Red tape still hampering small businesses

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Red tape has long been one of small businesses’ biggest enemies; stifling growth and innovation as owners are subject to the same rules and regulations as much larger companies with bigger budgets and HR departments.

The issue is something which small business organisations have been calling on the Government to tackle for a number of years, and Whitehall responded by promising a ‘bonfire of regulations’ over a three year period from 2011.

And while in his latest update at the end of January, Prime Minister David Cameron announced that 800 regulations have already been abolished or simplified, with further plans to cut tens of thousands of pages of red tape over the coming years, a recent survey has shown that many small businesses have not seen any benefits.

In fact, more than half (52%) of businesses questioned by business information group Croner said the measures taken so far had had no impact on their company, while a further 41% said they were unclear about what impact the campaign was having.

Richard Smith, head of product and strategy at Croner, said: “There hasn’t been the bonfire of regulations that the Government promised.

“Many of the reductions are in areas that touch customers infrequently, or have been repackaged into consolidating legislation. That’s because much of the drive towards regulation is European Union (EU) driven and therefore there is very little that the UK Government can do to change those laws.”

A further study by business software company Sage also highlighted that small businesses are still feeling the effects of red tape, with almost a quarter saying they would like to see it slashed as part of this week’s Budget.

Measures taken to reduce red tape in the past three years have saved businesses over £850 million annually, according to Government figures, with key measures including stopping unnecessary health and safety inspections from low risk businesses and doubling the qualifying period for unfair dismissal.

In the coming years, businesses can also expect to save a collective £100 million annually due to environmental guidance being trimmed.

However, there is still more which can be done to help small businesses overcome the burden of red tape.

The Confederation of British Industry (CBI) and the parliamentary Public Accounts Committee have warned that the Government needs to make it simpler for small firms to compete for public sector contracts. Speaking to the Mail on Sunday, the CBI’s John Cridland said that small businesses are being “crowded out” of the public procurement process because they can’t cope with the mountains of paperwork needed to even get on the tender list. With the Government spending around £187 billion a year, making it easier for small businesses to get a piece of the action could have a significant impact.

Do you think red tape is still hampering small businesses? What areas would you target next?

Posted by the Secret Businessman