Red tape crushing entrepreneurial spirit


Four out of 10 of Britain's company bosses say they would be unlikely to set up in business if the opportunity arose again, with red tape and tax their two biggest problems.

The figure, from the 2005 Sage Heartbeat Survey, is a massive rise on the 27 per cent who said the same thing in 2004 and calls into question the reality of the so-called enterprise culture supposedly gripping the UK.

Fully half of women (compared to 36 per cent of men) say they would not start a new business if the opportunity rose again.

And despite the government's claims to be tackling the UK's growing burden of regulation, it is red tape that is one of the biggest reasons for entrepreneurs turning their backs on future business opportunities.

The problems posed by red tape and growing problems of excessive taxation are confirmed by the latest NatWest Quarterly Survey of Small Businesses.

Whilst the impact of government regulations has been the number one problem for 18 months, the tax burden has now jumped into second place for the first time in 3 years, NatWest said.

Tax is a particular problem for one in five businesses in the health, education and leisure sectors and those running hotels or restaurants, possibly due to duty on alcohol.

For the smallest firms in the survey however, the lack of hours in the day to complete their required workload remains their greatest concern.

For the smallest firms, meanwhile, the lack of hours in the day to complete their required workload remains their greatest concern.

But some good news also emerged from the survey. The general economic climate, which was top ranked problem for most of 2003, is now only fifth ranked and is no longer a top problem for any industry sector. Optimism about the future is also good, with sales and employment both expected to improve in the coming months.

But the ability to recruit employees with the required skills remains a burning issue for many small businesses, particularly construction firms, where a quarter report that this is the biggest single problem facing them.

Pete Ferns, Director of NatWest Business Banking, said: "Small firms are clearly still feeling the pressure when it comes to dealing with government regulations and it is concerning to see the shift in opinion regarding the total tax burden.

"That said, with the improved economic condition and the optimism about sales and employment, the future looks bright for the UK's small business community."