Irish Presidency support for SMEs in EU research

Opening the first SME Technology Days conference in Brussels on 30 October 1996, Mr. Michael Fahy of the Irish Department of Science and Technology stressed the importance of SMEs for European research. Mr. Fahy, who was standing in for his Minister, the current President of t...

Opening the first SME Technology Days conference in Brussels on 30 October 1996, Mr. Michael Fahy of the Irish Department of Science and Technology stressed the importance of SMEs for European research. Mr. Fahy, who was standing in for his Minister, the current President of the Research Council, Mr. Pat Rabbitte, outlined the actions being taken by the Irish Presidency to ensure that the needs of SMEs were prominent in the debate on research policy in the European Union.

In his opening remarks, Mr. Fahy emphasized that change would make the nature of production, trade, employment and work in the coming decades very different from today's environment. New technologies can bring fundamental change, displacing existing technologies, to virtually every sector. However, enterprises which are innovative can assimilate and exploit these new technologies. "There are no sunset industries, only sunset technologies", he said.

The importance of SMEs in the European economy was widely recognised, he said, referring to the Commission's report to the Madrid European Council in December 1995. In particular, SMEs were responsible for creating jobs, with annual net job creation in the EU since 1988 almost entirely due to enterprises of less than 100 employees. Measures to build capability in SMEs, in all stages of their life cycle, should be taken. However, he noted that much of this would be at national rather than EU level.

SMEs have difficulties in obtaining long-term finance for a variety of reasons, and measures to improve this can be taken. However, Mr. Fahy reminded his audience that no matter how well financed a company was, investment in R&D and innovation was essential, or the company would enter a decline.

Turning to the participation of SMEs in the RTD Framework Programmes, Michael Fahy said that the fundamental design and architecture of the Fifth Framework Programme was being debated under the Irish Presidency. The new programme should recognize the contribution which SMEs can make to greater European innovation. The Fifth Framework Programme should build on the previous programmes, and EU research should be "community wide and unifying in nature - inclusive, not exclusive". It would have to better coordinated with national programmes, to ensure a genuinely European effort, as well as being relevant to the needs of society in a variety of areas.

As regards the role of SMEs in the Fifth Framework Programme, three questions were central to the debate:

- Is the role of SMEs and their capacity to contribute to further innovation fully appreciated and reflected in Framework Programmes and the way they are administered?
- How SME-friendly is the Brussels machine?
- Should SMEs participate in each programme in their own right or should positive discrimination in their favour be considered?

CREST, the Community's advisory committee on scientific and technical research, has recently adopted a report on SMEs following the work of an ad hoc group chaired by Ireland, and this will form the basis of the Research Council's conclusions in December 1996. The report contains some 30 recommendations, which will be fed into the planning of the Fifth Framework Programme.

The development of technology is only one aspect of innovation, although a very important aspect, and the Fifth Framework Programme cannot be considered alone. Other initiatives such as the action plan on innovation and the multi-annual SME programme, as well as national initiatives such as the Irish Government's White Paper on Science, Technology and Innovation should be seen as essential, complementary strands.

Different categories of SMEs have different requirements from the Framework programmes, with high-technology SMEs most interested in RTD support, whereas for low-technology SMEs the dissemination and application of the results of research is of more use. For companies in the middle of the spectrum, technology transfer and validation projects are of most interest. For all SMEs, however, the common need is for quick and easy access to useful and relevant information about the support opportunities available through the Framework Programme.

Mr. Fahy's remarks on the current Framework Programme were concerned with the management of the specific programmes and with the needs of SMEs in this respect. He acknowledged that the Commission has already made many efforts to improve the programmes' management. SMEs' needs relate principally to the time taken at every stage in the process, in evaluation, selection, and crucially, in payment. Problems of finance mean that many SMEs experience difficulties in participating in projects, with high administrative costs and slow payment acting as disincentives. Differences between the programmes in terms of rules and procedures are often confusing to SMEs, while even determining which area of which specific programme would be most appropriate for their project can be a problem for SMEs who do not have the resources to obtain and examine a range of documents in detail.

A number of actions are proposed to improve the involvement of SMEs, which, together with the introduction of improved procedures identified by the Commission following its recent internal review, should greatly enhance the attractiveness of the Framework Programme to SMEs.

Concluding with the Irish Presidency's immediate agenda for SMEs, Mr. Fahy outlined the actions which would be taken before the end of 1996:

- Reaching agreement on the new Multiannual Programme for SMEs;
- Presenting a resolution emphasizing the special needs of small and micro-enterprises;
- Hosting a major European Forum on services for SMEs;
- Hosting a conference on financing for small business.

In addition, the Presidency hopes to secure agreement in the Council on a new loan guarantee scheme called ELISE, which will provide loans totalling ECU 1 billion from the European Investment Fund for small businesses.

Finally, he made a number of points relating to SME participation in the Framework Programme, stemming from the CREST report:

- SMEs must be actively involved;
- Framework Programmes must be open to all categories of potential participants;
- SMEs need an effective mode of access to participation;
- SMEs should participate on the basis of excellence - there should not be an SME reserve fund;
- The Framework Programme has attractions for the majority of SMEs, which are not in a position to develop new technology themselves, in terms of technology transfer and demonstration;
- Those dealing with SMEs in the programmes' management need to have a real understanding of SMEs' needs and operating conditions.