HL Deb 12 February 2003 vol 644 cc126-7WA
Baroness Byford

asked Her Majesty's Government:

Whether there is a definition of small and medium-sized enterprises used by all government departments; and, if not, what definitions are used by each department. [HL1505]

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)

There is no single definition of a small firm.

For statistical purposes the DTI usually uses the following definitions:

  • micro firm: 0–9 employees
  • small firm: 0–49 employees (includes micro)
  • medium firm: 50–249 employees
  • large firm: 250 or more employees

Listed below are the different definitions used.

The best description of the key characteristics of a small firm remains that used by the Bolton Committee in its 1971 report on small firms. This stated that a small firm is an independent business, managed by its owner or part owners and having a small market share.

Section 249 of the Companies Act 1985 states that a company is small if it satisfies at least two of the following criteria:

  • a turnover of not more than £2.8 million;
  • a balance sheet total of not more than £1.4 million;
  • not more than 50 employees.

A medium-sized company must satisfy at least two of the following criteria:

  • a turnover of not more than £11.2 million;
  • a balance sheet total of not more than £5.6 million;
  • not more than 250 employees.

The DTI's centrally administered small firms loan guarantee scheme (SFLGS) uses the following definitions:

  • Manufacturing: turnover of £5 million or less.
  • All other eligible businesses: turnover of £1.5 million or less.

There is also an overall eligibility criterion of fewer than 200 employees for SFLGS.

  • EC SME Definitions: These are currently under review.
  • Micro:
  • Maximum of nine employees.
    • WA 127
  • small
  • Maximum of 49 employees;
  • Maximum annual turnover of€7 million;
  • Maximum annual balance sheet total of €5 million;
  • Maximum percentage owned 25 per cent.
  • Meedium:
  • Maximum of 249 employees;
  • Maximum turnover of €40 million;
  • Maximum annual balance sheet total of€27 million;

Maximum percentage owned by one or jointly owned by several enterprises not satisfying the same criteria 25 per cent.

To qualify as an SME both the employee and the independence criteria must be satisfied and either the turnover or the balance sheet total criteria.