EU problems for small businesses

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Guest Blog – By UKIP member Alan Piper, running a small hotel in the Lake District

Some years ago, after 25 years working down South, I left the City, bought a small hotel and pub in the Lake District and thought “what could possibly go wrong?”

Apart from the obvious like Blair, Brown, cheap supermarket booze and the smoking ban, my career change coincided with an unprecedented torrent of regulation which has left small businesses reeling and in particular, those that rely on employing a few staff… (sorted out a pension for your nanny, gardener, cleaner yet?) And now we face the EU referendum.

Recently I was chatting to similarly aged business owners and the EU came up. Are your IN or OUT I asked? Don’t know they said – we’re still thinking about it.

That surprised me because in my business I know some of my problems stem directly from the EU therefore getting out is a no-brainer, but they obviously didn’t. It was only when we started talking about shared concerns like staff, costs and how on earth our kids are supposed to manage when we’ve gone that I was able to open their eyes to some of the EU impacts.

Wiser heads than mine will know more detail than I but here’s two issues which surprised them and got them thinking.

Kitchen Staff. About a decade ago, most of my kitchen staff came from the commonwealth. Trained chefs, trainee chefs, gap-year guys and girls who went on to marry, or run their own businesses, run a formula 1 catering team (yes, really) and who spoke English.

A couple of years ago, one of them wanted to come back and I discovered that it couldn’t be done because now I would have to pay a minimum salary of £35,000 pa for anyone non-EU.  EU-sourced staff on the other hand are paid at normal UK rates. The door to the outside world has been firmly shut and that doesn’t do my hospitality business any good at all.

Nor theirs as it turned out. Like me, they struggle to find reliable local UK staff from the pool of benefit trapped, lazy, feckless, drugged-up dreamers so have to look to Europe where they don’t generally speak much English, work hard but can only work where their skills allow. It doesn’t make their life any easier either.

And neither does VAT at 20%. Remember Hancock’s blood donor sketch? Half an arm? VAT at 20% takes your financial legs off. So why can’t it be changed? Government doesn’t want to and EU rules limit the options – although ironically some EU countries operate it in a far more enlightened way. Not here though.

Here, 5.2 million SMEs in this country are VAT registered (that’s how they are identified – the VAT registration), and God knows how many more small businesses stay “below” the VAT threshold, currently £82,000 pa.

And yet they don’t see the EU’s hand in this. Something like 15 million people (SME owners, partners & threshold avoiders) don’t know how the EU affects their business thus give any incentive to leave.

I suggest it’s about time they did.

 

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6 Responses to EU problems for small businesses

  1. Pingback: How the EU is closing the door on the outside world |

  2. Philip Rock says:

    Thank you Roger. This really does show the actual pieces of fruit in the EU fruitcake – all the pieces of which are rotten as it is possible to be, not to mention pungent.

    There are details within the effect on small business of the European Union that I was not in the slightest aware of. That a commonwealth worker previosly having worked in the hotel would now have to be paid 35,000 ?!!!!

    There are many blatant infringements of our rights by the EU, and I as an avid anti EUnion person are aware of that, but when one sees these infringements laid bare, BLOOD BOILS!

    The Post Office, which Margaret Thatcher would have privatised except for the fact that the public specifically did not want that, has now been forced to be pprivatised by EU rules (so the Bundespost can take the more profitable parts of UK mail). One really has to ask, “who really won the Second World War?”

    I would very much appreciate if we could gather more of these ‘nuggets’ that can be laid bare without too much difficulty so that they can be used in our struggle against superstatist totalitarianism (did I really say that?) of the EU!

    Philip Rock

    • Michael Kennedy says:

      Phillip, I offer you this ‘nugget’ ….. It was written by the owner of Cross Lanes farm which was the last of some 9 apple farms around Reading, Berks. Sadly Cross Lanes farm closed and was sold last year.

      The State of the Apple Industry (Sept 2001)
      When we arrived at Cross Lanes some twenty years ago there were eight other orchards around Reading. Today we are the sole survivors. Sadly this is not an isolated example, but one illustrative of a general trend.

      In the mid 1950s there were three thousand commercial apple growers in Britain, today that figure is just eight hundred- many of those being very small scale. We therefore have to ask the question; why has this occurred and what can be done to reverse the change?

      The Cause
          -Europe
      It is easy to dismiss this change as just part of a greater agricultural decline that is inevitable in a world with plentiful cheap labour. Of course, it is argued, we can not grow apples at a profit here when it can be done in third world countries for a fraction of the cost. Is it time we just stuck to the hi-tech businesses we are good at running and left farming to those who are paid less?

      This might be a convenient argument, but it is not based on the reality. The fact of the matter is that many, indeed the majority, of our apples are imported from countries which are just as wealthy as we are. These include our EU partners, the United States and Commonwealth countries. These countries cannot get a competitive advantage by using cheap labour, in fact labour costs in many of these countries exceed those in Britain.

      A large part of the answer may lie in our relationship with the European Union. In an attempt to give farmers a fair quality of life and a guaranteed income the Common Agricultural Policy (CAP) was developed during the early days of the EEC. Part of this CAP enabled ‘Europe’ to buy up produce from farmers should the price drop below a certain level. Instead of using an efficiency drive to enable farmers to make a profit, for example by reforming French inheritance laws by which farms get smaller and smaller after every generation, Europe decided to guarantee farmers an income.

      This policy was not suited to Britain, which had already reformed its agriculture after the war, because it all to often discriminated against our methods. For example, in the apple industry the main English variety (Cox Orange Pippin) was excluded from the intervention scheme. This meant that huge over production on the continent was being subsidised by Europe, with British growers getting none of the benefit.

      Continental apple farmers, especially the French with their popular Golden Delicious variety, could thus undercut the British by a large amount using their subsidies. Furthermore, the glut of apples produced as a result of the intervention scheme, drove down the price of Golden Delicious, making Cox’s unaffordable.

      The ludicrous nature of the CAP’s intervention schemes is borne out by the following figures; Europe produces 10 million apples per year, yet has demand for only 7-8 million. ‘Apple mountains’ were created, with, as I have explained, great damage to British growers. However, not only did we suffer, the third world found cheap intervention produce being dumped on their shores at knocked down prices, putting out of business local people. And for all this, does the consumer benefit? No, they pay the equivalent of 5 pence on income tax to fund CAP!!

      There is therefore no doubt that our entry into the European Union has had a seriously detrimental impact upon our Apple Industry. In so many areas we were promised that entry into the EU would facilitate free trade, and in many it has. However with agriculture free trade has not been expanded, it has been restricted. The continental view of agriculture as an essential state service to be funded by the tax payer has resulted in this mess, and even caused difficulties in World Free Trade negotiations with the United States.
          -The Sellers and the Buyers
      How many French supermarkets stock English apples? How many English supermarkets stock French apples? The answer to the first question is probably none, the answer to the second; almost all.

      There are many reasons why this is the case. The first is simply a fact of national character. The French are a patriotic people who will buy, if at all possible, French produce. The British, by contrast, seem to delight in the purchase of foreign foods perhaps believing them to be more exotic. To be seen to care where your food comes from is felt to be petty and stupid nationalism, rather than just sensible and logical. The Earth Summit in Rio in 1992 concluded that food should be grown and sold in the same region to save on transport costs, both financial and environmental. Why does Britain therefore import 75% of its apples when it could perfectly well grow all it needs at home? The fact that there is no consumer pressure to buy British, or little in comparison with other European countries, enables the supermarkets to get away with importing apples even at the peak of the British season- a terrible sight for the farmer!

      There have also been reports of shelf space being ‘bought’ by foreign farmers or their representatives using subsidies designed for ‘promotional work’. These subsidies are not available to British apple farmers because of the different structure of the industry here.

      Perhaps the most important factor is the suitability of British varieties for supermarket sale. The traditional Cox Orange Pippin has great taste and flavour, but does not have a regular shape or a shiny smooth skin. As a result they do not look good on the supermarket shelf in comparison with the manufactured-looking Golden Delicious or Gala. The subsidies received by the Golden Delicious growers have been used to fund advertising campaigns such as ‘Le crunch’, which have distorted the impression most people have of what an apple should be about. Crimson, flavoursome and firm have been replaced by green, tasteless and crisp. To many young people today a cox barely tastes like an apple at all. They pull a face like someone who’s been duped by an own-label cola on tasting what used to be the pride of Britain.

      What we hope will happen….

      It is possible that the British people will wake up to what is happening to their farmers. If this happens and pressure is put on retailers to buy British then the apple industry might just recover. It is doubtful, though, that anything of any substance will occur until the disastrous Common Agricultural Policy is revoked. The prospects for this are very slim because of the vested interests in other European Governments for CAP to survive untouched.

      What probably will happen……

      Since CAP will remain in place and the modern idea of ‘Le crunch’ will persist, it is unlikely that large scale apple growing in the UK will be able to survive. Growing apples to receive 8 or 9 p/lb is just not economical, especially when regulations mean it can cost at least this to pack and transport.

      The last time English apples were threatened in the 1880s (by newer American varieties) there was a revolt. A fruit crusade was mounted with an enthusiasm only ever brought on by a sense of imminent loss. The threat was dealt with and a renaissance began. The great varieties of Blenheim and Cox were planted in many a garden; sadly it is from these trees that you must now glean your apples…..unless of course you are prepared to accept the badly named Golden Delicious.

      Small scale production for sale in farm shops will be the only source of traditional varieties in the future- it is, of course, into this category that Cross Lanes falls.

  3. Lobbying in the EU really brings excellent results!
    The 36 FTSE-100 companies that signed a pro-EU letter in The Times last month spent €21.3 million lobbying the EU; they got back €120.9 million in grants from Brussels. Hard to argue with a 600 per cent return on investment.
    The money, though, is the least of it. Far more damaging is the way big firms lobby to get rules that suit them and hurt their competitors.
    It helps explain why, when the rest of the world is growing, the eurozone is no larger now than it was in 2007. If you want to be on the side of the innovator, the entrepreneur, the start-up, you should vote to leave.

    -hat tip, Dan Hannan.

  4. catalanbrian says:

    The “torrent of regulation” that you blame the EU for does not seem to worry hoteliers throughout the EU, as there are plenty of small independent hotels that seem to be flourishing. I also note that you used to employ people from “the Commonwealth”. Why? Surely you should have been employing people from the UK in preference to these people. Perhaps you only wanted to pay part time wages for full time jobs. The £35,000 minimum wage for non EU staff is a Government introduction in an attempt to minimise immigration – nothing to do with the EU. The VAT at 20%, and the threshold of £82,000 is nothing to do with the EU (it is a UK Government tax) and is in any event paid by your customers, not you. I think your problem is your attitude, rather than either the EU or indeed the UK Government and this is made clear by your comments ” sorted out a pension for your nanny, gardener, cleaner yet?” which implies that you had no desire to offer a pension plan to your employees along with many of the worst employers in the UK and “……they struggle to find reliable local UK staff from the pool of benefit trapped, lazy, feckless, drugged-up dreamers……”. Start being a better employer and you may find that things get better for you, in or out of the EU.

  5. I’ve long thought it extraordinary the degree to which politicians left and right want to avoid mentioning the EU, supported by the opposition, whichever political party that happens to be. Politicians will even fall on their own swords rather than let it be known they’re simply obeying instructions from Brussels.

    This conspiracy of silence does have the effect of keeping the public unaware of the degree to which Brussels runs our lives. One thing I’ve noticed since this campaign began is the naivety of Remain supporters — they know nothing! They tend to argue from positions that take one’s breath away. Frequently, their wide-eyed faith is so massive, it’s difficult to know where to start in explaining reality to them.

    And while the Remain group often seem very to tell us that we don’t know what we’re talking about, I find in general that Brexiteers have a very stout understand of the situation. That’s why they support Brexit. It’s difficult to imagine anybody other than a complete charlatan like Peter Mandelson could possibly support EU membership if they actually understood anything worthwhile about it.

    And yes, what I said about “complete charlatan” can be applied to government members too. Cabinet members who’ve turned their coats doubly so.

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