FSB Cheers On Legislative And Regulatory Reform Bill

by Robin Pilgrim, LawAndTax-News.com, London

10 February 2006

The UK's Federation of Small Businesses on Wednesday expressed its support for the Legislative & Regulatory Reform Bill as it reaches its second reading in the House of Commons.

The legislation, first introduced last month, aims to make it quicker and easier to tackle unnecessary or over-complicated regulation and help bring about a risk-based approach to regulation, and would help to deliver a number of the wide-scale reforms announced in the Better Regulation Action Plan in May 2005.

It would do this primarily by creating a wider law reform power than that in the Regulatory Reform Act 2001. This will allow the Government to deliver reform of outdated or over-complicated legislation more quickly, and enable the mergers of those regulators not currently covered by separate legislation.

The proposed legislation includes:

• A new power to reform outdated, unnecessary or over-complicated legislation, enabling regulatory reform to be delivered swiftly and efficiently. This power to reform the law by order is intended to be used to implement: measures identified in departments' simplification plans (due by the end of 2006); uncontroversial Law Commission recommendations (including those reforming the common law); and structural reform of regulatory bodies, including those Hampton mergers not being taken forward through separate legislation.
• Measures to encourage a risk-based approach to regulation and inspection by requiring regulators to have regard to the independent Better Regulation Commission's five principles of good regulation. These principles will embed a risk-based and proportionate approach to better regulation, encouraging effective enforcement.
• Measures to make legislation coming from the EU easier for UK organisations to deal with. The Bill will reduce the number of pieces of domestic legislation needed to implement an EU directive in the UK, and make new obligations more transparent and easier to understand for British organisations affected by them.

The FSB revealed this week that it believed the Legislative & Regulatory Reform Bill was especially necessary, as it had surveyed its members and identified that:

• Small businesses spend an average of 28 hours per month filling in forms.
• Administrative burdens for small businesses are 5 times more costly and 5 times more time-consuming than for large firms.
• Small firms spend almost 5% of their annual turnover on compliance.
• The annual cost of payroll administration is £288 per employee in a 1-4 employee firm but only £5 in a business with over 5,000 employees.

John Walker, FSB National Policy Chairman, commented:

“Regulation is a large burden on small businesses. Our members tell us that remedying this situation must be a priority for Government and we support this Bill as part of the solution to achieve that.

“Some have expressed concern over the Bill, fearing that some necessary protections will be removed. We are not advocating irresponsible erosion of safeguards but merely asking that excessive, over the top, unnecessary measures are removed."

“Previous attempts to address the cumulative burden of red tape have not delivered on their promises. Between 1999 and 2005 there has been, on average, one new statute per month that affects business.

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