Over the last three years, a succession of government ministers from the prime minister down have vowed to reduce the bureaucratic burden on small businesses. In his 2011 budget, George Osborne announced a three-year freeze on new regulations for small businesses with up to ten employees. In recent weeks, that freeze was extended to firms with up to 50 employees. Called the Small and Micro Business Assessment (SMBA), it will now continue beyond its initial end-date of March 2014.
There is a whole new machinery in Whitehall for screening new regulations. Built around an independent Regulatory Policy Committee (RPC), it takes in a Cabinet sub-committee called the ‘Reducing Regulation Committee’. As part of the SMBA, any proposed new regulation will be assessed for its impact on small business. Under an initiative introduced in January, called the ‘One-in, Two-out rule’, any new regulations must also be offset by savings equal to twice the costs they impose on businesses.
All of this comes in the wake of much trumpeted moves to exempt most small business from health and safety rules and an initiative to scrap or overhaul a further 3,000 regulations.
So is the tide of government regulation turning? Those who speak for small businesses have welcomed the latest moves. The Institute of Directors’ Alexander Ehmann said: ‘Businesses across the country should welcome this new system, which gives the RPC much needed powers to throw out rules which are unmanageable for the UK’s smallest businesses.’ But how do those on the front line feel?
Our latest ‘DNA of an entrepreneur’ study suggests this war on red tape has not gone unnoticed. This is our fifth study since 2008 and we are seeing a considerable softening of attitudes on the part of UK entrepreneurs. Since 2011, they have become much less critical of government bureaucracy – and of the country’s labour laws and tax system too. The changes in the last two areas are the most marked. The number of British respondents who consider their labour laws inflexible has fallen by nine percentage points. Those who believe the tax system is an obstacle to new business creation are down 12 percent over the last two years.
This is not to say that everything in the garden is rosy. More than half (54%) still see government bureaucracy as a major barrier to setting up their own business. And nearly half (46%) consider the national culture risk-averse. But, overall, the British came out of the study – which also covered the US, Germany, the Netherlands, France and Spain – as the least critical of their government on red tape and employment laws.
Other aspects of the study support this assertion. British entrepreneurs devote the least amount of time to dealing with government regulations of all respondents in the study. The average in the UK is 97 minutes a week, equivalent to about 84 hours a year. That is half a day less than the average across all six countries.
The change in UK attitudes in the past two years is all the more striking because it runs contrary to the trend in other countries surveyed in the study. In four of the other five (led by the Spanish), respondents have become more, not less, hostile to their bureaucracy. The message is that, while the war on red tape in the UK may not have been won, entrepreneurs appreciate the vigour with which it is now being fought.
The Hiscox DNA of an Entrepreneur report 2013 examines the attitudes and behaviours of small business owners annually. Conducted for Hiscox by The Survey Shop, the findings are based on responses from 3,000 owners or partners in businesses with fewer than 50 employees (500 respondents from each of the following countries: the UK, US, the Netherlands, Germany, France and Spain). The sample was drawn from online panels contacted between 22nd May and 2nd June 2013. For more information about the research visit www.hiscoxdnareport.com/