By Alan Thomas, small business expert at Hiscox
Ever since the end of the First World War, British politicians have found it profitable to promise to cut government regulations for small businesses.
Not long ago, the Business Secretary Vince Cable announced plans to exempt hundreds of thousands of businesses from health and safety inspections. More than 3,000 regulations will be scrapped or overhauled. Echoing many of his predecessors over the last 90 years, Dr Cable said “in these tough times, businesses need to focus all their energies on creating jobs and growth, not being tied up in unnecessary red tape."
Business organisations welcomed his move. The Confederation of British Industry said that deregulation would free up time and money, allowing companies to focus on expansion. British Chambers of Commerce stated that "cutting back forms of red tape that do not serve the public interest is a very positive move for the business environment". Although there were protests from Britain’s trade unions, significantly the official opposition declined to join them. It has become a political truism that British businesses, especially small ones, need to be set free from over-intrusive regulation.
But how burdened are they? Our latest “DNA of an entrepreneur” study suggests that Britain’s SMEs spend less time on bureaucracy than some of their major competitors.
Since 2008, we have surveyed SMEs in countries such as the UK, the USA, the Netherlands, Germany, Spain and France. This year’s study asked them to estimate the time they spent each week dealing with government regulation. The British produced the lowest average figure — 96 minutes — compared to 160 minutes for Germany, the country with the highest average, and 154 minutes for the next country, Spain. Across all six countries, the average was 125 minutes.
The figure from British SMEs suggests that they are spending 4.1% of their average working week on government regulation — the lowest proportion of any country. The Germans had to put in 5.6% of their time and the Spaniards 5.7%: across all six countries the proportion was 4.9%. This helped to ensure that, as in last year’s study, the British had the shortest average working week — 38.5 hours, compared to 47.1 hours for Germany, the country with the longest hours and nearly four hours less than the average of 42.8 hours for all six countries.
Although the British reported themselves less burdened by bureaucracy than the other respondents they still saw reason to grumble about it. Across all six countries, 67% of respondents agreed that bureaucracy was a serious problem for people wanting to start a business, against 18 per cent who disagreed. In Britain the comparable figures were 61% and 16%. The Americans were the least complaining: 55% agreed against 27% who disagreed and the Spanish were the most critical: 79% against 13% who disagreed.
It will be interesting to see if Dr Cable’s initiative shifts the British figures in next year’s study. But it may be that the perception of being burdened by bureaucracy is not always influenced by actual experience.
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