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Fears over red tape ‘prevent businesses expanding’

Many firms are choosing not to expand because of concerns over complex regulations, according to research by the Federation of Small Businesses (FSB).

A survey of its members showed that 27% of those who wanted to expand did not go ahead because they are afraid of tackling the regulations involved. The same survey revealed that half of the businesses planning to downsize or close said their decision was strongly influenced by regulatory burdens.

The FSB has called on the Government to put a freeze on all new regulations - a move it estimates would help to create 258,000 jobs and prevent a further 55,000 from being lost.

The Government has given no indication that it is prepared to introduce a freeze although it says it has saved businesses £3bn a year through its programme to simplify regulations and remove unnecessary paperwork.

In spite of this, small businesses are spending a total of £12bn a year on complying with various regulations, according to research by the Forum of Private Business (FPB).

A recent FPB survey of its members shows that employers in small to medium sized firms are spending an average of 37 hours a month on compliance.

Employment law provides the greatest challenge and costs small businesses £2.4bn a year dealing with issues such as dismissals and redundancy, discipline, absence controls and management, parental leave and holidays.

Health and safety administration costs £1.2bn and small firms also find themselves bogged down in tax administration, building and property regulations, and equality and diversity.

The costs seem enormous when quoted in this way and it's not surprising that many firms will try to save money by dealing with these issues in-house. However, it is usually more cost-effective and safer to get good legal advice to ensure that compliance matters are dealt with quickly and correctly.

This can save money in the long term and reduce the risk of creating problems unnecessarily - particularly in the area of employment law where failure to follow the correct procedures can lead to costly tribunal claims.

Please contact Sess Sigre if you would like more information about compliance with the various regulations affecting business.