Freeze new small business laws until election to allow for review of red tape, says FPB

The Forum of Private Businesses (FPB) is calling for a freeze in new business legislation to allow the Government to re-assess the burden of red tape. The proposed moratorium would last until the General Election, which is expected to take place in May.

With the Pre-Budget Report (PBR) less than a month away, the FPB is lobbying the Government to ease regulation on small businesses after finding it costs them almost 12 billion per year.

The FPBís Policy Representative, Matt Goodman, said that a hiatus in new small business laws during the months before the election would be the perfect opportunity to launch the first ëComprehensive Regulatory Reviewí – in the spirit of the Comprehensive Spending Review – as proposed by the FPB in its submission to the PBR.

ìThe Government must ensure that regulations are proportionate to their aim,î said Mr Goodman. ìWe want departments to get to grips with all the various aspects of the regulatory burden on businesses and a Comprehensive Regulatory Review would provide just that sort of understanding.î

ìIn order to make the Better Regulation Executiveís hard work really count, it stands to reason that we should have a better picture of what is on the books at the moment, how those regulations interact and how they are being enforced. So not just the time and effort spent by businesses on compliance, but the time spent by government departments and local authorities as well.

ìBy committing to a moratorium and the first Comprehensive Regulatory Review before the General Election, the Government can extend the pre-election period and use that time to make ëjoined-up governmentí a reality.î

Research carried out for the FPBís quarterly Referendum survey found that, not only does complying with regulation costs small businesses a staggering 12 billion per year, they also devote an average of 37 hours per month on compliance.

Micro businesses (0 to 9 employees) spend an average of 33 hours per month complying with regulations, small businesses (10 to 49 employees) 48 hours per month and medium-sized companies (50 to 249 employers) 131 hours – equivalent to one full-time member of staff.

Employment law is the costliest bureaucratic burden, costing small businesses 2.4 billion per year. Health and safety administration costs 2.1 billion and tax 1.8 billion per year, according to the FPB's research.

The average time per month spent on employment red tape (dismissals and redundancy, discipline, absence controls and management, parental leave, and holidays) is ten hours. For health and safety, it is eight hours. Business owners spend an average of seven hours each month on tax administration, four on building and property regulations, four on standards, three on environment and waste regulations, and an hour per month on equality and diversity.

The FPBís survey also identified a significant level of disenchantment with the current regulatory framework with just 5% of respondents believing it is beneficial to their business and only 9% believing that the current framework is fair, robust and proportionate.

While welcoming the Governmentís Better Regulation agenda, the FPB is warning that more needs to be done to protect small business owners from the disproportionate effect of business laws.

FPB member Jeanie Cartmell, a partner with furniture and fixtures retailer Solihull Supplies, based in Birmingham, said she had been forced to take on an extra employee to help her deal with the burden of legislation.

The business, based on Lodge Road, Knowle, employs a total of six people. Mrs Cartmell agreed that smaller firms like Solihull Supplies are hit particularly hard by red tape. She told the FPB: It's quite ridiculous and it costs money left, right and centre.

It's really difficult to get through everything – it's just very time consuming with all the paperwork. It's so complicated and there's a lot of time spent as a small business just complying to survive.

I think common sense has gone out of the window with health and safety legislation in particular – that's an issue that takes up a lot of our time, added Mrs Cartmell.