· 2 min read · Features

Is business drowning in paperwork?


The government promised to reduce the burden of bureaucracy for businesses. With the election round the corner, here's a progress report.

In 2010, Prime Minister David Cameron pledged to lead “the first government in modern history to leave office having reduced the overall burden of regulation, rather than increasing it.” Five years later, the government claims to have saved businesses more than £10 billion over the past four years by cutting down on unnecessary bureaucracy. But do these statements tell the full story?

As part of our campaign to help reduce red tape around employment for businesses, HR magazine asked industry experts if they have seen a reduction in the red tape they face at work.

First, the good news. Protected conversations, introduced in 2013, allow employers to discuss settlements with their employees, in order to facilitate their exit from the company. Clearer guidance on using contaminated land has also saved businesses £132 million.

However, independent think tank Reform believes the figures tell a different story. In late 2014 it published a report, which claimed that the coalition government has in fact increased the regulatory burden on business by at least £3.1 billion per year.

Richard Harries, deputy director of Reform, explains: “While the coalition has done more to tackle regulation, they are overreaching in their claims of success. We re-analysed government figures, and when you count [changes] from the EU, the total amount of regulation has indisputably gone up.” Between 2010 and 2013, around 3,600 new regulations were imposed by Brussels.

According to Sarah Dillon, employment legal advisor for HR Legal Service, HR magazine’s employment law advisory service provided by ESP, shared parental leave is another area of concern, and could add further complexity. Shared Parental Leave comes into force this April, and some are worried it will be an extra burden for businesses. “When the mother and father work in different places, this is going to be difficult to police,” Dillon says. “It’s complicated and time-consuming.”

One of the coalition’s most divisive changes is the introduction of tribunal fees, as explored in HR’s January issue. According to the Citizen’s Advice Bureau, there has been a 66% reduction in applications for employment tribunals since the fees were introduced in July 2013. But while this has saved businesses money, time and paperwork, there are fears fees are preventing some employees from accessing justice.

While Helen Giles, executive director of HR at charity St Mungo’s Broadway is pleased with the simplification of the tribunal process, overall she believes the government’s changes have been “a mixed bag”.

“The simplification of the tribunal process is good and has cut down on a lot of time,” she says. “However, settlement agreements look easier on paper, but as a practitioner I’ve found it is pretty much business as usual.”

Some changes have been unwelcome too, Giles adds. For example, increasing the qualifying period for unfair dismissals from one year to two. “I was involved in the consultation process, and I never asked for it nor know anyone who did,” she says. “It doesn’t help employers, and it didn’t address our issues.”

John Allan, national chairman of the Federation of Small Businesses, says although progress has been good, new rules and regulations are proving costly. “The Small Business Bill currently before parliament will certainly help by requiring secondary legislation to be reviewed five years after it has been implemented.”

But he adds: “Whichever parties form the next government, they should be ready to demonstrate a renewed focus on easing small business regulation.”

With the election looming, all political parties are reviewing their policies for businesses, with Labour promising to reduce the burden on SMEs and the Conservative party pledging to reform rules around industrial action.

Has the government fulfilled its promise? While it can’t be denied an attempt has been made to prune the amount of bureaucracy faced by businesses, the impact appears to be minimal. And ultimately, businesses do not care where red tape comes from – Brussels or Britain – they just need less of it.