Red tape is still tying down UK business and holding back expansion, a new report has warned, with employment law causing firms particular problems.
The Institute of Directors said that petty rules and regulations, incompetence and misplaced 'assistance' continue to hinder business expansion, often making the difference between a business expanding and standing still.
An IoD report, based on case studies from 45 businesses, reveal the day-to-day effects of red tape and burdensome bureaucracy across all facets of business activity from employment law, to planning, to health and safety rules.
Recent developments in employment law emerge as one of the major concerns of IoD members, with maternity leave – notably the problem of recruitment of stand-ins and uncertainty over return dates - causing particular problems.
Indeed, says the report, there is a widespread perception that the more generous arrangements that have been in place since April 2003 are now undermining relations between employees and employers.
"The law is too heavily weighted towards the employee, who should be obliged to give a clear indication of when she will return to work, or at least commit herself to a period when she will not be at work," said one company boss.
"Although we recognise that employers have social responsibilities, we feel that current legislation has carried this way too far,” another said. “We are supposed to be trying to run a business here! The Government does not recognise the reality of running a small business while being obliged to comply with such demanding social legislation."
James Walsh, Head of Regulatory Affairs at the IoD said that the impact of the new maternity arrangements needed to be reviewed and that the Government should publish a revised impact assessment.
"Employment regulations crop up time and again in this red tape dossier,” he said. “The Government should consider giving business a time-out until at least 2010 before it presses ahead with further extensions of employee rights on issues such as flexible working, maternity pay and parental leave."
Away from employment law, examples of real bureaucratic insanity include a building firm ordered to install a speed hump within a housing development by the local Council, and then charged £12,000 for the Council to ensure the hump ‘complied with regulations’. The actual cost of constructing the speed hump was £3,000.
One IoD member who contributed to the report said: "Instead of common sense and good practice, we have to incur cost to set up systems and pay for services that are of no practical use save to comply with regulations."
"Being a responsible businessman and compliant just costs us more and more, while the rogues won't comply regardless of how much or little regulation," another CEO complained
James Walsh said that the case studies spoke volumes about the difficulties of doing business in Britain today.
“For many companies,” he said, “red tape makes the difference between expanding the business and standing still.
"The Government has made some encouraging noises about getting to grips with red tape, but we need practical action. These case studies show where some of the key problems lie. We look forward to working with the Government to set business free."