Posted by

Kamala Mackinnon, Campaigns Adviser

17 May 2012

Businesses spoke of the lack of communication of new regulations, the burden of compliance and their belief that unnecessary red tape was making UK PLC uncompetitive.

Many of the smaller businesses present did not have HR departments able to deal with Directives which are sometimes complex, time consuming and unworkable. One of the key messages that came out of the seminar was the feeling that Europe is too detached from businesses on the ground. Certainly, that Commissioners such as Dr Klingbeil are making the effort to visit and hear from firms should be appreciated - putting a face to ‘Europe’ is the first step to developing greater confidence and engagement.

I also attended a seminar with Mark Prisk MP, Rebecca Harris MP and Alan Lewis, Vice Chairman of the Conservative Party, on regulation this week. Some similar concerns were raised by businesses and representative bodies – the lack of communication by government of new regulatory changes and the seemingly endless amount of paperwork needed to run a business. In particular, the effects of labour market legislation were repeatedly cited; quite simply many sole traders are put off hiring their first employee due to their perception of the burden employment regulations would place on them. Indeed, a BCC survey of 1,118 sole traders in 2011 showed that 1 in 3 with ambitions to grow said that exemptions from employment law would encourage them to take on their first member of staff. Pensions requirements, dismissal rules and sickness absence were the top three total or significant barriers names by businesspeople preventing them from hiring their first employee.

Certainly, the government has made progress in its regulatory reform agenda. Policies such as the creation of the Regulatory Policy Committee, the one-in, one-out policy for new regulatory proposals and the recently implemented changes to the tribunal system will all help to reduce the regulatory burden placed on businesses. Equally, whilst BCC has some reservations about the effectiveness of Red Tape Challenge, there have been some positive outcomes. DEFRA announced in March that simpler and smarter environment regulations will provide savings to businesses of more than £1billion over five years. 

However, more needs to be done. According to the World Economic Forum, the UK ranks 83rd out of 142 countries for the compliance burden it places on businesses and companies still tell us that they are not feeling the regulatory burden lift.  Last week’s Queen’s Speech also announced that a Children & Families Bill will form part of this Parliamentary session, which will include measures to introduce shared parental leave. This is likely to extend paternity leave and allow parents to share part of the leave that was previously allocated to the mother.

The BCC has great concerns about the complexity of agreeing this leave, as it will be the first time an employer’s relationship with their employee is contingent on a 3rd party – the employee’s partner’s employer. One employer may approve their employee’s requested pattern of shared leave while the other employer rejects it forcing a re-think for both parties. This proposals will hit business at precisely the time ministers are asking companies to create jobs and spur growth.

More changes are needed if the government is to create a really hard-hitting deregulatory package for the labour market. This includes reforming redundancy rules and introducing a no-fault dismissal route. Unnecessary red tape stifles growth and limits businesses ability to innovate and create employment – something which is needed now more than ever.