Mr President, it is because the Lisbon Summit first of all set its sights on making Europe the most dynamic and knowledge-based economy in the world by 2010 that we actually have the risk capital action plan we have today. It was optimistic of governments to set this target, but not unrealistic, given that it is within their grasp to achieve it. A stimulating framework is required for us to promote high-growth industries such as information and biotechnologies and from that the jobs that must come. SMEs are a part of that process and that is what this is about: attracting finance to try to generate those businesses. Why do we need the risk capital action plan? If we make a comparison of Europe and the US in the areas of business generation and equity financing, particularly amongst small businesses, then venture capital activity demonstrates a huge gap in Europe's readiness to compete. A framework has had to be established in order for us to plot Europe's future. To begin with, and the Commission has done this fairly well – after prompting by Parliament – key barriers had to be removed and benchmarks set for their removal. The framework for these benchmarks has now been identified. The first is market fragmentation. How do companies actually raise debt and equity finance across the European Union? There are varied and contrasting pictures across the 15 Member States. There are can best be described on one side as nascent markets, and on the other, rather more sophisticated and developed approaches. Commercial bank loans are how many small- to medium-sized businesses attract finance. This is wholly appropriate in some circumstances; but new and exciting projects or spin-offs are not necessarily so appropriate for bank loans. In areas where risk is likely to be a considerable feature of the exchange, dotcoms for example, commercial banking may be deemed inappropriate and unworkable. Alternative processes are then required – business angels or groups of investors, private investors – bringing together people with ideas on one side and money on the other. At the institutional level, there is the possibility of quotation on the AIMS market in the UK, for example, and perhaps even the idea of using pension funds to allow for higher growth returns rather than with bonds and blue chip equities. Given the pursuit of those higher returns for potential new and growing firms, it is not perhaps surprising to learn that an entire industry has sprung up in this field. Similarly, the careful approach of these investors, with their application of the principle of due diligence, means that spontaneity is not a part of the risk equation, as one might have first imagined. If the EU wants a place in the 'premier division' of industrial growth and competition, then funding the industries of tomorrow is of vital importance. This is the stark reality of a market which is held back, not just by the slow evolution of debt-raising, but also by the nature of the institutional and regulatory barriers which fence in any further development across the European Union. Let us have a look at some of those barriers. On the administrative side, it is nice to see that the administrative formalities for forming a company have now acquired the cornerstone of the company statute. This permits the kind of progress we hope to see. I note also that in January 2002 the Directorate-General for Enterprises started to work on benchmarking the administration of business start-ups. The cost of starting up a business varies across the European Union and there is some progress. But look at some of the licensing issues. Look at some of the other issues which hold companies back. It is important to make distinctions, and here we see companies in the areas of hi-tech, drugs, and biotechnology being made to jump through hoops which may have to be reconsidered. We have to look at just how these businesses fare. We do not just need to look at start-ups – businesses grow, they develop or they are bought out. So, for any practical observation, we need to consider just what kind of businesses we are looking at for risk capital. Even now buy-outs – and management buy-outs in particular – are the single largest category of acting in venture capital. Clearing the path of regulatory barriers means introducing new directives. There they bind together the approaches necessary for a single market to emerge. Recently the prospectuses directive was adopted and now – I believe, because of the activities of this Parliament – protects small- to medium-sized businesses from the bureaucratic requirements of continual registration or the dangers that threatened their ability to have access to funding. The issues of the prospectuses directive which Parliament had to address could have been avoided if there had been sufficient cross-referencing with the risk capital action plan in the first place. Let me also just mention pensions and the need for us to have a good quality directive on pensions – one that avoids the prudential plus approach. That approach, would actually reduce the prospects of any kind of funding from the pensions industry – an industry which, in the US is a major source of small business investment. If that prudential plus approach is used, then we may as well not have a pensions directive in Europe. The financial services action plan itself gathers together many of the directives necessary for completion of the risk capital action plan, including most of what I have already mentioned. But now that the Lamfalussy issue is practically resolved, progress will be assured, leaving the regulatory framework requirement for the risk capital action plan well within our sights. The impact of small- to medium-sized businesses has long been an issue raised by many parliamentarians who want to see nothing but the most positive advantages passed on to companies. The Commission's benchmarking of its achievements in these areas has given the European Parliament and the Council the tool to measure Europe's progress. So far that progress has been good, if a little slow. There are other areas which have been mentioned, such as taxation, double taxation of venture capital or capital gains tax, tax arrangements for new firms and comparative tax rates with less risky forms of capital. These have been taken up by a number of Member States but some backbone still needs to be put into these issues. Also, in terms of human resources, we have to have the kind of training or advice that is necessary to help these businesses flourish in the first place: life-long learning and initiatives in vocational qualifications can seen as the start of the spread of best practice, as is the introduction of business mentors in certain countries and developments in school curricula. The high-tech small businesses which, in the end, are the target of the risk capital action plan, are in short supply themselves. The Lisbon Summit of 1997 threw down the gauntlet of the risk capital action plan for Europe to pick up. The expectation is to reach completion by 2005 in terms of a regulatory framework and 2010 for the knowledge-based economy. The risk capital action plan is not in itself a master plan for increased growth or job creation, but it is the essential framework. Progress has been made but it is quite slow.

Political group: PSE