Red tape most critical issue for SMEs

Cutting red tape should be the most important business priority for the government, according to small and medium-sized enterprise owners.

This ranks more highly than improving access to finance (54 per cent) and reviewing employment legislation (36 per cent) in the list of top three SME priorities, finds research from insurer Zurich.

The desire for cutting red tape rises to 76 per cent among companies in the North of England and 74 per cent in the Midlands.

In London the figure is 60 per cent, which while below average, still ranks as a top priority.

By sector, manufacturing companies put the greatest emphasis on the reduction of red tape (86 per cent) with construction (75 per cent) and financial services (67 per cent) sectors closely following.

When senior SME decision makers were asked to rank their top three regulatory challenges, employment regulations topped the list (37 per cent), followed by health and safety (28 per cent) and pensions (21 per cent).

The concern with employment regulations is also reiterated by the fact that almost one in five (17 per cent) small businesses view employment tribunals and legal proceedings as a significant business threat.

Richard Coleman, director of SME at Zurich says, ‘Ensuring that Britain has the most accommodating regulatory environment for small businesses is obviously essential to helping SMEs grow, prosper and attract further investment at home in the UK and from abroad.

‘While most businesses would accept there’s a vital need for regulation in areas such as health and safety, UK SMEs are clearly looking for simplification to focus on what they do best – fuelling economic growth. The fact that SMEs tell us this concerns them more than access to finance is a clear indicator that they still feel over-burdened by red tape.’

James Caan: Cut the red tape for SMEs

The government must stop piling unnecessary rules and regulations on small businesses if the economy is to grow, says entrepreneur James Caan.

‘It’s not the government’s role to create jobs, that’s the role of small business and entrepreneurs. Government needs to get out of the way and let us do what we do best,’ adds the former Dragons’ Den star.

Caan cites examples such as requiring a £35 poisons licence to sell toilet descaler or ant killer and requiring an alcohol licence to sell chocolate liqueurs but then prohibiting them next to lingerie.

Opening a new warehouse in Britain takes up to 18 months versus only four in Germany, he adds.

Caan, CEO of venture capital and investment firm Hamilton Bradshaw, says that prime minister David Cameron’s announced plans to “kill off the health and safety culture for good” by abolishing or consolidating up to half of existing regulations is “a good start”.

He supports the Federation of Small Businesses and the European Small Business Alliance’s recently tabled declaration in the European Parliament urging a halt to excessive rules and regulations affecting small firms.

He also notes a British Chambers of Commerce survey where 1,200 small and medium-sized businesses said they felt “choked” by government regulations.

Caan says, ‘Chancellor Osborne has declared that red tape reform has saved businesses £3.3 billion but think about that. That means those rules and regulations, prior to their repeal, were costing businesses £3.3 billion. I could put a lot of people to work with £3.3 billion.’

Alan Dobie

Alan Dobie

Alan was assistant editor at Vitesse Media Plc (previous owner of before moving on to a content producer role at Reed Business Information. He has over 17 years of experience in the...

Related Topics

Red Tape