Small Business Act 'must influence real policies'

The Government must use the EU Small Business Act to help small businesses in the UK, the Forum for Private Business (FPB).

The Act, adopted by the European Commission yesterday, encourages local authorities to divide contracts to share among smaller firms.

It also introduced a directive on reduced rates of VAT for small businesses. The directive will allow the UK government to introduce discounts for locally-sourced services.

However, member states are not compelled to bring the proposals into practice. The FPB urged the Government to implement "real policies" designed to address the needs of small businesses, including lower taxation and less red tape for small businesses.

Of the 27 EU member states, 10 are still to declare fixed national targets to cut red tape, despite the Commission's aim of a 25% reduction by 2012.

The British Chambers of Commerce is also skeptical of the influence the Act will have on small businesses operating in the EU.

"This publication is unlikely to produce the shift in policy we were led to expect," said David Frost, director-general of the BCC.

"This is a mish-mash of watered down proposals and initiatives with a questionable amount of political will attached to it from the member states."