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In or out: Is the EU good for you?

In or out: Is the EU good for you?

19 Dec 2013

A selection of National Business Awards winners and finalists offer their views on the pros and cons of EU membership

With global a key theme for the 2014 National Business Awards, we couldn’t end 2013 without asking some of Britain’s best business leaders to share their views on the politically and economically divisive issue of EU membership, writes Alex Evans

The following commentaries reflect the diversity of perspectives on this issue and the variety of organisations recognised by the National Business Awards:

Mike Meehan is Managing Director of Plymouth-based luxury bed manufacturing company, Vi-Spring / Finalist for International Growth Business of the Year…

We export our luxury handmade beds across the globe from our UK base, with a third coming from continental Europe. Being a part of the common European market means there are fewer barriers to reach our main trading partners, which is a great benefit to us as an export business.

The convenience of travel between member countries is also an advantage. As we grow internationally, our headquarters and factory will remain in the UK, but we also have offices in Brussels and sales representatives across the continent. EU membership makes travelling between our European territories considerably more time efficient and means that, as a company, we can react quickly and effectively to changes in customer demand. It also means that, when recruiting, we have a much larger, more varied talent pool to choose from.

As is the case for any manufacturing business, legislation and red tape is very time consuming and expensive for Vi-Spring. Legislators in Europe and UK must aim to simplify things, so we can compete with the emerging markets. While British regulatory requirements are higher than in the EU in our sector, having a standard set by the EU does mean that we only have to contend with one additional framework across continental Europe. 

Global expansion is key to Vi-Spring’s growth strategy and by 2016 we anticipate that more than half of our sales will come from overseas. The UK's membership to the European Union will have a huge role to play in that.

Terry Williamson is CEO of London and Edinburgh-based JacTravel, an independent, privately owned, wholesale travel company specialising in the provision of hotels online and inbound services to the travel trade…

I am reluctant to advocate leaving the EU as there are definitely benefits to it from a travel and trade point of view and, as the CEO of a travel company, I want to see almost anything that encourages people to travel.  Free movement was a core principle of the Treaty of Rome, which established the EEC.  The Schengen agreement, which was signed in 1985 by five EU member states and has since been adopted by 26 countries, has resulted in the abolition of passport checks at borders and common rules on visas.  The reduction in hassle and sense of freedom one has now in travelling around Europe is a great joy for visitors and that has to be a good thing.  The introduction of the Euro has also been a wonderful innovation from the point of view of managing the money in an international business.  I used to worry a great deal about currency fluctuations between every country in the EU but this headache has definitely eased.

However, not everything about the EU has been so helpful.  There is one piece of EU legislation that affects the way VAT is applied to the travel industry in Europe that has been hugely damaging to inbound tourism.  It is called the Tour Operators Margin Scheme (TOMS).  TOMS enables travel companies to avoid registering for and accounting for VAT in every member state where their clients travel.  This is great!  However, TOMS is flawed in two main ways, which is disastrous.  First, certain business expenses, such as marketing costs, which would in any other industry be offset for VAT purposes, are excluded.  Second VAT is applied to sales made to clients abroad.  In all other industries, if one provides a service to a client based outside the EU, VAT is not applied.  However if the service is planning and booking travel; VAT is applied.  The consequence is that EU-based companies selling inbound holidays to Europe cannot be cost competitive with companies based outside the EU.

When TOMS was introduced, all the major players promptly relocated their businesses offshore.  If Britain left the EU and TOMS no longer applied, it is foreseeable that London could again become the centre of the inbound tourist industry – and, as inbound tourism is an invisible export and as tourism is the one sector that is forecast to grow consistently ahead of inflation for decades; that would be an economic blessing!

Martin Brown is Managing Director of Glasgow-based leasing and fleet management provider Fleet Alliance, which was shortlisted for Croner Employer of the Year and the Customer Focus Award…

I believe that the economic argument for the UK remaining as part of the EU is very clear. Put simply, why would we jeopardise our economic growth by driving a wedge between UK Plc and our largest trading partner? The EU is the UK’s main trading partner with contracts worth more than £400 billion per year.

This is made increasingly relevant as the Global economic landscape changes, and many eastern countries now carry far greater significance - none more so than the BRIC countries. The UK as part of the EU will have far greater influence than if flying solo.

Fleet Alliance is a leasing and fleet management provider, and relies heavily on vehicles produced throughout Europe – again we would prefer no complications to exist in the relationships the UK has with EU based car manufacturers. In 2012 car exports were worth £21 billion with Land Rover and Mini proving to have very strong appeal.

Fleet Alliance has – in the past – offered Pan European leasing for one of its global clients, and again I would have reservations that this type of arrangement would become more difficult if the UK was not a part of the EU.

Another potential impact of an exit would be a drop in inward investment – a recent survey pointed to the fact that 75% of surveyed UK businesses believed this to be the case, and 8 out of 10 British firms suggested they would vote to stay in the EU in a referendum.

To my mind, the economic cost of not being in the EU could be extremely damaging for the UK. In September 2013 the UK’s EU exports stood at £12.4 billion (up 2 % on September 2012). That is not to say that the politics and often quoted bureaucracy does not come without its challenges – but in purely economic terms the UK and EU should work closely, as they have done since the inception of the Union.

Paul Drechsler is CEO of privately-owned Surrey-based construction firm Wates Group, which won the inaugural Corporate Citizenship Award…

The Wates Group work in construction and property development, therefore the business’ growth and prosperity is fundamentally tied to the growth and development of the UK Economy. There are two key challenges that the UK must address in order to ensure it remains relevant and competitive in a global context. The first and most significant is education and the second is dynamic and influential membership of an internationally competitive EU.

It is imperative that the UK remains in the EU and I am convinced that it is overwhelmingly in the national interest to do so. The arguments in favour are well documented in the CBI Report: 'Our Global Future: the business vision for a reformed EU'. Globalisation means the UK is and will be much stronger as part of an economic market of 500 million people and through membership gaining access to 30 free trade agreements worth $24 trillion. Using EU scale negotiations with Japan and the USA would add another $23 trillion to the opportunity.

It has to be in the interests of all members to be leading and influencing a faster moving, more dynamic, less bureaucratic and more efficient, outward looking EU. These are the essential ingredients for improvement and increased competitiveness. Britain has benefited greatly from the single market and we should move forward as challenging, constructive and enthusiastic champions of a better EU for all.

There will be no long term success without the ability to compete and the next generation of talent is vital to that, so education is, in my view, the single most important strategic priority for the UK. The significance of the recent PiSA scores is less about the fact the UK scored 23rd in literacy, 26th in numeracy and 21st in science, but actually all about our ability to compete and win globally in the long term. These measures suggest our legacy is of a relatively less educated generation than was gifted to us.

As businesses we can help to make a significant difference by engaging in long term strategic partnerships with schools via programmes like 'Business Class' operated by Business in the Community. We can encourage employees to become school governors ensuring that no school in the UK has to operate without a full complement of governors. We can provide work experience opportunities and importantly encourage and value the experience gained by children who engage in social action - Step up to Serve is THE campaign to encourage youth social action. Finally we all know that any organisations’ performance is hugely influenced by the quality of its employees so supporting the acceleration of programmes like 'Teach First' is a real priority.

So for the year ahead, URGENCY on the education agenda and QUALITY conversation and education on the EU agenda (for an informed referendum) seem to be the two key priorities.

(If you would like further information on the programmes mentioned visit www.bitc.org.uk/programmes/business-class, www.stepuptoserve.org.uk/, and www.teachfirst.org.uk/).

Silvio Spiess is CEO of Essex-based renewable heating specialist Innasol, which was shortlisted for the New Business of the Year award…

We are a “cross-European” company, dealing with products from Austria, Germany and Italy for the emerging UK market. Our membership of the EU helps us to facilitate trade which in turns drives wealth and creates jobs in those countries we operate in. Not only this, but working with other EU countries means that the UK can learn from other member states - in Germany, for example, over 20% of biomass heat is produced by households and the German legislation regarding biomass is almost a decade ahead of our own. This is something that the UK can learn from when implementing its own renewable heat developments.

Additionally, Europe can often offer more advanced alternatives than their UK counterparts - Innasol uses the best renewable heating products in Europe, such as Austria’s ETA Heiztechnik biomass boilers, to ensure that we are bringing the UK fully up to speed with the most innovative renewable heating technology available.

Leaving the EU would be disastrous for the UK. It would lead us down a route of isolation and would present huge long-term disadvantages for the country, economically as well as politically. For example, trading within Europe would be much more difficult as export levels would decrease, driving up prices which as a consequence would have negative effects on medium sized businesses such as ours. The UK is far better off working collaboratively with other EU countries, as we can learn from one other to bring more fantastic expertise in many fields!

Through working within the EU, Innasol and the renewable heat industry as a whole will grow quickly. We will continue to work with cutting-edge European products and our UK partner network to push renewable heat up the news agenda and create new job opportunities in this sector.

Carole Woodhead is CEO of Leeds-based consumer delivery company Hermes UK, which won the Inflexion Growth Business of the Year award…

Remaining in the EU is important to Hermes UK as a business for many reasons. Firstly many of our clients trade across Europe and are maximising some strong potential growth opportunities there. They are, in the main, established web-enabled, high street retailers and market place shippers. For them cross border online sales growth can often be achieved at a relatively low cost, with low risk and offers a great opportunity to extend the summer fashion season and/or serviceable market.

For Hermes UK, we estimate that the growth opportunities presented by being in the EU are huge in terms of volume and revenue and this is extremely attractive to a business like ours.

Unlike many other players in the sector we are a truly European business though our Group companies and in partnership with other delivery networks. We operate a fully tracked, pan-European delivery network (2home, 2parcelshop), linking and promoting trade between 15 countries.

Our employees benefit from a diverse working experience as a result of being part of a European business. They face the challenges of cultural differences, differing market requirements and consumer behaviour. This all makes coming to work a bit more interesting and rewarding.

There are however some downsides of being part of the EU. The introduction of high standards of vehicle upkeep, road safety and driver training are all welcome initiatives from the EU. But well intended efforts like The Green Paper 698 (‘an integrated parcel delivery market for growth of e-commerce in the EU’), which promoted proposals to impose standard cross-border charges on b2c carriers, are less welcome.

Take for example an SME in remote southern Spain who is 345KM away from a central hub and shipping low volumes of product which can be purchased in many EU22 domestic territories already. These businesses should not expect the EU to impose below market rate, standard cross-border charges on b2c carriers, in order to artificially promote potentially unsustainable cross-border trade.  Nor should the EU expect carriers to invest in best in class logistics infrastructure, vehicle maintenance, driver training & sustainability initiatives if it wants to interfere in market pricing.

Do you have an opinion about whether the UK should be in or out of the EU? Send you comments to alex.evans@nationalbusinessawards.co.uk

 

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