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Government to slash red tape for small firms

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Firms with fewer than ten employees are to benefit from a three-year moratorium on new domestic regulations.

The moratorium will affect most regulations except those that affect public safety.

Also under the Government’s plans, which were announced by business minister, Mark Prisk at the Federation of Small Business Federation annual conference, firms with fewer than 250 workers will be exempt from rules entitling employees to the right to request time off for training.

There are plans, too, to reverse regulations that allow parents with children aged 17 the right to ask to work flexible hours.


The Government said it is committed to extending the right to request flexible working to all employees in due course, as set out in the Coalition Agreement. But the purpose for delaying the extension of flexible working is to allow businesses breathing space in the current economic climate. Flexible working is currently available for parents with children 16 and under and carers.

In an effort to give businesses a say in the process of clearing away red tape, all 22,000 regulations which affect business are to be published, and firms will be invited to identify the rules that cause the greatest compliance problems and to indicate those that they would like to remain in place.


The legislation will be grouped into themes, starting with retail. A special website will be created and businesses will be asked to tell the Government what they think of those regulations and how to improve the system.

Other measures include introducing more transparency into the Government’s ‘one-in, one-out’ rule by publishing the opinions of the Regulatory Policy Committee where they do not believe the evidence supports a new regulation, and freeing small companies from unnecessary audit fees by matching the minimum required by EU directives.

Mr Prisk said: “We are giving those affected an opportunity to tell us which rules are badly designed, or straightforwardly a bad idea.”


Business Secretary, Vince Cable added: “A moratorium for the smallest and genuine start-up companies from regulations alongside the removal of obligations for flexible working and giving time off to train will be a real boost to businesses.

“It’s not right that businesses should have to deal with years of Government intervention by abiding by arcane rules. That’s why I am asking them to help us take a comprehensive look at the stock of regulation and tell us how rules and regulations affect them.

“This is the first time such a radical look at the statute book has been taken and we’re giving you the chance to play your part. I’d encourage all businesses, large and small to grab it with both hands.”

However, the scrapping of the default retirement age will continue as planned in April, while new rights for temporary workers will be implemented as planned in October.

John Walker, the FSB’s national chairman, commented: “FSB research shows that 27 per cent of businesses said increased regulation created difficulties in expanding their business and 33 per cent said regulation is the biggest potential obstacle to growth.

“We have long been calling for a moratorium on the introduction of all new employment regulations for all businesses for at least a year, so it is welcome news that the Government is putting this in place for micro firms. For the next three years, it will give those micro firms the confidence and stability they need to employ more staff without the worry of constant changes in employment law.

“Around half of small businesses that were planning to close rated the regulatory burden as a very important factor to their decision. So the Government should now consider extending the moratorium to all small and medium sized enterprises and include all regulations due in April, if the it truly wants to create an environment for small businesses to grow and for budding entrepreneurs to set up in business.

“Small businesses are flexible by their very nature – 27 per cent of small firms offer flexible working to all their staff. The FSB believes that it is common sense that the Government has axed plans to extend flexible working to parents with children aged 17.”