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Review recommends action on small business regulation

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An independent review of the regulations affecting small businesses has made a number of recommendations aimed at helping firms comply with the law.

The review was carried out Sarah Anderson, and its proposals have just been published.

The recommendations are designed to increase compliance with the law, boost business confidence in government advice and cut costs for small businesses.

Specifically, they include: a telephone advice service, free to SMEs for the first year, providing tailored and ‘insured advice’ to make sure they comply with employment and health and safety law; greater government responsibility for its own guidance, the removal of disclaimers and more discretion over the prosecution of ‘reasonable’ businesses; and the creation of a single access point for all government guidance.

Ms Anderson said: “Many small businesses do not use and have little confidence in guidance from government. Where there is good guidance, they donπt know where to go. Instead they choose to pay for advice, which they could get free or which might make them do more work than is necessary, to comply with the law.

“Improving the quality of, and access to, government advice is vital if we want to see better understanding of, and compliance with, the law. The vast majority of small businesses want to comply with the law. Government should give them a cost effective and efficient way for them to do so.”

Commenting on the review, David Frost, the director general of the British Chambers of Commerce (BCC), said: “It is crucial for the UK’s economic competitiveness that the regulatory burden on business is reduced. According to the BCC’s Burdens Barometer, the cumulative cost of regulation on business now stands at £66 billion.

“For too long the government has abdicated responsibility on helping firms comply with new legislation. If the recommendations of this review are implemented, it will be a significant step towards reducing the burdens on businesses, especially at a time when firms are focusing on combating the downturn.”

Katja Hall, the CBI’s director of employment policy, said: “Viewed together, the Anderson Review recommendations will significantly help employers, particularly SMEs, comply with the daunting volume of regulation business faces. They will ensure that companies receive clearer, more accessible guidance supported by tailored advice, which will reduce the burden of regulation on employers and encourage job creation when we come out of the recession.

“We congratulate Sarah Anderson. In the current difficult times, it is important that the hurdles to creating employment are reduced to a minimum. These recommendations take a worthwhile step in that direction.”

However, another leading small business organisation, while welcoming the report’s call for the government to take more responsibility for the guidance it offers on business regulation, argued that other proposed measures, including the creation of a single point of contact for all government guidance, are already provided by both private and public sector bodies.

Instead, the Forum of Private Business (FPB) said it believes the government’s focus should be on restricting the burden of unnecessary bureaucracy.

Phil Orford, the FPB’s chief executive, said: “If the government adopted this strategy, guidance relating to new and existing legislation would be simple to deliver.

“However, instead, public money will now be spent duplicating established, expert-based, reliable business support services available from the private sector, with little regard to cost or demand.”

Mr Orford added: “The problem arises at the beginning of the regulatory process and it is here that government should be focusing its efforts by reducing the burden the first place.”