Dr Charles Tannock

Member of the European Parliament for London

Debate on the Skinner Report - 10th April 2002

Implementation of the Risk Capital Action Plan

The Skinner report provides a sensible response to the October 2000 Commission communication to implement the Risk Capital Action Plan dating back to the 98 Cardiff Summit and which dovetails neatly with the Finacial Services Action Plan which Barcelona has made a priority.

SME's in Europe compared to the USA still face considerable difficulty in raising loan or equity finance and this may explain in part the extraordinary success in US Economic growth in the last 10 years. Although there is now rapid growth in venture capital funds in the EU they vary enormously, with the UK and the City of London which I represent leading the way at 0.4% GDP dedicated to this but still coming mainly from US sources. Pension funds are the prime source of capital and I advocated the promotion of UK style self select pension plans for the self-employed being permitted to allow such investments on a pan EU basis, but this was rejected in Committee.

I do agree with the call for US style EU wide insolvency harmonised laws as I think that the American Chapter 11 Bankruptcy procedure affords a number of Economic advantages, particularly in not disrupting the continuity of trading in failing Companies and I also lament the lateness in bringing forward the much needed Community Patent due to excess sensitivity on the language issue which will only add costs to SMEs and make the procedure unworkable.

Member states should also seriously consider generous capital gains tax incentives for such funds to mitigate the risk to investors.

Thank you