Red tape the biggest obstacle to expansion

Jun 13 2005 by Brian Amble Print This Article

Regulation and red tape is still viewed by British employers across the country as the number one factor inhibiting their development.

A survey of 3000 businesses by the Confederation of British Industry (CBI) and the Regional Development Agencies (RDAs) found that firms in every part of Britain saw red tape as more of a dampener on growth than the availability of finance or inadequate government support.

Terry Hodgkinson, Yorkshire Forward Chairman and lead spokesman for the RDAs on CBI issues said that many firms in his region were concerned about red tape and that employers had consistently made Government aware of this.

"We believe that the new approach to business regulation being proposed by the Government has the potential to break into this problem and Regional Development Agencies across the country will continue to work to reduce the burden of red tape on business," he said.

The survey also found that profit margins fell last year across the regions, except in London where they were broadly unchanged. Scotland and the South East saw the most significant declines in profitability.

This was despite domestic orders, output and employment increasing at a reasonable pace in most regions.

Businesses also achieved a modest increase in selling prices, but only a small minority were able to pass on cost increases in full - explaining the decline in profit margins.

Looking ahead, all regions of Great Britain expect some improvement in the overall business situation during the next six months. But this does not necessarily translate into more jobs; while London has above-average expectations of increased employment, Scotland expect net job cuts over the coming year, driven in part by an expectation of declining export orders.

The survey also looked at skill levels across the UK and revealed that management skills were the most significant area where skills improvements would benefit business performance (cited by 40 per cent of all companies), followed by marketing skills (36 per cent) and selling skills (31 per cent).

Seventy per cent of companies said they had funded training for employees over the past 12 months, while 46 per cent had provided work experience or apprenticeships.

According to Doug Godden, CBI Head of Economic Analysis, the overall outlook for Great Britain remains one of economic growth.

But he warned: "the pattern of growth has been uneven and is likely to remain so, with retailers and manufacturers suffering.

"Clear risks remain, not least from the impact of high oil prices on world demand, and of the weak housing market on consumer spending. Profit margins are likely to remain under pressure."