Employment regulations cost firms £37 billion
October 10, 2006
Despite Government pledges to reduce red tape, employment laws introduced since 1998 have cost UK businesses a total of £37 billion, according to the Confederation of British Industry (CBI), writes Tom Whitney.
The CBI’s Lightening the load report into red tape found that, since 1998, the Working Time Regulations alone have cost businesses £18 billion. While the 2004-05 rise in the minimum wage cost businesses £122 million.
"Companies don’t want to turn back the clock, they accept many of the new rights," said CBI director-general John Cridland.
"But they are being strangled by too much complex and unnecessary red tape, which is holding back the growth of the business.
"What the Government must do is simplify these regulations where they are complex, return to the key principles of the rights and remove the clutter," he added.
According to CBI research, 75 per cent of employers said the time spent administering and complying with employment regulations was damaging their business. Only two per cent of employers were confident the Government would deliver on its promises of simplification and deregulation.
"It is little wonder firms lack confidence the Government will deliver on its promises of better regulation," said Cridland.
"It has already failed the first test of its own ‘one in one out’ principle, by implementing the Work and Families Act without taking back the administration of statutory maternity pay as it proposed."
Commenting on the likely impact of the new employment laws introduced on 1 October, CBI spokesman Stephen Cooke said: "They are likely to add to the time firms have to spend dealing with regulations. The age discrimination regulations alone are going to force businesses to have to go through a lengthy review process."
Responding to the criticism that the Government is failing to reduce the burden of red tape on businesses, a Small Business Service spokesman said: "As the CBI itself says we now have an ‘appropriate and balanced framework of rights’. The World Bank last month identified the UK as the best place in Europe to do business.
"The Government has committed itself to delivering more than £1 billion in regulatory savings by 2010," he said. "We are working to ensure that we use as light a [regulatory] touch as possible. We’ve introduced impact assessments, simplified rules about how companies are formed, and restructured company law.
"We will continue to listen to business and work closely with them to simplify compliance costs," he added.
Print this page