The British Chamber of Commerce recently called on the coalition to encourage sole traders to grow by making them exempt from certain legislation.
Employment legislation has been identified as one of the main obstacles to sole trader growth, according to research from the BCC. Sole traders are deterred from hiring staff or contracting umbrella company contractors because of dismissal rules, pension requirements and sickness absence.
The BCC pointed out that the number of sole traders has continued to grow in the past seven years and although not all 3.6 million of them want to expand, some do. The Chamber’s director of policy, Dr Adam Marshall, said that if the government wants to increase employment, it has to make changes to encourage sole traders to expand.
It’s not only sole traders who feel burdened down by the pressures of bureaucracy. Basepoint surveyed its licensees in the South and the Midlands recently and 42% said the government should be doing more to reduce the red tape that holds smaller firms back from expanding.
The decision to increase National Insurance has not been popular amongst small business owners and some respondents felt a 12 month NI holiday should be granted to small firms to encourage them to hire more staff.
The increase in holiday entitlement was also flagged as a deterrent, with one respondent saying that paying employees for being absent for six weeks was too expensive.
The executive director of Basepoint Centres, Brian Andrews, said the economy is still stuttering towards recovery and this is a crucial time for small firms. The government has to understand that small businesses will not be able to grow unless outdated and unnecessary red tape is removed.
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