The Better Regulation Task Force says that small firms are disadvantaged compared to larger businesses when complying with Government regulation.
Their interim report on Small Firms and Regulation suggests there is evidence that firms are deliberately restricting growth in order to stay below the threshold at which regulations apply.
Task Force Chairman Lord Haskins said: “Our research suggests that regulations bite at a particularly crucial stage of a firm’s growth. During the initial start-up stage, businesses are more concerned with survival than regulation. But as they develop and take on employees they breach regulatory exemption thresholds and come to their attention of enforcers, but are still too small to justify employing a regulatory expert.”
The task force, an independent advisory body appointed in September 1997, has recommended that the Government’s Small Business Service should give higher priority to supporting firms through this growth barrier. It also recommends that trade associations provide support, and small businesses be given incentives to join, and that small businesses be offered compensation when asked to comply with new or changed regulation which creates additional workload.
However the report urges against the blanket extension of exemptions to balance small firms competitive disadvantage, saying this could allow firms to exploit both employees and customers.
Copies of the Better Regulation principles leaflet and Task Force reviews are available from the Better Regulation Task Force, Room 67a/3, Horse Guards Road, London SW1P 3AL. Tel: 0171 270 6601.