Small Businesses and Red Tape

- Wednesday, 15th November 2000

 

I recently asked a number of small businesses in my constituency about the problems facing them and I received a surprisingly strong response.

They were overwhelmingly concerned about the increased burden of regulation. Many did not just generalise, but quoted specific examples of regulations creating new problems.

Most of them welcomed Conservative proposals to set a regulatory budget. That would provide the same discipline as cash budgets do on Departments. If a Department wants to add any regulatory burdens, they must also subtract some existing burdens. Each measure will be assessed as to the cost it will impose on firms. If a Department still feels the regulations are necessary, they must prune existing regulations to reduce burdens by at least a similar amount.

Many businessmen blamed the EU for these increased regulations - and rightly so where we have given up our veto. But much of the problem is of this government?s own making. They sign up to new proposals even where there is no need and we retain the veto.

I recently appeared before the House of Lords Select Committee on Europe to discuss proposals for a European Social Agenda and then debated it in the Commons

In the last government I had no difficulty in persuading my fellow Social Security Ministers throughout Europe that we did not need to go down the route of harmonising social legislation (even though the Commission wanted to do so). Now this government is signing up to just such a process. And the programme lists no fewer than 24 proposed new directives and regulations.

When I asked Ministers which items on this list would reduce the regulatory burden on small companies, they were stumped. In fact most of them will add to the burden on British companies and centralise decision making quite unnecessarily in Brussels.

Some of the measures in this long list may be harmless or even desirable. If so, we ought to enact them as British legislation through our Westminster Parliament. Then if we subsequently find that they are a burden on business or out of tune with British circumstances we will be able to amend them.

The trouble with enacting them as European directives is that they will be virtually impossible to amend. So we cannot set regulatory budgets to cover the burdens imposed by EC directives because they are too rigid.

One interesting proposal put forward by a local businessman was for a taxpayer funded unit to advise small and medium sized firms on the meaning of the mass of legislation with which they are faced.

Even where regulations are necessary they can be bewildering. And firms who are keen to abide by the law may need help to find out how to comply with it.

One of the things which makes this constituency so vibrant and prosperous is the wealth of small and medium sized businesses. We need to nurture them ? not strangle them with red tape.

 

 

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