The £40 billion red-tape burden

Feb 28 2005 by Brian Amble Print This Article

Regulations and red tape have cost British business almost £40 billion since the Labour government came into power, according to figures from the British Chambers of Commerce.

The BCC's annual Burdens Barometer, complied by London and Manchester Business Schools, put the cost of 46 separate pieces of legislation introduced over the past seven years at £15 billion a year.

The report estimates that the cumulative costs of new regulations introduced since 1998 is £38.9bn.

The biggest burdens have been imposed by the Working Time Directive, which has cost business more than £13 billion, and the Data Protection Act, whose cost is put at some £5 billion and vehicle excise duty regulations.

But the figures do not include the cost of the minimum wage, which will rise to £5.05 in October, and to £5.35 next year if the government is re-elected, increases which the BCC said were simply not sustainable.

The BCC's Director general David Frost said: that businesses simply cannot afford to be held back by the mounting costs of complying with regulation.

Moreover, he added, the administrative burden of red tape is five times more costly and five times more time consuming for small businesses than for large firms.

"As well as the cost, firms tell us all the time that they are spending too long dealing with paperwork and trying to get their heads around each and every regulation."

"Small firms say it takes large chunks out of their day, when they should be concentrating on running their businesses," he said.

The Federation of Small Businesses, meanwhile, called for radical measures to deliver the cultural change so that civil servants genuinely consider alternatives to regulation.

ďIt is not surprising that small business owners are cynical about promises from politicians to tackle red tape," said John Walker, FSB Policy Chairman.

"Despite hundreds of government initiatives they still spend five times as much time as large companies dealing with regulations."

And he added that there were "6,000 voters in each constituency waiting to be won over by the party that commits to radical action to tackle the cumulative impact of red tape".