British businesses have shown the country’s regulatory regime a red card, with 96 per cent of respondents to an official government survey saying regulators were “creating unnecessary problems” for their industries.
Another 89 percent said laws and regulations, which are often inconsistently applied and poorly scrutinized, impose “unreasonable costs”. Even more than 271 respondents to the Department of Business and Trade’s detailed Business Openings questionnaire said that the way regulations are put in place limits their ability to grow, develop new products and services, and be more efficient.
For SME owners, the department summary will read like a diary of their working week. The response showed that “the UK’s regulatory system is often complex, inconsistent, slow and burdensome, with disproportionate impacts on small and medium-sized businesses”, it said, adding that the responses provided a “rich evidence base” for its efforts to “reduce administrative burdens”.
A repeat complaint is a repeat. Businesses often “submit the same information to multiple regulators” who seem unable to co-ordinate their activities, a problem compounded by “different responsibilities, inconsistent guidance, and divergence between UK and international (mainly EU) standards”.
A regulation often cited as hindering growth is the extended producer responsibility (EPR) program for packaging, which came into effect in April last year and requires brands to pay additional costs for household waste management. Its reporting requirements have been cited as “among the most resource-intensive requirements” faced by businesses.
Firms also flag environmental permits, chemical controls, financial reporting and the administrative burden of complying with IR35 contractor tax rules.
The silence of the regulators is another sore point. Businesses say they receive limited updates once applications have been submitted, leaving them in the dark about completion dates, with delays ranging from “weeks to years” that could “result in significant costs”.
Their prescriptions are clear enough: “simplification and simplification of regulatory processes”, and “predictability, timely, and transparent; clear, consistent legal guidance; digitization, including single portals, adoption of digital records, and collaboration between organizations; limited and risk-based regulation, especially for SMEs”.
The findings are in line with research published in March by the Federation of Small Businesses, which put the annual cost of compliance for SMEs at £36 billion and 379 million hours of their time.
The government has pledged to reduce that burden by 25 per cent by the end of this parliament, a target which is in line with the chancellor’s £6 billion pledge to corporate governance. The FSB welcomed the move but warned that “previous governments have not lived up to their lofty promises to prune overly burdensome laws with concrete action”.
Tina McKenzie, FSB policy chair and co-chair of the department’s small business task force, said: “It’s no surprise that the questionnaire found so much dissatisfaction with how the regulatory framework is working – or not – for businesses.
“Regulatory reform is desperately needed, with the recent decision to force all companies regardless of size to file profit and loss accounts with Companies House just one example of the additional regulatory burden that will add pressure and cost to many private companies.”
He said progress against the 25 percent target was “slow”, but should be achieved.
Kate Shoesmith, director of policy at the British Chambers of Commerce, who also sits on the working group, said the lack of joint thinking between government agencies is a particular problem, with the same information being requested in different ways, many times.
“It can feel like ticking a box for the sake of ticking,” she said. “The new prime minister will no doubt have new ideas. But policy changes must be seen in a growth-promoting way. Will they reduce, rather than add to, the burden that has been placed on business by the actions of successive governments?”
