Business owners sceptical over Coalition’s ability to cut red tape

8 November 2010

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Many small business owners doubt the new Government's ability to free them from the shackles of red tape, according to new research.

A study by the not-for-profit Forum of Private Business found that just 28% of small to medium-sized enterprises (SMEs) believe the Tory/Lib Dem Coalition will make a noticeable difference to the rules and regulations they face.

A sizeable 40% of respondents said they did not think the Coalition will significantly reduce the amount of legislation small firms have to comply with. The remaining 32% on the Forum's Red Tape research panel said they did not know whether or not the Government would achieve its stated aim of regulation reduction.

Many Forum members on the panel also submitted comments outlining why they doubted the Coalition's ability to cut red tape. The main reason given was the historical failure of similar initiatives in the past but an overwhelming 89% of those surveyed said they felt that legislators do not understand how regulations affect small employers.

Others claimed that civil servants and other policy-makers would get in the way of Tory attempts to streamline UK workplace law. The Government's reliance on the leaders of large corporations for advice on business regulation was also a concern.

The Forum's research manager, Thomas Parry, said: "It would appear that many small firms feel as though we are now past the point of no return with legislation – there's a sense that because there's so much of it and it's so deeply embedded in our legal framework, any attempts to tackle it are doomed to failure.

"The level of change required – around a 50% reduction in terms of the time business owners spend on completing forms – is unlikely to be met without a radical rethink of legislation".

Other findings from the Forum's Red Tape panel included:

- Employment law emerged as the area of most concern among the business owners surveyed. In particular, respondents said they wanted to see more simplicity, certainty and consistency in the legislation governing treatment of employees.
- The regulations surrounding taxation appeared to be the second biggest concern for SMEs, with a high volume of firms calling for the time and costs they spent on tax-related issues to be reduced.
- Overall, the complexity of business legislation proved most controversial among Red Tape panel members.
- Environmental legislation was seen as overly complex but overall less problematic than other areas of legislation.

Additionally, many businesses on the panel said they concentrated on ensuring they followed what they considered to be best practice in the workplace, rather than simply aiming to fulfil their legal obligations.

Some pointed out that with large sections of the legal framework untested in a court of law, it was more practical option for them to adhere to what they considered to be best practice, rather than trying to understand and interpret ambiguous areas of the law.

Comments submitted by Red Tape panel members included:

- "I don't think they (policy-makers) really think it through. They are paid to create new legislation and need to justify their jobs."
- "Cut as much regulation as possible and just issue companies with a book of best practice so managers and owners are aware of their responsibilities but do not have to operate under such a threatening atmosphere."
- "The current Conservative Government, before being diluted by Liberals, promised to make a bonfire of onerous and pointless legislation. This needs to happen to free up companies in this country."

The Forum's Red Tape panel is one of a number of focused research groups run by the not-for-profit support organisation.

The panels are designed to provide in-depth and contemporaneous research on specific issues affecting smaller businesses. Others include Economy Watch, the Health and Safety panel and the Tax and Budget panel.

The Forum carries out research on behalf of its members as part of its Communications Director business support solution – one of eight solutions designed to provide products and services to cover every aspect of running an SME.

More information can be found at www.fpb.org.

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