Red tape and gold-plating restrict SMEs

Small firms’ number one bugbear, over-regulation, and Government’s propensity to extend proposed new directives are preventing businesses from growing and consequently harming the UK economy.


Small firms’ number one bugbear, over-regulation, and Government’s propensity to extend proposed new directives are preventing businesses from growing and consequently harming the UK economy.

Small firms’ number one bugbear, over-regulation, and Government’s propensity to extend proposed new directives are preventing businesses from growing and consequently harming the UK economy.

This is the view of the Federation of Small Businesses (FSB) and the Foreign Policy Centre (FPC). Together they are warning the Government that the legislative burden on small firms from red tape and extending new directive, aka gold-plating, is impeding business growth.

This follows the launch of a report examining the extent of gold-plating on regulation for UK businesses. The FSB believes that the problem of red tape and gold plating has to be addressed now before it is too late. Its report recommends that:

• The Government set up a central independent body to assess the potential burden of all new legislation
• This body to conduct improved risk assessments that focus resources on the most relevant businesses as outlined in the Hampton Review
• This body should be involved in the legislative process at all stages. There is a case for its representatives to attend legislative meetings at an EU level and identify potential problematic areas early in the process
• There should be retrospective Regulatory Impact Assessments (RIAs) on existing laws examining not only envisaged costs but also real costs to businesses
• Clear and unambiguous language of regulations should be a key priority for legislators as many small businesses complain about confusion around what is required from them. Jargon should be confined to the dustbin
• Once the Davidson review is published, the Government should outline a series of steps it will take to review existing legislation that has been over-implemented or gold-plated
• The Government should consider ways to support Germany in its effort to make the Better Regulation agenda an EU priority

‘If regulation is prepared carefully, with implementation and enforcement carried out proportionately, then the protections for workers or the environment can be achieved without putting the economic well-being of the country at risk,’ believes Tina Sommer, FSB EU and International Affairs Chairman. ‘That is the challenge that the Government faces and we hope to assist in meeting that challenge. Our small business members cannot afford the failure to tackle the red tape burden to continue any longer.

‘Complying with regulations costs five times as much and takes five times as long for small businesses as it does for large firms,’ she continues. ‘Our research has found that two-thirds of small firms want to grow in the next five years but half of all small businesses see excessive regulation as a serious barrier to that growth.’

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