Red tape blitz must free firms from bureaucracy, says FPB

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The Forum of Private Business is cautiously welcoming another government drive to ease the burden of red tape on small firms – providing it actually frees employers from costly bureaucracy.

According to a statement, which marked one of the new Business Minister Michael Fallon’s first activities since being appointed to the post in last week’s reshuffle, shops, offices, pubs and clubs will no longer face burdensome health and safety inspections and over 3,000 regulations will be scrapped or overhauled.

From April 2013, the Government plans to introduce binding new rules on both the Health and Safety Executive and on local authorities in order to exempt hundreds of thousands of businesses from inspections – which will then only take place for businesses in higher risk sectors such as construction or for firms which have experienced a health and safety incident or those with or a track record of poor performances.

In addition, the Government is legislating to ensure that businesses will only be held liable for civil damages in health and safety cases if they can be shown to have acted negligently, rather than the present system where businesses can automatically be liable for damages even if they were not actually negligent.

The Forum is, in principle, welcoming reducing regulations to allow small firms to flourish – but is pointing to several similar red tape busting initiatives unveiled over the past few years that have not worked.

“I hope that this latest scheme will actually reduce the bureaucratic burdens to running a business and not simply be more hot air while small business owners are left to foot the bill,” said the Forum’s Senior Policy Adviser, Alex Jackman.

“If it brings about a true risk-based culture to workplace health and safety law, and removes the less common sense elements that currently face business owners every day, then it is very welcome indeed.

“However, there is a history here. We have had departmental ‘regulatory budgets’ that were dropped almost as quickly as they had been embraced, the promise of a ‘bonfire’ of regulations following the Löfstedt Review into health and safety, and more recently a one-in, one-out initiative which, despite its reported success, neglects to consider that not all regulations have an equal impact on businesses or the fact that almost all employment law comes from the EU and can therefore not simply be repealed at will.

“We have seen few genuine signs on the ground to indicate that bureaucracy is becoming less of a practical problem for small firms.”

Despite numerous initiatives to reduce red tape going back several years, Forum research has shown that bureaucracy is still a major impediment to small business success.

Research carried out by the Forum of Private Business last year revealed that small firms are spending more time and money on complying with regulations – a combined £16.8bn per year to be exact – despite the Government’s legislation-busting initiatives to date.

In all, 84% of Forum members reported an increase in time spent complying with legislation since 2009, when the not-for-profit organisation’s previous cost of compliance research took place.

According to the survey administering health and safety legislation was the third-highest bureaucratic headache facing UK entrepreneurs, costing them a total of £3.8bn per year, only beaten by employment law (£4.2bn) and tax (£5.1bn).

The Government is also examining approximately 6,500 Regulations as part of its Red Tape Challenge process, has committed to abolishing or substantially reducing at least 3,000 of these and that it will complete the identification of the Regulations to be scrapped or overhauled by December 2013.

Mr Jackman added:

“While this is clearly a good thing there are also policies announced recently that seem to fly in the face of the Government’s de-regulatory agenda, for example the ‘fee for Intervention’ proposals, set to come into force October 2012, which would force business to pay for their own inspections and could create a culture of inconsistency and cost recovery rather than proportionality and fairness.

“It is very important to iron out these inconsistencies so that this latest attempt to remove the regulatory barriers to success created by red tape can stand the best chance of working.”

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