Small businesses tangled in red tape

Complying with government red tape can cost small businesses more than £3,600 a year.

The latest quarterly survey by the Forum of Private Business found that a third of its 1,782 members questioned spent over £300 a month on such compliance.

The survey covered eight specific issues of particular pertinence: parental leave; working time; stakeholder pensions; family tax credits; the minimum wage; IR35; employment contracts and time off for dependants.

The FPB said these subjects related to staff matters because “the major barriers [to complying] are perceived to be related to employment regulation.” Record-keeping was singled out as a particular burden in meeting necessary requirements in this area.

In its accompanying report the FPB calls this “an insupportable cost to any business that is truly concerned with maintaining real competitiveness in an increasingly competitive market.”

The FPB has suggested a “Comply As You Complete” process to reduce the administrative burden on SMEs. Dave Harrop of the FPB said if this was allowed, “Then the Government would get a lot more people complying, a lot less penalties, and so on.”

In the meantime Harrop advised small businesses to cut costs by continually “reviewing overheads.” In addition he urged his members to review their suppliers regularly and challenge the services provided by their banks.

The survey also showed the number of businesses expanding has dropped to its lowest level in three and a half years. Last quarter only 36% of enterprises did so compared with 42.5% in the previous three months.

The FPB pointed out that this could still partly be blamed on the effects of foot-and-mouth, and not anything more dramatic. More businesses have remained static, rather than actually experiencing a decline in demand.

For a copy of this report, priced at £15, contact the Forum of Private Business, on 01565-634467.

With thanks to Lloyds TSB Success4Business.

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Red Tape

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