Pamphlet launched as the Federation of Small Businesses recently opened an office in Brussels

The Federation of Small Businesses (FSB) has long been regarded as a hotbed of Euroscepticism – in 2001, members voted by over 2-1 to leave the EU, and in 2004, 96% of 110,000 members voting cast their Conference votes against the EU Constitution.

Some of FSB's leaders have claimed merely to be ‘in dialogue’ – not part of the system. How much FSB is 'part of the system' needs to be examined...


The June/July 2006 issue of FSB’s ‘First Voice’ journal contains the headline: ‘This is the most business-friendly European Commission ever’.

Commissioner Verheugen tells FSB that the Commission ‘is in a process of far-reaching cultural change" over the flood of regulations and is now sensitive to their effect on small businesses (‘SMEs’).

He did not say that the same Commission has recently tried to end their freedom to choose their own working hours. At the time of the interview, it was trying to pass paint rules that could destroy nearly 1/3 of our 6,500 car bodywork shops.1,2

The FSB has publicly backed a scheme whereby the EU’s 300 most senior officials will now have a week’s ‘work experience’ in a small firm in another country. What are the odds that they’ll go native again when back at their cushy jobs in Brussels?

A clue might be in "What can Small Businesses do for Europe?", oddly billed as "a roadmap of success for EU institutions" in a FSB press release.3

Apparently the FSB urges: ‘Restore trust in EU decision making", noting the distrust of small firms.

Some might excuse FSB cuddling up to the EU in order to achieve ‘damage limitation’. In First Voice, FSB EU affairs adviser Andrew Cave notes that FSB could have launched their Brussels office with legitimate demands, such as the need to cut red tape and regulatory burdens....

"The only problem with this is that business organisations have been deploying these arguments for years, all with little effect".

Indeed, in October 2005, First Voice reviewed the massive burden of environment Directives, and in the 2006 Conference report, FSB National Chairman, Carol Undy, compared the torrent of red tape and regulation with leaves on the line: "The Government and Brussels just scatter these leaves as and when they feel like it"


FSB's current tack is to persuade the EU to create jobs and boost EU employment figures through a 'help us help you' approach.

However, cynics believe that every deal has its price, and the EU, in a public confidence crisis, is loathe to miss an opportunity to puff up its battered image. First Voice certainly gives the impression of ‘advertorial’ – an unsubtle editorial plug for the EU:

- ‘News of Brussels is always filtered through the national media

- ‘Regulations aren’t normally the work of bureaucrats in an ivory tower, but interest groups and industry…’

(think - if Verheugen’s second quote above holds, then why is a ‘culture change’ so necessary?). Finally…

- ‘Blaming Brussels is a favourite trick of many governments

This is from Philip Bushill-Matthews, MEP, who took over the regular column from Dr Richard North in 2004. He is a staunch fan of ‘Conservative’ MEPs staying aligned to the EPP federalists. EPP policy calls for MEPs to set an EU-wide income tax!4. (Although governments do sometimes gold-plate, the initiative for EC legislation comes firmly from the European Commission. Two wrongs hardly make a right... and just look at the costs).


So what are the FSB’s chances of saving small businesses in return for PR favours? Not promising, judging by their experience with New Labour, which has fleeced small businesses in various ways. (These include over-regulation, extra taxation, reduction of allowances and the scandal of encouraging sole traders to incorporate then removing the benefits).

It's not that FSB does not provide any benefits for its 195,000 members - it provides a worthwhile legal helpline, for instance. It does have a 'government damage limitation' role as far as exempting small businesses from some regulations. However, it is not exactly encouraging that its 2005 review included as 'Top 10 policy successes':
- opening an office in Brussels (!)
- getting the government to stand firm on the Working Time Directive opt-out (now again endangered)
- securing a longer lead time for the introduction of a complex new UK postal charging system (introduced to meet Directive 97/67/EC)
- regulatory impact assessments of EC regulations one year on (shutting the stable door after the horse has bolted?).

Some would doubt the value of a £400 donation to Labour (oddly made by FSB to Gordon Brown’s local Labour Party5) and would also question the point of letting Europe Minister Denis MacShane whitewash the EU to the 2005 FSB Conference. (In fairness, it must be added that FSB has also invited Eurosceptic MEP Robert Kilroy-Silk as a Conference speaker.)

FSB’s Tina Sommer now chairs the European Small Business Alliance (ESBA), FSB’s European umbrella group that claims to be ’the only one that focuses its representation on the needs of small businesses’.6

Yet in 2002, ESBA pushed for a European Constitution with EU powers on ‘tax competition’, more power to the European Parliament and the slashing of remaining UK vetoes!7. (This is doubly naive, as in 1992, the EU frowned on different national tax systems as 'a distortion of competition' and works in the interest of more harmonisation, not less!).

It also called for harmonisation of EU business establishment rules, and for ‘neighbouring regions’ to control other countries’ economic initiatives.

Although local FSB groups still lobby against congestion charging and carbon taxes affecting business, the national organisation woos their originator, and the main ‘policy’ web page seems free of EU comment. (When checked in July 2006 - FSB has just raised the alarm over a draft transport regulation with a massive cost to small businesses!)



The EU won’t rule out new company taxes and is eroding tax sovereignty

FSB also works with the regionalist lobby ‘West Midlands in Europe’.

The Treaty of Nice8 assures us that regulations ‘must be passed in a way that avoids administrative and financial burdens on small businesses’

Another group to watch is Forum of Private Business ( FPB), with 25,000 members. Sceptical on some policies, such as the EU Services Directive, it believes that the EU’s image problem is self-inflicted.9

However its Policy Analyst, Andrew Mowlah, stated in 2005 that FPB was not against a cut in the UK rebate, but was against "cheap point scoring at our European neighbours' expense. The idea that we should just keep quiet and keep the money is disgraceful".10


Mowlah also believes "Much of the legislation coming out of Europe makes perfect sense when you
see it in the light intended
". 9

Commentator Jon Barbuti slags off Vernon Coleman’s hard-hitting book ‘The truth they won't tell you about the EU’ – "Coleman's stance is worse than misinformed: it is lamentable".11

FPB actually boasts of its membership of the European umbrella business group UEAPME - which supports European integration, and claimed ‘Small businesses weigh in to support the EU Constitution’ on the flimsy excuse that not to do so would give uncertainty to the European economy. It wants a ‘common EU tax area’ and an end to tax vetoes.12



1 Ashley Mote MEP ‘Update’, 19.6.06

2 Open Europe Bulletin, 1.6.06

3 PR/2006/56, 31.5.06

4 Daniel Hannan MEP, 12.6.06

5 Electoral Commission return; donation to Dunfermline East CLP, 1.3.01.

6 www.esba-europe.org

7 Dec 2002, ‘ISB’ group proposal

8 Article 137.2.b

9 Eurolink, Feb 2006. www.fpb.org

10 Eurolink, Dec 2005.

11 Eurolink, Apr 2006

12 www.ueapme.com, PR, 26.4.05 and PR 28.4.04



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This page updated: 18 August 2006