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04 March 2016

The cost of regulation to Small Businesses

REGULATION is often considered to be a tedious topic; nevertheless it affects every single area of business, and is extensive enough to have 40% of small businesses in Northern Ireland regarding it as a barrier to growth.

The central component to our call for reform of regulation in Northern Ireland is that while businesses accept that there is a need for regulation, equally it is vital that politicians understand the potential impact it has before they implement it.

Northern Ireland has not worked out the cost of regulation to business and, due to not measuring it, it has been impossible to manage how much regulation there is for businesses.  It is due to this that FSB has been calling for the introduction of a Regulatory Budget.

One key aspect that Government need to consider is that in comparison to larger companies, SMEs have fewer resources to assist with compliance, and as a result compliance becomes relatively more expensive in terms of cost, advice and time.

To ensure the success of such a budget, there is the need to produce Regulatory Impact Assessments, with independent scrutiny, so we want to see these embedded in the process, along with the creation of a Small Business Advocate within government to ensure regulators adhere to the system and understand the need for it.

Additionally, FSB have argued that for the enforcement process be modernised, an online Regulation Hub should be established so that inspectors can check on compliance without always having to visit premises and interrupt business.

If these transformative measures are put in place, it will give the Executive another tool in the box alongside lower corporation tax to promote Northern Ireland’s reputation in becoming a great place to do business.

We welcome the measures that were announced on Friday 25th March by the Department of Enterprise, Trade and Investment on the reform of the regulatory landscape in Northern Ireland.  The measures included will progress improvement in the regulatory environment, alongside the conditions to allow SMEs to grow and prosper through a fair and competitive market place.

As the voice of small business, the message from our members was clear, that this was an issue they wanted FSB to focus our lobbying of local representatives upon.  Accordingly, as part of our manifesto for the forthcoming Northern Ireland elections, which we launched in November, FSB called for implementation of the recommendations of the Review of Business Red Tape established by then Enterprise, Trade and Investment Minister, Arlene Foster MLA.

Subsequently, FSB produced a further, more detailed paper entitled Regulatory Reform in Northern Ireland, setting out the key measures its members want to see the Executive deliver in order to make Northern Ireland a more vibrant place to do business.

Last month, First Minister Arlene Foster MLA attended the FSB Offices in Belfast to discuss the paper alongside implementation of the recommendations of the Review of Business Red Tape.

Speaking following the meeting, the First Minister said:  "I am delighted to lend my support to this initiative by the Federation of Small Businesses and I give my assurance that the Northern Ireland Executive will do all in its power to support small to medium sized businesses to thrive and grow. This will curtail the ever-rising cost of regulation on the typical businesses of Northern Ireland.

"Small to medium sized businesses are the backbone of the Northern Ireland economy and I very much welcome the Federation's contribution to improving the business environment. The Northern Ireland Executive will consider carefully the recommendations in the FSB’s Manifesto and Regulation Policy paper.

"I commend the work that organisations like FSB continue to do to promote better regulation of this vital sector."

Arlene Foster has shown a real interest in helping business, taking seriously the need to reduce red tape, and FSB welcomes her support in launching this Policy Position Paper.  In a time of reduced public spending, cutting regulation will be a resource efficient way of improving business productivity and competitiveness. 

 It is a real victory that the FSB’s calls have been heard.  However, we now need to see detailed plans from the Department so SMEs can ascertain how they can get on with growing their business, and decreasing the amount of time they spend filling out forms.

 Both FSB’s Northern Ireland Assembly Manifesto, Realising the Potential of Small Business and FSB’s Regulatory Reform in Northern Ireland Position Paper, can be accessed from the FSB website under Publications. 


First Minister

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