Red tape on the rise

Red tape is still at the forefront of business concerns as Peter Jackson discovers.

Governments, it seems, are constantly promising to cut the amount of red tape which binds businesses, but for business people it remains a top concern.

The Tees Valley Committee of the Institute of Directors, IoD, and Waltons Clark Whitehill recently helped highlight these red tape troubles to the town’s MP and Shadow Minister for Competitiveness and Enterprise Iain Wright.

In front of an audience of more than 40 members of the Tees Valley business community at the new offices of the Hartlepool-based chartered accountants and business advisers, the MP was part of a panel to which three pieces of legislation were pitched, with the aim of consigning them to the mythical Room 101.

Joining Mr Wright on the panel were Waltons Clark Whitehill Partner Derek Boyd and Jamie Brown, a partner at Stockton-based commercial law firm Endeavour Partnership.

After hearing the three pitches, the audience were asked to vote one piece of legislation into Room 101, and narrowly opted to consign thousands of pages of tax code legislation to history, following a pitch by John Megson, of Hartlepool Business Forum and the HMS Trincomalee Trust.

Mr Megson had competed against Gavin Wise, of Wise Financial Consulting, who spoke out against the pension reforms, and against insolvency specialist John White, of Taylor Rowlands, who argued for the ancient law of landlords’ distraint to be shelved.

Whether or not Mr Wright took on board the concerns of the IOD members, he is not in government and in no position to cut red tape. Even if he were, governments of any colour have a poor record in reducing regulation, writing new rules faster than they tear up the old ones.

The North East Chamber of Commerce, for example, has been campaigning for a simplification of the planning laws.

NECC director of policy, Ross Smith, says: “Radical change to the planning system could kick-start real development, create jobs and the economic growth that goes alongside it. It also has potential to provide stimulus to the construction industry. By removing red tape and bureaucracy that surround planning applications many people and companies will escape months of form-filling, expense, and potentially a lengthy decision-making process.

IoD research has revealed that the amount of time company directors spend each week doing paperwork related to regulatory compliance has gone up from 13 hours a month in 2009 to 17 hours a month in 2010. A typical director would have to work continuously from January 1 until February 9 to complete their annual administrative burden. February 10 is Regulation Freedom Day for company directors.

The associated costs of red tape are startling. Directors say that on average they spend 17 hours a month on the paperwork associated with government regulation.

The cost of directors undertaking these 17 hours, when annualised across the number of private enterprises in the UK, has been calculated at £36.8bn in 2010, up from £28.2bn in 2009.

Topping the IoD’s list of concerns are maternity leave and the amount of notice employees should give of their intention to return to work; the agency workers directive; auto enrolment pensions and health and safety.

Miles Templeman, former director general of the IoD, has said: “Instead of building up their businesses and creating new jobs, the UK’s entrepreneurs are spending over a month each year handling Government red tape. Some of this burden has to be lifted if we want the private sector to grow and create jobs to offset redundancies in the public sector.

“Significant deregulation of employment law must be on the agenda. We know this is contentious, but we’ve reached a point where excessive red tape is stopping many micro-businesses from taking on their first employee. This doesn’t benefit anyone.”