The 30 worst threats to small firms

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Prime Minister David Cameron has today welcomed radical business-led proposals to cut back EU regulation and to unleash the potential of the EU single market, helping European businesses to thrive in the global race.

Thirty recommendations, drawn up by a taskforce comprising 6 heavy-hitters from the UK business community appointed by the Prime Minister, were presented to Cabinet this morning. They have consulted over 100 business voices across Europe and drawn on over 250 ideas for EU reforms.

The taskforce’s report, ‘Cut EU red tape’, sets out how the EU could promote enterprise and boost growth by sweeping away poorly understood and burdensome rules and preventing similarly pointless legislation in the future.

Welcoming the report, Prime Minister David Cameron said: “It’s vital that business can take full advantage of the EU´s single market. But all too often EU rules are a handicap for firms, hampering their efforts to succeed in the global race. Business people, particularly owners of small firms, are forced to spend too much time complying with pointless, burdensome and costly regulations and that means less time developing a new product, winning contracts or hiring young recruits. I’m determined to change that and to get the EU working for business, not against it. That’s why I got this Taskforce together, so we could establish from business what they really need. This report makes clear that there are lots of simple and practical ways to cut EU red tape and save businesses across Europe tens of billions of euros.

We must now persuade our European partners and the European Commission to listen to business and to move faster to reform the way Europe regulates. At next week’s European Council, I’ll be calling for a clear commitment to sweep away unnecessary bureaucratic barriers and to unleash private sector growth – helping to secure the economic recovery for all.”

The group focused on barriers to growth in 5 areas of business activity – from starting out, to exporting, to expanding, to developing new products, to overall competitiveness.

Proposals to cut EU red tape include:

  • scrapping EU-wide requirements for small businesses in low-risk sectors to keep written health and safety risk assessments. These record-keeping requirements cost businesses time and money. This would benefit at least 220,000 UK small businesses and save businesses across the EU an estimated €2.7 billion
  • reforming employment law where it prevents firms from creating jobs, and abandoning plans to introduce complex new rules on employee consultation and subcontracting
  • exempting micro-enterprises from all new employment law proposals where possible
  • abandoning plans to force small businesses such as one-man gardening firms and carpenters to pay fees to register to collect and transport waste, even when the materials involved are harmless and the quantities small. Abolishing these rules could benefit 460,000 small businesses in the UK and many more across Europe
  • taking urgent action to simplify costly and complex chemicals regulation, which threatens the competiveness of hundreds of small firms
  • boosting e-commerce, including by simplifying labelling requirements and improving standards for cross-border parcel delivery

Further proposals for EU measures to support growth include:

  • rapid agreement of faster approval processes for the pharmaceuticals industry through the new clinical trials regulation
  • fast-tracking measures to set a maximum cap on the fees that could be applied to card, internet and mobile payments, thus reducing costs for retailers and SME´s and through them for consumers, providing a clear, comprehensive framework to cover card, internet and mobile payments

The report also proposes a new set of ‘Compete’ principles to ensure that all new EU legislation is rigorously assessed to ensure that it is pro-growth. This would include not accepting any new regulation unless cuts in costs to business of equivalent or greater value can be implemented, as pioneered by the UK government’s ‘One-in, One-out’ and ‘One-in, Two-out’ rules.

The work of the taskforce will inform the government’s work to reform the EU to make it more competitive. It will also help shape longer-term thinking about the impact of EU regulation on growth in the UK.

However, not everyone agreed with the findings of the report. Richard Jones, head of policy and public affairs at the Institution of Occupational Safety and Health (IOSH), said: “It’s important to remember that health and safety failures in the UK cost society a staggering £13.4 billion per year, double this once you take into account the cost of occupational cancers and property damage.”

In this latest report, we’re concerned that once again health and safety is misunderstood and wrongly labelled as a hindrance to business – whereas research shows that positive feelings about work are linked with higher productivity, profitability and worker and customer loyalty.”

The report fails to make clear that small firms in the UK, employing fewer than five employees, are already exempted from keeping written risk assessments, said Mr Jones.

“We would argue that what small firms actually need is more help from Government, for example more promotion of all the free tools, welcomed by SMEs, which help make risk assessments easier,” he added.
“In terms of economics, we understand that at least one European employer body (UEAPME), while supporting simplification, has opposed general exemption from health and safety laws for small firms because of fear it would create a two-tier system in the internal market and be detrimental to their members.”

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