SMEs - Red tape leaps 20% in two years

The regulatory burden on small business has rocketed by almost 20% in two years, according to Chantrey Vellacott figures cited in parliament last week.

Using data supplied by the firm and the English ICA, Tory MP John Bercow said government pledges to cut the red tape strangling smaller firms had proved hollow.

Introducing a Ten Minute Rule Bill to try to slash back bureaucracy, the Buckingham backbencher said Maurice Fitzpatrick, head of economics at Chantrey Vellacott, had backed employers’ organisations in alleging that ‘the burden of regulations on small business is high, continues to rise and needs to be checked or reversed’.

Bercow said English ICA figures showed the extra cost for the average small business with fewer than 100 employees as a result of government legislation introduced since 1 May 1997 is £5,000 a year – a 17% rise.

This was before taking into account the Employment Relations Bill that will give new rights to workers including union recognition, he added.

Bercow highlighted measures including tax credits for working families, child care and the disabled, as well as the move to self-assessment.

Bercow’s Bill is unlikely to become law but is aimed at prompting the government into action. It calls for an annual statement to parliament on the cost of new regulations, a six-monthly review of deregulation initiatives and a review of existing laws to root out the ‘gold-plating’ of European Union directives.

It also calls for a power to exempt small businesses from damaging regulations, a US-style ‘sunset’ system, where regulations lapse every three or five years unless specifically renewed by parliament, and a minimum of three months’ consultation and three months’ notice before new regulations take effect.