Regulation costs individual smaller businesses £33,000 on average each year. This is an aggregate cost to the small business community in the UK of approximately £183 billion per annum. Regulation increases the cost of doing business, creates barriers to business activity and distorts business decision making and consequently resource allocation and results in lower profitability, reduced innovation, slower workforce growth and higher prices. The costings do no take account of the in-direct costs that smaller firms suffer as a result of regulations, which if estimated, would further increase the negative impact of regulation on smaller businesses.
Some regulation is essential to a functioning economy and a successful small business community. For example, contract, intellectual property and insolvency laws all help commerce function through reducing uncertainties and risks. Although such regulation needs to be high quality in order maximise the benefits of such laws for smaller businesses. Often it is not of the optimum quality.
We believe reducing the quantity of regulation, improving the quality of necessary regulations and making implementation and enforcement more sensitive to the circumstances of smaller businesses would reduce the cost of doing business, minimise the negative impacts that regulation has on smaller firms and improve the incentives for business growth and lead to a more successful small business community in the UK.
Smaller businesses want:
Small businesses want these goals to be achieved by simplifying the existing regulatory landscape, greater use of partial exemptions for smaller firms, greater discretion over meeting regulatory outcomes, better support through clearer and simpler guidance, fewer recording and reporting requirements, more tailored language and formats and in some cases complete exemptions from regulatory requirements, among other reforms. In addition there needs to be a significant change in approach to the implementation and enforcement of regulation by regulators. They should look to work with and support smaller enterprises in their regulatory compliance.
In 2013 we successfully lobbied the Scottish Government for a more considered and business-friendly approach to regulation.
In direct response to our campaigning, Holyrood passed the Regulatory Reform Bill.
The Bill, which includes a new economic growth duty for regulators to adhere to, will reduce inconsistencies and help ensure local authorities regulate with small businesses in mind.
The cost of regulation to Small Businesses
Red tape review welcome but must include tax simplification, say FSB
Local regulation shouldn’t mean a postcode lottery for small firms
The smallest firms need protected too!