A PROPOSAL to create a European anti-terrorism “quality label” has raised fears that it will be an expensive burden for British companies.

Business leaders have warned that draft legislation on supply-chain security — currently in the pipeline in Brussels — could cost between £2,000 a year for micro businesses and £91,400 for medium-sized businesses.

The thrust of the plan from the European Commission is to create a “secure operator” quality label, to be awarded to companies that prove there are no security gaps in their operations.

It aims to keep the supply chain secure against terrorists by controlling product movement from the production line to transport and warehousing. It would affect all products from sandwiches to heavy goods.

The new standard would require increased surveillance and new vetting procedures for millions of lorry drivers and warehouse staff.

While the law would initially be voluntary, businesses fear it will put those without the label at a competitive disadvantage and be compulsory by default.

An independent impact study released by the Norwegian consultancy DNV in October puts the total cost of a mandatory scheme in Britain at £215m for the initial audit and £92m annually.

A separate EC study puts the annual cost burden of a voluntary scheme for EU countries at £60m, which it suggests could be paid for by industry at an average cost of £426 per company.

Smaller firms fear they will bear the brunt of the new measures. Of the 4.75m companies that will be affected by the proposal, 4.73m are small and medium-sized businesses.

Last week the Federation of Small Businesses warned that the move would bankrupt a huge number of its members and “inadvertently hand a victory to terrorism”.

The federation’s senior adviser, Andrew Cave, said: “This is an example of how not to regulate. Small businesses would have to invest in surveillance equipment, extra security measures and even new premises as well as vetting all staff. In short, this proposal is unworkable in the real world.”

British MEPs have already pledged to block the legislation when it comes to the European parliament for approval in the new year.

Gary Titley, leader of the Labour MEPs, described the proposal as “a bit of a pig’s ear” that would “harm the people doing the right thing and not deal with those doing the harm”.

Another MEP, Philip Bradbourn, the Conservative transport spokesman, said he had asked the commission to withdraw the entire proposal. “This is already covered in single-market legislation. The cost to small businesses will be huge,” he said.

“Similar measures are being discussed on Capitol Hill as we speak and we do not want a battle between the US and the EU on this.”

But other MEPs said they would fight to keep the proposal.

Jeanine Hennis-Plasschaert, a Dutch Liberal MEP in charge of steering the legislation through the European parliament, said that while she disagreed with some aspects of the commission’s approach, she would still push the case for common security standards across the EU.

The European Commission last week said it was standing by its proposal. “We want one system instead of 25 different ones,” it said.

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