By Daniel Hunter

Business Minister Michael Fallon will announce that the freeze exempting businesses with fewer than 10 employees from burdensome new regulations will now be extended to firms with up to 50 staff, and will continue from 2014.

Under a rigorous cross-government assessment process, firms will also be exempted from new regulations if there is any evidence that they will result in disproportionate burdens that could impede growth.

“We all want faster growth. As Britain recovers, small businesses are leading the generation of ideas, the creation of new jobs and the shift towards a balanced economy. We cannot afford to hold them back with more rules and regulations," Business Minister Michael Fallon said.

“On my watch, new regulations will now only extend to small businesses if they are essential, justified, and where disproportionate burdens are fully mitigated. And where regulation is not fit for purpose it will be reformed or binned.”

The new Small and Micro Business Assessment builds upon and strengthens the current Micro-Business Moratorium, introduced following Budget 2011.

New proposals for regulation will first undergo an initial departmental impact assessment which will be considered by the independent Regulatory Policy Committee, before facing further challenge and scrutiny by the Reducing Regulation Committee (RRC), a sub-Committee of Cabinet. If at any stage, unnecessary burdens on small businesses are identified, proposals will only be cleared if an exemption is granted to smaller businesses - or if disproportionate burdens on small businesses are fully mitigated.

Alexander Ehmann, Head of Regulatory Policy at the Institute of Directors, said: “The IoD has argued for a much tougher system of challenge when government is applying regulations to small and micro businesses. We are pleased to see this turned into reality with the introduction of the SMBA. Businesses across the country should welcome this new system, which gives the Regulatory Policy Committee much-needed powers to throw out rules which are unmanageable for the UK’s smallest businesses.”

John Allan, National Chairman, Federation of Small Businesses, said: “The burden of regulation often falls heaviest on the smallest of firms. This is why the FSB has called for the RPC to have sharper teeth to defend small and micro firms against poorly framed regulation. The small and micro business assessment should help to make future regulation more manageable and proportionate for the smallest firms, and is to be welcomed. This should mean that business owners will be able to devote time to growing their business and creating jobs rather than form filling.”

In carrying out their initial impact assessments of proposed new regulation, departments will be required to consider a wider range of mitigating strategies, for example:

* providing extra time for small businesses to comply with new regulations, meaning that changes to equipment or processes can be made at a time that makes sense for the business;

* simplifying record-keeping requirements for smaller businesses, meaning that those with less staff have to spend less time filling in forms and keeping records compared to larger business;

* tailoring advice and guidance so that smaller businesses can quickly find out what regulatory changes mean for them in practice;

* varying regulatory requirements such as inspection frequencies or licensing requirements by size of business, to ensure a proportionate regulatory approach.

This is the latest initiative in Michael Fallon’s drive to change the culture of government, so that regulation is introduced only as a last resort. Under the One-in, Two-out rule introduced in January, any new regulations must be offset by savings equal to twice the costs they will impose on business.

Yesterday (Wednesday) the Prime Minister pledged further backing for small businesses as he announced that all the recommendations made in a recent report by his Enterprise Advisor Lord Young will be accepted. The Government will make it easier for small businesses owners to access the right advice and support to help them grow.

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