Forum responds to government's regulation-busting action plan

3 June 2010

The Forum of Private Business is responding to the coalition Government’s announcement of an ‘action plan’ to end excessive red tape.

The plan includes a new cabinet ‘star chamber’ to spearhead the drive to reduce red tape, an immediate review of all forthcoming regulation, a new ‘challenge group’ team charged with devising innovative non-regulatory solutions and a ‘one in, one out’ approach to introducing new regulations.

“Our calls for a comprehensive review of red tape finally appear to have been heard. The first job of the new star chamber will be to scrutinise all new regulations that are in the pipeline and that has to be welcomed,” said the Forum’s Chief Executive Phil Orford.

He added: “The Government must ensure that, in administering the work of the Reducing Regulation committee, it does not create more bureaucracy to deal with red tape.

“If this is achieved, combined with the ‘one in one out’ approach and the work of the challenge group in devising innovative, non-regulatory solutions to social and environmental challenges, we look forward to an enterprise culture that is conducive to small business growth rather than restrictive, as we have at present with the record levels of red tape that exist.”

Last year, the Forum’s ‘Cost of Compliance’ survey revealed that red tape costs smaller employers £9.3 billion per year in internal costs, mainly the time spent on administration, and found they spend an average of 37 hours per month complying with the law.

According to the FPB's research, at £2.4 billion the amount spent by smaller businesses on employment law is the highest out of all seven different types of legislation categorised in the quarterly survey, called Referendum. It surpasses the £2.1bn per year spent on health and safety administration and £1.8bn on tax

The survey found that smaller business employers spend £259m on work associated with dismissals and redundancy. They spend a further £391m on absence control and management, £237m on maternity, £333m on disciplinary issues, and £1,175m on holidays and any other remaining areas of employment legislation. The average time per month spent on all these different areas of employment law was found to be around 10 hours for each small business.

In all, 81% of businesses surveyed said the existing regulatory framework was unrealistic, not robust and unfair.

Particularly time consuming were the tasks of understanding new regulations (73% thought this was excessive) and the general monitoring and administering of legal responsibilities (74%). Monitoring and administration was deemed to be most costly (45% felt the cost was excessive), closely followed by implementing health and safety legislation (selected by 42% of respondents).

FPB member responses

“[The legal framework] is complicated, unclear over-regulated and obtuse which leads to scaremongering by certain companies who want to sell you their services and this in turn leads to even more confusion.”

“We are a small company of 5 staff and 2 directors and complying with regulations represents a dis-proportionately high amount of time and money.”

“Much of the compliance is to ensure that the correct pieces of paper are in place. It doesn't mean that it's done correctly. Systems are too complicated and time-consuming. We should have this time spent on growing our business, which would protect our employees more.”

“Someone has got to just cut the paper pushers and time wasters and get proper support for honest hard working businesses”

“Stop making me feel you want small business gone because at the moment between paperwork, rules and regulations, bank charges, rates and fuel, there's nothing left to employ staff.”

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