The problem of the multitude of different government regulations is now so bad that businesses often breach them simply because they don’t know which rules apply to them, according to a new report from the National Audit Office.
British companies, including umbrella companies, have an average of 60 different regulations to comply with and the different regulatory bodies fail to communicate the rules they impose effectively.
In 2005, the Better Regulation Executive was established to help reduce this regulatory burden but it is still not providing value for money, the NAO discovered. SMEs in particular lack clarity about compliance with the different regulations and many don’t know all of the rules affecting them.
The administrative burden associated with running a business is weighing some companies down. At least once a week, regulatory updates are issued so it’s hardly surprising that firms can’t keep up with the changes.
Employers are currently concerned about plans to force them to set up an employee pension scheme and some have admitted that they now only recruit temporary staff so that the regulation will not apply to them.
Small businesses spend a long time complying with legislation. One SME claimed to spend between four and six weeks per year on compliance and another said every weekend for months was spent getting to grips with all the different regulations.
To make matters worse, a report published last week warned that firms and limited company contractors face an extra £23bn in red tape over the coming four years.
The BCC has pointed out firms cannot create new jobs when threatened with a mountain of new regulations and this could derail the economic recovery.
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