Red tape burden is getting worse

Despite continued government promises to reduce the amount of time and money businesses spend on compliance, the average SME spends more time on compliance than in 2013, when a similar methodology was used to assess the market. Money spent on external consultants has dropped but salary increases have meant that the cost of compliance has continued to rise at a cost of 8.5% consistently since 2011.According to research by the Forum of Private Business, the total cost of compliance for employers with fewer than 250 people is estimated at £20.0 billion, an increase of 8.4% on 2013 which is equivalent to £14,900 per company. A 3.6% increase in the time spent on dealing with red tape tasks equates to an increased internal compliance of 12.8%, with the cost spent on external consultants dropping by 5.7% to £6.5 billion. Employment law has now become the greatest outlay for businesses in terms of compliance, despite an increase in the amount of time spent in dealing with dismissals and redundancy. Overall the cost of employment law is now £5.9 billion, with tax compliance costing £5.7 billion and health and safety requiring an outlay of £4.2 billion. Changes to flexible working – most notably shared parental leave – have been problematic for micro businesses, while businesses with more than 50 employees have seen an increase in time spent on holidays, salaries and other employment issues most notably pension auto-enrolment. The Forum’s Managing Director Ian Cass said: “Our research shows that the deregulation agenda has not been effective as the legislation removed from the statute books has been cancelled out by a small number of legal changes and a reluctance of businesses to change processes while non-compliance penalties escalate.