furniture, paints, shoes and various goods not only to Morocco but to Turkey and Italy. They were doing that because they were using digital technology. The digital economy is a multiplicator of the activities of the business model and the biggest challenge in the coming years is to link e-skills to the manufacturing sector, industry and services, and to multiply the possibilities. That is an area where we will have the possibility to finance programmes with the member states.
What can we do about bureaucracy? That is a very good question. Whatever we are doing, it is not enough. We need to examine this problem across the entire cycle. We are proposing that before a new rule is adopted each country, and the EU is already doing it ,should conduct the SME test. In terms of the impact of this rule on SMEs, if the impact is negative because it will increase the burden, the rule should be reconsidered. If for some overriding reasons it cannot be reconsidered, there should be a simplified process for SMEs.
We have proposed exempting micro-companies from legislation unless it is indispensable to cover them, in which case there should be a simplified regime. There have been diverging reactions to this proposal, including from the SMEs because some have told us they do not want to be above the law. They want to be covered but they want us to introduce simplification. However, we have to use electronic administration more often. In terms of the principle of only once, when one submits a document to the administration, one does not have to submit the same document to the different administrations because the document has already been submitted.
I refer to evaluation of existing legislation, the fitness checks to see if we can get rid of old texts which are no longer necessary, and the impact of legislation on competitiveness. Community assessment is not a new rule. It is that this rule comes on top of a number of rules and increases the burden. There are many things that can be done. There are many things we are doing. When the members were in Brussels I informed them about our initiative on the top ten worst pieces of EU law. We have done the consultation on the website. We asked people to tell us what are the ten worst EU laws. We had thousands of replies. We did a ranking. I regret to inform the members that one of them, which was under our responsibility, was the REACH legislation, registration of chemicals, which is very burdensome. Following that, we are reducing the registration fees for SMEs. We have appointed the special ambassador in the European Chemical Agency to deal with the SME problems, simplification of procedures and to see if we can facilitate that, but this must be done and scrutinised through all areas of legislation.
On facilitating the creation of companies, three days and €100, licensing is an issue. It is not enough to create the company. How long does it take to get a licence?
We have a big programme at EU level, and we must lead by example. We can also have targets. We used to have a target of 25%. We exceeded that target but what about putting that target at national or regional level? What about Governments on taking office saying that when they leave office they will have less of an administrative burden than was the case when they arrived? That is a challenge.
The Commission is preparing a very important communication for the June European Council. I will be in a position to send it to the members' Parliament in the coming weeks. This will be a refit programme on actions we are putting in place to reduce bureaucracy, but it has to be a permanent challenge and it must be introduced in the culture of the Administrations at all levels.
Mr. Calleja Crespo is very welcome. I thank him for coming to visit us in Ireland. The trip to Brussels in January was inspirational, as is Mr. Calleja Crespo today.
The members of this committee are very interested in the subject of access to finance and supporting SMEs, and entrepreneurships in particular, and the challenges they face. On access to finance, I agree with Mr. Calleja Crespo that we need different forms of finance outside of banks. That is one of the major challenges, but how do we do that? He spoke about disseminating information to SMEs. Is it possible to do that closer to the people, as in a regional way, as opposed to it being done in our capital city or large areas here such as a county or district? The issue of funds for entrepreneurships and SMEs is linked somewhat to Europe and would be underwritten by Europe. That is my first question.
A subject close to my heart is mentoring. The two most important areas for me are access to finance and mentoring, or what I call soft supports. In terms of the digital economy, we could have a closed network mentoring service across Europe. For example, if an Irish business wanted to expand into France or a Spanish business wanted to expand into Ireland, they should have access to a network that can overcome language barriers and so on. Europe will have to lead in such a supporting system.
I welcome our distinguished guest. Is it not the case that currently in Europe there is not a single economy?
There are, for example, countries that were unaffected by the economic downturn and then there are countries that are struggling to recover from an economic downturn. Would Mr. Calleja Crespo not expect two different sets of advice for those economies, rather than a general overall list of things countries ought to be doing? If the director general has said a little about that, I missed it. What are the special measures in respect of countries such as Ireland and other countries, typically in southern Europe? What additional supports are required? Perhaps the director general has touched on it. I hope it is not unfair to ask this of Mr. Calleja Crespo but in the recent European elections, considerable scepticism was expressed in the polls about the entire European project. Incidentally, it is not a scepticism I share personally and I am certainly strongly pro-European. Would Mr. Calleja Crespo like to comment on this if he considers this to be a fair question?
Briefly, I refer to a point on which the director general touched regarding entrepreneurs and the number of young people who are employed. Initiatives here such as microfinance funding have been changed to place more emphasis on young people. Can members envisage something coming from Europe to push a separate guaranteed fund that could be disseminated here for young people who have that entrepreneurial spirit?
I welcome the director general, Mr. Calleja Crespo, and his team to the meeting. I have two brief questions. He mentioned promoting entrepreneurship and starting at primary school level. Are there Europe-wide programmes with regard to that initiative? On internationalisation, any new trade agreement obviously entails both opportunities and threats. Are certain sectors concerned about the negative threats in respect of such deals?
My questions were very similar to those of the previous two members. I join in the welcome to Mr. Calleja Crespo. He spoke a lot about promoting entrepreneurship and how only one in three people considered it as a way of making a living. How can one accelerate efforts to have young people consider the idea of being able to create a job for themselves and perhaps one or two others? Many of the areas represented by members are rural communities, in which large multinational industries will not be established. As a result, there is a real need to encourage young people to think about creating work in their own communities. Finally, Mr. Calleja Crespo spoke about a message of confidence. Can he quantify how he envisages this will manifest itself over the next three years?
Although I am conscious we are short of time, Mr. Calleja Crespo might address two further issues, either now or at a later stage. When one talks of entrepreneurs, a major point to come through all the committee's meetings concerns the appetite for risk. I am conscious it is probably the same across Europe and while the aim is to encourage a lot more youth entrepreneurship, even in the case of existing entrepreneurs one is not simply risking oneself as one is also risking one's family. During the recession, many business people across Europe who lost their business felt the state let them down and there was no safety net in place to protect them. While one will not go hungry, the protection is not good enough for someone who takes the risk, pays taxes, employs people and so on. Such people felt let down and a considerable amount of damage has been done in this regard. I got the sense there is work to be done to repair that image and not just in Ireland. If one has a business, one is taking a risk and the State should protect one if it goes wrong for reasons that were not one's own doing, that is, if one acted honestly, as Mr. Calleja Crespo himself noted. This issue must be addressed because it is one's family and not just oneself who one puts at risk. For example, it is quite common for banks to seek a personal guarantee, which often involves the family home and the family finances. I believe this is where the problem lies and this must also be addressed. In the same vein, I refer to the cost of credit. Business finance has become more expensive in recent years. I assume it is the same across Europe and this issue must be addressed because we will be unable to compete on an international stage unless the cost of credit is brought down.
Mr. Daniel Calleja Crespo:
I thank members of the joint committee who have raised many important points. I will start with the questions regarding access to finance and how to get new forms of finance. I believe it is dangerous to do this from the regulators or from government. This must come from the banking institutions, non-banking institutions and the business community and we are trying to encourage best practice. We have experience in all the 28 member states, where we are confronted with similar problems, and wish to enhance the exchange of measures that have been working in a particular country, such as certain forms of innovative financing, crowd funding or business angels. We also must look at the different legal frameworks and the exchange of information is very important because things which are done by one country may be producing good results. I can give examples of programmes in which countries have decided to institute a credit card for the entrepreneur, which will be facilitated under certain conditions. If such a measure is good, it can be adapted easily to another country and this is what we are doing through the small to medium-sized enterprise, SME, envoys. We also need to facilitate the SMEs getting together with the banking and financial institutions to identify the needs and the different products. This is about bringing them closer to people. While it is a challenge, I think our new programmes also will facilitate the covering of innovative mechanisms, although they must be submitted.
As for what the European Union could propose to enhance mentoring, in this regard we have a very positive impression of the Irish senior enterprise programme, which is led by Ireland with partners from the United Kingdom and France. It was very inspiring and members should know we wish to invite Irish experts to our next sessions. We will have interactive laboratories because we wish to launch programmes for mentoring towards the end of this year and next year. In this regard, Ireland has a good, positive experience and so we will be asking you to share it and on this basis to establish a European programme.
As for the questions on the two categories of economy and how we set advice, we try to do this through the country-specific recommendations. This is the importance of those recommendations. We analyse the situation in each country and ascertain what needs to be done if one seeks growth and then the Commission puts forward recommendations. These are not binding rules but are measures for those who wish to enhance growth in the coming years. In spite of the differences in the economy with 28 different member states, the problems of SMEs remain very similar. They are problems of being obliged to deal with bureaucracy, of access to markets and of access to finance. It is true that countries that are in a better economic position have fewer problems regarding access to finance but when one speaks to them, the banks will tell one there also are fewer projects. Consequently, the way we have developed is through working with the business associations to identify the needs and then, through the country-specific recommendations, discussing with the countries the way forward.
As for what can be done about scepticism, I am giving my personal opinion in this regard. I believe we must listen to the citizens and must respect what they say. I think the economic crisis has played a role. The Chairman mentioned there is a perception that many sectors of the population may have been let down because of the economic situation. We must improve the way in which we work and must listen to the message. We must be closer to the citizens and I believe we must work to find good solutions at European level to face their problems.
As for entrepreneurs, young people and the possibility of a guarantee fund for young people-----
Mr. Daniel Calleja Crespo:
We have the Erasmus for Young Entrepreneurs programme and we will be able to finance projects under the COSME and Horizon programmes. If a country wishes to operate a guarantee fund for young people, it is possible to cover it under the new programmes. I thank the joint committee and apologise that we are leaving a little bit in a rush but if members agree, we can continue the discussion.
That would be most helpful. On behalf of the committee, I thank the director general and his colleagues for their engagement with the committee. We can continue our discussion over lunch and any outstanding issues can be dealt with in correspondence. The meeting has provided the committee with much food for thought. Our report, which will summarise stakeholders' views and outline our recommendations, will issue in July, and we will send a copy to the delegates.