Removing red tape will encourage SMEs

Removing red tape will encourage SMEs to grow and budding entrepreneurs to start their own businesses, claim industry experts.

The Better Regulation Executive (BRE) says that Britain is one of the best places in the world to start and grow a business – ‘although that’s not a reason for complacency’.

William Sargent, executive chair of the Better Regulation Executive says: ‘It’s a pretty vibrant economy and anything we can do to make remove barriers and make things easier – that’s what this is all about.’

The organisation has launched 500 plans to combat unnecessary regulations over the last year.

However, Mr Sargent adds: ‘This is something that needs to happen year after year, it’s not a one-off. It’s a way of life.’

Red tape in the form of time consuming legislation is considered a major hindrance to the growth of SMEs by business owners.

According to a Sage Heartbeat Survey, which surveyed over 2000 businesses, 46 per cent of business owners said that they would not start up a business again due to the amount of red tape in place.

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.

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.’

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...

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