The UK Better Regulation Executive has just published a new report on "Lightening the load: The Regulatory Impact on UK's Smallest Businesses" which confirms many things we know about burdens on small companies. Some points developed in the report:
Businesses with fewer than 10 employees account for 96 % of UK businesses and around 7 million jobs. They are disproportionately affected by regulation, for instance SMEs may be spending almost six times more than larger ones on risk assessment. The study team interviewed 500 micro businesses, from which three key themes emerged:
Frustration - there are significant levels of frustration with the extent of regulation, the pace of regulatory flow and the expectation by government that a single business owner can cope with the cumulative array of regulations.
Complexity & Misunderstanding - a range of regulatory areas place a huge cumulative burden on micro businesses. For example, because of the complexity of employment law and the challenges of its implementation some businesses actively avoid recruiting and expanding.
Tax system – Although outside the scope of this project, the theme was often viewed as very close to regulation (both are seen as government intervention).
Two underlying issues emerged. 1/ Policy makers are still not 'thinking small first' when designing and implementing regulations. 2/ The level of managerial capability in micro businesses is a key constraint.
The Government is expected to present new measures within its better regulation policy.
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