Research carried out by the FPB has found that Britain's small and medium-sized manufacturers face a £1,230 million annual bill to comply with legislation.

The figure, drawn up using feedback from members of the not-for-profit business support and lobby group, is based on the amount of company time, and therefore money, spent on government-imposed bureaucracy. It was revealed by the FPB's quarterly Referendum survey of members.

This latest issue of Referendum, which focused on ‘the cost of compliance', found that recession-hit manufacturers are forced to spend an average of 35 hours of company time each month on form-filling and paperwork. Manufacturers with nine or less employees spend an average of 27 hours, those with between 10 and 50 employees spent around 50 hours and firms with up to 249 workers devote approximately 131 hours.

In terms of costs, complying with health and safety legislation alone was found to leave small manufacturers £357 million out of pocket each year. The cost of complying with employment legislation was put at £320 million per year, comprised of dismissals and redundancy at £64 million, absence control and management at £55 million, maternity at £25 million, and disciplinary issues at £46 million. Meanwhile, the costs associated with legislation on employee holidays and any other remaining areas of employment legislation were put at £130 million.

The legislation surrounding waste and the environment was calculated to cost £112 million, equality and diversity £35 million, ISO and industry standards £105 million, tax £221 million and building and property £80 million.

Manufacturers in the South East face the biggest bill for overall compliance out of 12 regions identified by the Referendum at £153 million. Manufacturers in the West Midlands are hit with the second-largest cost at £133 million, followed by the South West (£132 million), the North West (£131 million), Eastern England (£127 million) and the East Midlands (£113 million). The Yorkshire and Humberside region's cost was calculated at £112 million, followed by £102 million for  Scotland, £76 million for London, £60 million for Wales, £51 million for Northern Ireland and £40 million for the North East. 

FPB member Peter Harlick runs Eas Technology Ltd in Bury, Lancashire, which manufactures electrical equipment and employs three people.

Mr Harlick is 75 years old and said the "soul destroying" burden of legislation had got "worse and worse" over the 40 years he has been in business. He said new regulations appeared to be imposed on manufacturers almost on a monthly basis.

He said: "The situation now is disgusting.

"The government wouldn't know how to run a business. If they tried, I'm sure it would go bust very quickly. All this regulation is the most soul destroying thing they've ever done to small businesses."

Commenting on the figures, FPB Chief Executive Phil Orford said: "Many of Britain's manufacturers are finding the current trading conditions incredibly tough and can ill afford to spend precious time and money on dealing with excessive legislation.
"Employers in the manufacturing sector are often particularly burdened with the cost of complying with health and safety legislation and will, no doubt, support the FPB's calls for the government to reduce the amount of bureaucracy imposed on small businesses."

Out of four sector headings in the research based on the UK SIC, the overall cost of compliance for smaller businesses in the manufacturing industry was the third highest. The price was put at £1,157 million for construction, £2,764 million for TRAD businesses and £4,151 million for the services sector.

The Referendum found that, with external costs taken into account, regulation costs the UK's smaller business employers almost £12 billion per year. The FPB is now urging the Government to cut down on red tape for small businesses and believes that reducing the time and cost of complying with legislation must not be sidelined, particularly as many firms are struggling to survive because of the recession.

FPB Policy Representative Matt Goodman attended a meeting of the Better Regulation Executive (BRE) on Friday (26 June 2009) to help put across the lobby group's calls for the legislative burden on smaller businesses to be reduced.  Representatives from the BRE have been in discussions with small businesses from across the UK hoping to meet a target of saving £3 billion per year via reducing bureaucracy. While welcoming this engagement, the FPB believes that more must be done in order to meet this target.

The FPB provides a member helpline, a 24-hour legal advice service and Health & Safety and Employment Guides in order to help small businesses to comply with legislation. In addition, the organisation has recently launched an online video advice portal, www.smallbusinesschannel.co.uk, and has joined forces with Cardinus, a subsidiary of THB Group, to provide online health and safety training.