The increasing burden of red tape is costing small businesses in the United Kingdom up to £14,200 each, in order to comply with legislation. Despite promises by the coalition government to cut red tape, the mountain of administration is increasing, according to a survey carried out by the Forum of Private Business.
Small businesses are inundated with complex legislation, not only from the last government but also the coalition government, regarding maternity benefits, health and safety legislation, paternity leave and taxation rules. According to the survey results, 84 percent of small businesses spend more time now dealing with regulations than they did in 2009. This increasing cost to companies is a threat to the ability of businesses to provide a much needed boost to the economy.
The cost of business opportunities that are foregone in order to deal with compliance amounts to £29.8 billion. Jane Bennett of FPB said:
“There appears to have been no improvement in the guidance, explanation and support small firms are given when new laws are introduced.”
Bennett believes that the Government’s Regulatory Policy Committee should eradicate the more burdensome and costly regulation, to allow small businesses to develop. Compliance with taxation costs small businesses an estimated £5.1 billion, with an excessive rule book. Employment law is the second offender for excessive red tape.
The amount of administration which includes completion and filing of forms, combined with adhering to legislation has resulted in the lowering of morale in many companies. Under new policy, any regulation that wasn’t deemed necessary would be scrapped.
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