Government regulators must be accountable, says FSB

Tuesday 14 August 2007

The Federation of Small Businesses (FSB) has called on the Government to ensure that its regulations and regulatory bodies are transparent, accountable, consistent and act in a targeted and proportionate way.

The overall aims of the Government’s plans, contained in the Draft Regulators’ Compliance Code and the Draft Regulatory Enforcement and Sanctions Bill, are welcomed by the FSB as a step in the right direction to reduce the red tape burden on small firms. However, the FSB believes that there are still improvements to be made to the draft documents.

Research by the FSB has found that the average small business spends 28 hours per month filling in forms for the Government. With no human resources or finance department the owner-manager of the small business has to complete these forms instead of spending that time finding new customers, growing the business and creating new jobs.

John Walker, FSB Policy Chairman, said:

“We welcome the Government signalling its intention to reduce the administrative burden on small businesses but we have heard similar noises in the past. It is time for action to follow words so that small firms can spend less time filling in forms and more time creating jobs.

“Following close on the heels of John Redwood’s proposals to reduce red tape for the Conservatives the challenge for all political parties now is to ensure adequate but proportionate legal protection for workers and the public.

“Meeting that target will allow businesses to create more jobs but in a safe environment for all. Given the number of people at work in Whitehall this should be an easy target to meet.”

Proposals put forward by the FSB include:

• Requiring regulators to produce annual reports to inform stakeholders on their performance against targets set for them and the actions they have taken enforcing regulations. This will ensure that regulators are accountable to the public and that they are not taking disproportionately punitive action;
• Regulators should base their priorities for inspection on risk assessments. Accreditation systems can be over-burdensome and should not be used;
• The Regulators’ Compliance Code should follow a revised penalty regime not precede it. The current penalties are blunt instruments and should be altered to reflect the aims of the code. The code should also apply not just to general principles but to individual actions taken by regulators to ensure a proportionate and fair approach is taken to eliminate unnecessary burdens on businesses;
• If regulators from more than one agency aim to inspect the same business then these inspections should take place at the same time to avoid excessive disruption of the business;
• Regulators should provide free advice, with no threat of punishment, to small businesses. This will assist small firms in complying with legislation much more effectively than through prosecutions. At present many small businesses avoid seeking advice from regulators because they could inadvertently ‘shop’ themselves, leaving them open to prosecution;
• Penalties enforced by regulators should be proportionate so that, for example, a large supermarket should be fined on a different scale to a corner shop;
• Regulators should publish penalty guidance and enforcement policies so that businesses know what is required of them;

The FSB made these calls in its submissions to the Government consultations on the Draft Regulators’ Compliance Code and the Draft Regulatory Enforcement and Sanctions Bill. The deadline for these consultation responses is Wednesday August 15 2007.

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