Businesses face £26bn red tape costs

Businesses will be faced with £26bn of red tape costs and taxes over the next four years, which could impact on their ability to create new jobs, a lobby group has warned.

According to research by the British Chambers of Commerce (BCC), new employment legislation and taxes will cost businesses £25.6bn between now and 2014, hampering their ability to take on new staff as the economy recovers.

More than half of this figure (£14bn) will come from employer National Insurance contributions, which are due to increase by 1% from April next year.

Meanwhile, planned legislative changes include this year’s Equality Bill, which will incur a one-off cost to business of £190m. The Agency Workers Directive will come into force in 2011, bringing with it an annual cost of £1.5bn, while the 2012 Pensions Reform will cost businesses £4.8bn a year, the BCC said.

The BCC is calling for a three-year moratorium on new employment laws in the UK to allow businesses to create new jobs. The organisation also wants Britain to lead the campaign for a similar reprieve across the EU.

David Frost, director general of the BCC, said: “The cost of employing people must be reduced if future governments are serious about giving businesses the freedom to create jobs and drive our economic recovery.

“What must not happen after a general election is that a new government – from whatever party – comes to power and decides to add to this already sizable burden on business.”

Official figures released tomorrow are expected to confirm that the number of unemployed people in the UK has surpassed 2.5 million.

Frost added: “From what employers tell me, they will get on with creating jobs and wealth, but they simply need government to get off their backs and let them do it. A good start would be to abolish the planned increase in National Insurance in 2011 – it’s a tax on jobs and will hinder recovery.”

© Crimson Business Ltd. 2010