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UK small firms deny that they are hampered by red tape

13 February 2018

UK small firms deny that they are hampered by red tapeA new study refutes the claim that business regulations are burdensome for British small businesses.

AXA Insurance interviewed 800 small firms and found that 93% said regulation was neither burdensome nor costly for the day-to-day running of their businesses.

The findings show that the number of respondents who found regulations beneficial to their businesses far outweighed those who objected to them. In addition, 91% of small firms said that employment laws did not influence staffing decisions. Only 15% of employers said they had to spend too much time or money on compliance.

"We have run research for years, and we have never found justification for the claim that red tape strangles small firms," said Gareth Howell, managing director, AXA Insurance. "It's often the big business owners who resent regulation most, not their smaller brethren, who just get on with it."

The small businesses polled said the pieces of legislation most relevant to them are:

  • Health and Safety at Work Act (23%);
  • Data Protection Act (21%);
  • Product Safety Regulations (9%);
  • Employment laws (9%);
  • Consumer Rights Act (9%).

However, the report concludes that some SMEs don't realise that these regulations apply to them, with sole traders and micro-businesses least aware of their legal obligations. Only 40% could recognise common pieces of legislation that apply to their business area. That figure rose to 61% for businesses with one to five employees and to 94% for businesses with five to ten employees.

Being "too small" or believing that "these regulations apply to big businesses" are common assumptions. Howell said: "I'd conclude that businesses are not crying out for cuts in red tape in the UK, they just require clearer information on what does and doesn't apply to them, and better support on day-to-day implementation."

The study also uncovered some worrying concerns about equality and discrimination laws. While most small business employers said they are committed to equal employment opportunities, a sizeable minority (14%) said they would not hire a woman or someone from an ethnic minority for fear of tribunals or accusations about workplace discrimination. This rose to 18% among male business owners.

AXA's Gareth Howell said: "If this figure is representative of the overall population, it means that almost 700,000 business owners feel discouraged from hiring equally. It's based on misconceptions: tribunals brought against employers on grounds of workplace discrimination are rare, but they get a lot of attention. There is a need to redress the balance through positive stories about workplace diversity and factual guidance for small employers."

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