Sunday Interview: Business minister Michael Fallon says heavy regulation from Brussels must come to an end When he was appointed, many businesses leaders heaved a sigh of relief. Fallon has been a director of four companies, including Quality Care Homes and inter-dealer broker Tullett Prebon. In many people's books that makes him "one of us" when it comes to his relations with the business community. The attitude is in sharp contrast to how many people view Vince Cable, the Business Secretary and Fallon's direct boss. Where Cable is seen by many as the anti-business secretary, following comments attacking the City, Fallon is seen as far more pro-business. That image was only reinforced last November when Fallon waspishly commented at the Institute of Directors" annual dinner that Cable "slips his electronic tag occasionally." Earlier that day, the Business Secretary had spoken about responsible capitalism and moving away from what he alleged was a "quick-buck mentality." Fallon insists that both Cable, a Liberal Democrat, and he, a Conservative, want the same thing - businesses flourishing in Britain. The route to that, however, is probably seen differently by the two, who are from opposite ends of the political spectrum. Fallon cut his political teeth under Margaret Thatcher, a name not at the top of the Liberal Democrats" political heroes list. "We have very different politics but we are both batting for British business and the Autumn Statement is proof of that," Fallon says, arguing that the "anti-business" rhetoric many say the Government has fostered is altering. "We are changing that climate and the Autumn Statement showed that the Business Department is back on the front line," Fallon says. I think it was the best Autumn Statement for business in years - increases in capital allowances, more tax relief for entrepreneurs, more support for private-sector growth in the regions. There is plenty there for industry to welcome and they did welcome it. On the issue of red tape, there was a minor spat late last year with the CBI after the industry body said that, far from reducing red tape, the cost to business of new regulations from Europe and the Government was increasing. Fallon says that some of the CBI's workings were awry and that he has since met the organisation, which is now using the same figures as the Government. "Their analysis wasn't complete but they are right to keep up the pressure on us," he says. That's why I have doubled the target from January 1 that for every pound of new cost that is applied in new regulation, that is matched by £2 of cost being taken out. That is going to make it very, very hard for Whitehall departments to introduce any kind of new regulation. Two issues are still irritating the minister. The first is on the matter of "adaptations," where EU regulations are changed for small businesses so they are not too onerous. The second is on micro-business exemptions which are still as rare as the proverbial hen's teeth. "For SMEs, the thing is to continue to press Brussels for more exemptions - in the jargon these are called adaptations," Fallon says. Of the 42 directives that had an impact on British business in the first 11 months of last year, 2012, only 14 had any type of exemption for small firms. That isn't good enough. The EU also promised a year ago that as well as adapting for small firms where necessary, they would also exempt micro-businesses of under 10 employees entirely. There are no examples in a year of any micro-exemptions. I have challenged the Commission directly to live up to their promise on that. So, only a third of business directives are adapted or adjusted for small business and there are no micro-exemptions at all. Such frustrations bring to the centre of the debate Britain's ongoing and fractious relationship with the EU. Fallon says it is "a bit premature" for larger corporations and the City to begin raising concerns about a complete exit from Europe, saying that before that question is tackled there is a lot that can be done to change the relationship between London and Brussels that is advantageous to the UK. "Europe is changing," the minister said. Clearly, London is the major financial centre in Europe and an awful lot of our trade is with Europe and a lot of jobs depend on it. But it is changing and our relationship with it is bound to change to reflect that. Certainly, a lot of inward investment is here because we are inside the single market. That is undeniable whether you are pro or anti-European. [But] we are not alone in challenging Brussels. On red tape, for example, 12 [member states] have now signed Vince Cable's letter [on the issue]. There is strong interest from Mediterranean countries where they need SMEs to lead them towards growth and countries as far apart as France and Lithuania have joined us in calling for a proper target on the number of regulations to reduce and better impact assessments [an EU judgment on the cost of regulations]. This is not a solitary British campaign. All of this is to make it easier for our companies to compete across the European market. When it comes to bank lending, there was better news last week. The Bank of England revealed that the Government's £80bn Funding for Lending scheme has led to an increase in the availability of mortgages and business loans. Nevertheless, Fallon insists that the main high street banks can do more and is still unconvinced by the "lack of demand" argument. "We need to publish bank lending [statistics]," he says. I've done it already for the Enterprise Finance Guarantee scheme. They [the banks] didn't like that, they didn't think I was serious that I wanted to see increased take up of the scheme. I now want to publish bank lending to small firms by area as, indeed, the new Archbishop, Justin Welby, recommended and we need to do that. And that needs to be separate from mortgages and personal loans. The information is there, it is held by the banks and it is held by the Bank of England. I think it ought to be out there in the public domain. At the Telegraph's Festival of Business last autumn, Fallon heard from many small and medium-sized firms that their relationship with their main banks had deteriorated. "Each bank will tell you a different story," he says. That it is not them, that they are the ones increasing their lending. Well, let's see, let's list it area by area, to see which of the big banks are really lending to companies in the regions. The challenger banks, a very small number, they are already making inroads and I am hearing of more and more businesses turning to those challenger banks, such as Handelsbanken, Co-op and Aldermore. The demand is there. If very small newcomers can lend money, then so can the big high street banks. Lending is their business. If they are confident they have a good story, then they have nothing to hide and nothing to fear from seeing the information published by postcode. Fallon hopes that the three main pillars of 2013 - prompt payment, reducing regulation and increasing bank lending - will lead to a better relationship between business and the Government. Even if he still can't think of a verb for "de-gold plating."