Research published yesterday, based on a survey of 5,000 firms carried out by the forum, found small firms are spending more time and money on complying with regulations – £16.8 billion per year, it believes – despite the Government’s legislation-busting initiatives to date.
In all, 84% of respondents reported an increase in time spent complying with legislation since 2009. And 67% of respondents are being forced to spend more money on external consultants to help them avoid legal pitfalls, says the survey.
Based on data provided by members who took part in the survey, the total annual cost of compliance for the UK’s smaller employer nationwide is £16.8 billion – £11 billion in internal costs and £5.8 billion for external and contractor costs – or £14,200 per firm on average.
The forum’s head of campaigns, Jane Bennett, said: "While this is a rise of just 1% compared to two years ago, the increase is greater in real terms because economic activity, which drives the need for compliance, has shrunk significantly since the 2009 survey was carried out.
“Despite several Government initiatives – some more effective than others – it is clear we are heading in the wrong direction so far as reducing regulation for small business owners is concerned. We simply want these measures to work properly and for the voices of the UK’s business owners to be clearly heard.
“We also want the authority of the Local Better Regulation Office (LBRO) to be maintained, following its move into the Government’s business department. Targeted support, sympathetic enforcement and grading of compliance would be helpful.
“The Regulatory Policy Committee has been established to ensure legislators take full account of the impact of regulation on small businesses. We fully support its work in rejecting inadequate impact assessments and recommend it continues to refuse to endorse any regulations that have not taken into account the impact they have on small businesses.”
The Forum’s Get Britain Trading campaign highlights the barriers to growth created by over-regulation in the UK.
As part of the campaign, politicians have been invited to attend ‘work experience’ placements at businesses in their constituencies. It is hoped that giving decision-makers direct experience of the challenges of running a business via the forum’s Business Buddy scheme will lead to reduced regulation and other pro-enterprise measures.
According to the survey, administering tax has become the top regulatory burden for owners of small businesses. Tax-related regulation was deemed to be the most costly area of red tape, leaving smaller employers with a bill of £5.1 billion per year.
Employment law was second at £4.2 billion, followed by health and safety law at £3.8 billion.
The survey also found that forum members estimate they have missed out on business opportunities worth £29.8 billion due to the time and resources they spend on dealing with regulation.
The research also found increased frustration with the Government for its failure to reduce red tape, after several years of apparent inaction.
In fact, they are concerned that overall legal requirements placed on smaller employers have increased since the Coalition came to power. There also appears to have been no improvement in the guidance, explanation and support small firms are given when new laws are introduced.
In addition to the Government’s red tape challenge, where people are invited to post online the regulations they find most onerous, the Regulatory Policy Committee is set to publish a paper on the effectiveness of Whitehall’s regulatory impact assessments, for the first time since its inaugural report in March 2011.
