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South West firms are still waiting for red tape bonfire, according to Bishop Fleming survey
Businesses in the South West have issued a damning verdict on Gordon Brown’s promise to reduce “red tape” – but have no confidence in any other leading politician making a significant impact
More than two years ago, the then Chancellor promised to light a “bonfire of bureaucracy” which he claimed would free businesses of much of the burden of regulation, and allow them to spend more time on their core operations.
But the latest red tape survey from Top 50 accountants and business advisers Bishop Fleming, reveals that a large majority of firms believe that the regulatory burden has increased since Mr Brown’s pledge.
And only a tiny number of businesses believe the situation will improve under the new Prime Minster’s replacement as Chancellor, Alistair Darling.
The findings emerge from a survey of almost 500 companies, tracking the amount of time, effort and money being used by owner-managed businesses to comply with officialdom.
Matthew Lee, Managing Partner at Bishop Fleming, said: ”There have been some positive signs in our latest survey but it is worrying that businesses still do not appear to hold out much hope of the red tape burden being reduced in the foreseeable future, regardless of which political party is in power.
“Recent research has reaffirmed that employment law, for example, continues to prove a disincentive to the recruitment of new staff. Meanwhile to take another example, the number of pages in Britain’s best-known tax guide has increased 40 per cent since 2001. Due to the increasing complexity of UK tax law, Tolley’s Yellow Tax Handbook now has almost 10,000 pages and runs to four volumes.”
Not one of the businesses who took part in Bishop Fleming’s latest twice-a-year survey of red tape said they believed Gordon Brown has succeeded in delivering the “Red Tape Bonfire” promised in his 2005 Budget. Just under a third – 32 per cent – said there had been no noticeable difference since then while 68 per cent believe the level of regulation had actually increased.
Likewise, only 4 per cent of firms believe Alistair Darling will finally succeed in reducing red tape on businesses. Some 21 per cent do not think either Mr Darling or a Conservative Chancellor will make a real impact, although 25 per cent think a Tory government would herald a change for the better.
But Mr Lee said the most significant finding was that exactly half of the businesses taking part in the latest survey had no faith in any of the main political parties to remedy the excessive burden of regulation.
“It is telling that a full 50 per cent of businesses cannot see any of the main party leaders – whether Gordon Brown, David Cameron or Menzies Campbell - making a tangible difference in this area,” he said.
“While it is encouraging that the numbers who believe regulation has increased in the past two-and-a-half years has fallen 13 per cent on six months ago, the figure still represents more than two-thirds of the total in our survey.”
There is also some good news in terms of the amount of money our businesses are spending on complying with regulation. Six months ago, some 6 per cent of firms said they were spending more than £100,000 a year on compliance, but that figure has fallen to zero in the current survey.
However, 11 per cent of firms say red tape is costing them up to £100,000 and the same figure puts the cost at up to £50,000. The comparable figures six months ago were 3 per cent and zero respectively.
While the majority – 52 per cent – of businesses say red tape takes up between 5 and 10 per cent of their time, not one of our survey respondents says they are spending less time on regulation compared with a year ago. Some 43 per cent said the amount of time was broadly the same, and the number who responded “significantly more” than 12 months ago actually fell, from 68 per cent to 57 per cent.
Meanwhile the major problem area for business remains employment, which accounts for 43 per cent of the concern, but payroll issues also remain prominent, with 29 per cent citing this area as their major worry, up from 19 per cent last time.
Matthew Lee commented: “Although the figure is falling, it is significant that rules surrounding employment continue to be the major concern for owner-managed businesses. Clearly, we can only hope that Mr Brown’s successor gives employers some respite from the stream of employment regulations we have seen in recent years.
“Our survey clearly shows that legislation in the areas of employment, payroll and property are the ones our businesses would most like to see abolished or simplified.”
In line with previous surveys, the vast majority of firms continue to rely on trade, professional association or professional advisers for information on new legislation affecting their business – with a significant number feeling that they are being left to find out for themselves.
Some 14 per cent say their principal source of information are government departments or regional agencies, but this figure is far outstripped by those who have to rely on professional advisers or else are left to find out for themselves (both 29 per cent).
There remains a belief that the British government subjects businesses to more red tape than our competitor countries – a view held by 78 per cent of survey respondents. Meanwhile some 16 per cent think the UK’s red tape burden is broadly the same as our competitors, while 6 per cent believe it is smaller.
“While our government is fond of holding the UK up as an example of a free and dynamic business environment, in direct comparison to our European competitors, owner-managers in the South West of England clearly take a different view,” said Matthew Lee.
“Red tape continues to be the major headache for most of our businesses, and the biggest perceived impediment to their continued success.
“We can only hope that Alistair Darling starts the process of actually putting his predecessor’s promises into action – our businesses have waited far too long already.”