Posted by

Kamala Mackinnon, Campaigns Adviser

17 Jul 2012

Business has a role to play in encouraging staff to save for the future. The BCC supports the principle, which is at the heart of the 2012 reforms. However, when these reforms were first envisaged in 2005, no one imagined that in 2012 the economy would be struggling to grow, and a crisis in the Eurozone would be making our economic outlook increasingly uncertain. We can ill afford to add costly regulation given the economic environment. Auto-enrolment adds the obvious costs of employers’ contributions to pensions, but there are more worryingly other costs associated with the reforms. High indirect costs (the administration, the complexity of payroll, new starter procedures and external advice) will put a real burden on UK PLC, particularly small businesses, where the marginal cost per employee will be higher. The burden will be significantly increased if awareness does not rise amongst smaller firms. The 2012 reforms risk being so complex that a large number of businesses may accidentally not comply with the regulations, either in full or in part.

There were very few other measures announced today which would affect businesses significantly in cost terms, and in many ways this SNR would have done the government proud - were it not for the cost of the pensions regulations being introduced. In particular, new changes announced around audit exemptions will be welcomed as they will save businesses up to £390m a year, and the government’s efforts to reduce the regulatory burden on businesses have not gone unnoticed.

The government has acknowledged red tape as a key business issue and there have certainly been some positive deregulatory developments in recent years. Business will always welcome the government’s aim to reduce unnecessary regulatory burdens; however more needs to be done if we are to see a reduction in the complexity and quantity of existing burdens on small and medium-sized enterprises. Given the uncertain global climate, UK companies are operating in a challenging position. It is therefore essential that regulatory policies are effectively scrutinised.