Cost of red tape reaches £16.8b despite government schemes

Red tape is costing small firms £16.8b a year, new research has found.

The Forum of Private Business (FPB) study reports that 84% of its members experienced an increase in time spent complying with regulations over the last two years suggesting the coalition's targets to cut red tape still have a long way to go.

A further two thirds (67%) of respondents said they had been forced to spend money on external consultants to help avoid legal problems.

Tax-related regulation was deemed to be the most costly area of red tape, leaving smaller employers with a bill of £5.1b per year. Employment law was second at £4.b, followed by health and safety law at £3.8b.

The cost of compliance is currently estimated at £14,200 per firm, a rise of 1% compared to 2009, but head of campaigns Jane Bennett says the increase is greater in real terms because economic activity, which drives the need for compliance, has shrunk significantly since the original survey.

Bennett said: "Despite several government initiatives - some more effective than others - it is clear that we are heading in the wrong direction as far as reducing regulation for small business owners is concerned. We simply want these measures to work properly and for the voices of the UK's business owners to be clearly heard."

The FPB represents independent businesses in every sector throughout the UK. It recently launched the Get Britain Trading campaign to highlight barriers to growth created by over-regulation.

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By Emily Manson

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