IoD says red tape machine is forcing companies abroad

A survey conducted by the Institute of Directors has shown that 93 per cent of UK businesses are unable to grow efficiently with some moving abroad as a consequence of excessive red tape.

The survey shows red tape has become a serious impediment to economic growth and that the burden of complying with it has become greater over recent years.

On a section regarding employment law (excluding PAYE and payroll), 93 per cent of the survey's 611 respondents thought regulatory burden had increased.

Seventy-five per cent thought the burden had got 'much heavier,' and 18 per cent thought that it had got 'a little heavier.'

Eighty-four per cent thought the burden relating to PAYE and other payroll matters had got heavier.

'There is a real danger that Britain will soon slip into a regime of excessive red tape. We are considering moving to a less onerous base.' - Survey respondent's criticism of excessive bureaucracy was united

Several respondents commented on the damaging effects on business growth and international competitiveness. A few indicated that the red tape burden was enough to persuade them to look at moving their businesses abroad.

Some of the comments from smaller companies who took part in the IoD survey, included:

'The stress the red tape has caused to many of us is unreal. As a very small business, we find it difficult to find out what affects us and what is only relevant for bigger organisations.'

'As a small business we waste far too much time and money, paying our accountant etc, to be able to make sure we are complying with all the necessary areas. This time and money would be better used in growing the business.'

'If we are to be a true market-driven economy then vast swathes of regulation should be abolished. GDP will rise, and we will be able to spend more on essential services and infrastructure.'

'There is a real danger that Britain will soon slip into a regime of excessive red tape, as seen in many other European Union countries such as Germany and France. We are considering moving to a less onerous base.'

Richard Baron, Deputy Head of the Policy Unit at the IoD, said:

"Survey after survey shows the seriousness of the problem. British business does a brilliant job, but the Government must let it get on with its work and stop distracting it with regulations. We applaud the steps the Government has taken to control the burden, but there remains much to be done. The Government should heed the comments we received. They come from the people who run businesses, and business is our only source of prosperity.

"Admittedly, the Government has taken steps to control the growth in regulation, including regulatory impact assessments which ensure that ministers are made aware of any burdens which they are imposing. The Government's regulatory reform action plan lists 260 ways in which burdens might be reduced, but there is clearly a considerable way to go."

David Hands, a DTI spokesman for the Government's Small Business Service, responded: "We welcome this survey of the views of some businesses.

"The vast majority of the costs associated with employment laws are from improved pay and conditions, and are fundamental protections and rights, not administrative costs.

"According to the Organisation for Economic Co-operation and Development (OECD), the UK has one of the most lightly regulated labour markets in the EU.

"These rights also protect the good employers - the overwhelming majority of firms in this country, from the unfair competition of the unscrupulous few; rights such as the minimum wage and the right to paid holidays.

"At the same time, the Government is committed to eliminating unnecessary regulation and minimising the burdens imposed by regulation and has taken forward a number of initiatives to achieve this goal, such as the Regulatory Reform Action Plan, setting out over 250 proposals for change. We have also boosted the role of the chairman of the Small Business Council as the voice for small firms when it comes to new regulations."

The IoD will present the survey findings to the Government as part of its wider drive to lessen the regulatory burden on British business and promote entrepreneurial freedom.

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Richard Powell, UKTECH