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Keep new business regulations on hold and review red tape

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There should be a freeze on new business legislation until the government has had the chance to assess the effects of red tape on smaller firms.

The call has come from the Forum of Private Businesses (FPB).

The business group wants a moratorium imposed until the next general election, allowing time for the introduction of a study which would examine the administrative impact of business regulations.

Matt Goodman, the FPB’s policy representative, argued that a hiatus in new small business laws during the months before the election would be the perfect opportunity to launch a first comprehensive regulatory review along the lines of the comprehensive spending review.

Mr Goodman said: “The government must ensure that regulations are proportionate to their aim. We want departments to get to grips with all the various aspects of the regulatory burden on businesses and a comprehensive regulatory review would provide just that sort of understanding.”

In order to make the Better Regulation Executive’s work really count, a better picture of the legislation already on the books at the moment is required, he continued. This would demonstrate how regulations interact and how they are being enforced.

Results from its quarterly survey of members found that complying with regulation costs small businesses £12 billion per year and that the time spent by each firm on compliance amounts to an average of 37 hours per month, the FPB claimed.

Micro businesses (0 to 9 employees) spend an average of 33 hours per month complying with regulations, small businesses (10 to 49 employees) 48 hours per month and medium-sized companies (50 to 249 employers) 131 hours, the FPB said.

Employment law is the costliest bureaucratic burden for small firms, amounting to £2.4 billion per year; health and safety administration costs £2.1 billion and tax £1.8 billion per year, according to the FPB’s research.

The survey also highlighted a lack of belief in the current regulatory framework, with only 5 per cent of respondents considering it beneficial to their business and just 9 per cent regarding it as fair, robust and proportionate.

Although the FPB welcomed the government’s Better Regulation agenda, it warned that more needs to be done to protect small business owners from the disproportionate effect of business laws.