Britain's boardrooms: Hit by red tape?

Ministers have been warned that they must take action to deal with the problems being faced by Britain's small businesses.

A report from the Small Business Research Trust (SBRT) found that taxation and employment regulations are the main barriers to growth in the sector.

The survey - which sought the views of some 12,000 smaller companies between August and November 2004 - found "moderate growth".

But there were two "major difficulties" faced by the companies polled.

Two thirds cited tax and national insurance as a barrier to future growth.

And employment regulations were cited as a problem by 57 per cent.

SBRT chairman Brian Wolfe said the SME sector "is often misrepresented and its importance underestimated by government".

"The needs and problems of smaller businesses are different to those of their larger counterparts," he added.

"It is hoped that the administrative burden experienced by SMEs, as a result of the increasing number of employment regulations, will be minimised by government."

Highlighting the report, the Forum of Private Business (FPB) said its members were often frustrated at having to grapple with employment regulations.

"This survey proves that employment regulations are a running sore for employers," said FPB chief executive Nick Goulding.

"The FPB has consistently argued that a fatal flaw of employment regulations is that they are loaded in favour of employees.

"This is completely the wrong way round. It is the employers who are putting everything on the line for the success of the business, his or her home or lifesavings.

"And that is why business owners feel the present system is unjust and unfair.

"Maternity law, for example, prevents business owners asking their staff when they intend to return to work.

"That leads to enormous organisational and operational headaches for small businesses.

"Moreover disciplinary procedures are a minefield for employers. It is extremely difficult for firms to deal with incompetent staff, who are holding the business back, and the whole procedure is extremely costly in both time and money."