UK Business Barometer

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The February survey was an exceptional one in that it was longer than normal, consisting of 16 questions instead of the usual 12. Ahead of the 2004 Budget, it focused strongly on aspects of business connected with the impact of regulation on growth, innovation and productivity. Respondents were asked what their top three practical choices were for government to reduce the impact of regulation on their businesses.

The first main area of enquiry was around the problems created for businesses in complying with taxation assessment processes and with employment and Health and Safety regulations. The respondents were asked to what extent their clients experienced problems in the areas referred to in each question, while respondents to the parallel survey of businesses, the UK Business Barometer (UKBB), were asked about impacts on their own businesses. The two sets of results are presented together and show broad reinforcement with each other.

1. PAYE and its associated functions is seen by many from both Advisers and Businesses as a problematic area, with 47% of UKBAB and 37% of UKBB responding in the highest categories (4 and 5). UKBAB respondents were the more pessimistic in their responses overall to this question.

2. Advisers were more reserved than businesses about processing VAT returns, with 24% saying that they thought their clients found this unproblematic or moderately unproblematic, but 41% saying that clients found this moderately highly problematic or highly problematic. Businesses were more confident than Advisers about processing VAT returns, with 41% finding this unproblematic or moderately unproblematic, and 21% saying that VAT processing is problematic or moderately problematic.

3. When it comes to income tax self-assessment, both Advisers and Businesses are less happy overall. 67% of Advisers and 46% of Businesses think that this area is either highly or moderately highly problematic.

4. It is perhaps not altogether surprising that out of this group of five areas , employment regulations appear to cause the greatest levels of anxiety. 82% of UKBAB respondents judge that dealing with employment regulations is highly problematic or moderately highly problematic for their clients, and this corresponds to a response of 60% of from UKBB respondents

5. The last of this group focused on Health and Safety regulations. Again, both UKBAB and UKBB respondents provided most responses in the highly problematic and moderately highly problematic categories, the UKBAB with 55% and the UKBB with 51%.

6. The next group of seven questions addressed issues of impact of compliance on business innovation and growth. The first aspect was that of time taken up by compliance with regulations. Both UKBAB and UKBB respondents took similar views, with 68% of UKBAB and 62% of UKBB saying that compliance takes up too much time to a high or moderately high extent.

7. In terms of developing new markets, the response was still high but not so extreme. 32% of Advisers think that their clients are highly or moderately deterred from developing new markets because of compliance, while 39% of UKBB respondents are deterred to a similar extent.

8. Developing new products, services or processes is affected to a somewhat lesser degree by the need to comply with regulations, with 26% of Adviser respondents and 36% of Business respondents feeling that that they, or their clients, were deterred to a high or moderately high extent. 31% of UKBAB and 33% of UKBB respondents reported that they were only slightly deterred, or not at all deterred.

9. When it comes to diversion of activity from other business areas because of compliance, there was a stronger reaction than to the two preceding questions. 51% of UKBAB and 54% of UKBB believe that complying with regulations does divert them, or their clients, from other business activities , to a high or moderately high extent.

10. The next two questions looked at staffing impacts. Amongst the respondents to the two surveys, 54% of Advisers and 50% of Businesses find that they, or their clients, are highly or moderately highly deterred by regulations from recruiting more staff, while 23% of Businesses and 19% of Advisers, on behalf of their clients, say that regulation causes very little or no deterrence to recruitment of additional staff.

11. 51% of UKBAB respondents believe that regulation compliance costs their clients too much money in terms of buying in advice or extra staff, and responded in the high or moderately high categories. Respondents to the UKBB were more of this mind, with 53% finding this to a high or moderately high extent.

12. The impact on turnover from compliance with regulation produced very close results between the two surveys. 21% of UKBAB respondents felt that turnover was highly or moderately highly inhibited, 31% were in the halfway category and 38% said that turnover is only slightly or not at all affected, while UKBB responses showed 28% saying that turnover was highly or moderately highly hit, 30% took a mid-position and 37% believe that turnover is only slightly or not at all affected.

In seeking to discover what businesses and their advisers consider to be the most important ways of reducing the impact of regulation on business performance, respondents were asked to select their first second and third most preferred choices consecutively. What emerged was a small number of focused choices echoed by both groups of respondents.

These leading choices were:

improve governments understanding of the concerns of business

reduce the number of regulations

make regulations less complicated

provide more help and information to help businesses comply with regulation

13. The most preferred option for UKBAB respondents was to reduce the number of regulations. This gained the support of 28% of respondents. 26% of UKBB respondents voted for improving governments understanding of the concerns of business as their first choice.

Runners up for first choice were:

UKBAB - make regulations less complicated (24%)

UKBB - reduce the number of regulations (25%)

14. The second most preferred choice emerged as 'make regulations less complicated' for both UKBAB respondents, with 26%, and for UKBB respondents, with 25%, the remaining choices from both surveys being well behind in response terms.

15. For UKBAB respondents, two options tied for the third choice namely, 'make regulations less complicated' and 'improve governments understanding of the concerns of business, both attracting 16% responses. The third most preferred choice was again 'make regulations less complicated' for UKBB respondents, with 23%.

16. The final part of the survey looked at the impact of the new pension regulations on businesses' investment plans. Responses from both surveys were similar in that 23% of UKBAB and 22% of UKBB believe that the costs of the new regulations is highly or moderately highly inhibiting investment plans for their own businesses or those of their clients. 32% of UKBAB and 42% of UKBB respondents think that the cost is having little or no impact on investment plans.

Feedback into the February 2004 Survey BAB-18

Views expressed are those of individual panellists and may not represent those of the IBA or the University of Nottingham.

Although I have answered the questions as posed, I believe there is little chance of having the number of regulations reduced and in many cases this would not be desirable anyway. Perhaps Government could be persuaded be to more understanding of small businesses and listen less to large conglomerates who despite their small numbers weald a lot of power.

The biggest regulatory issue is the lack of awareness in the sme sector. They are also being intimidated by threats if fines for failure to comply.

My clients don't find regulations that much of a problem when contemplating expansion into new areas, they are not generally aware of many regulations until they get caught for non-compliance. If new regulations have to be introduced then it should be once a year only. Two to three times per annum is still far too much to expect small businesses to cope with. The Government/bureaucrats should try to run a small business for a month. They then would speedily reduce the volume and format of the ridiculously large amount of regulation and worse, the number of times that the regulation is amended or changed.

I think the government should do more to provide expert systems and administration systems to help companies meet obligations. eg. payroll is only complex because of tax, Ni and other thinks like sick pay tax credits etc. Why should SME's have to buy packages and other expertise to comply, it should be provided FOC.

My clients are all in the farming sector - red tape from Europe and the UK government is the bane of their lives - there can be few more regulated businesses

Many clients ignore regulations until forced to comply.

One of the key problems with this government (and this is NOT a political statement, just based on observation and painful experience) is that they continually use a sledgehammer as their preferred option for cracking even minor nuts. They impact on the entire business community to close minor loopholes used by a few. Whatever their hollow statements, their actions are anti-enterprise.

One of the key problems with this government (and this is NOT a political statement, just based on observation and painful experience) is that they continually use a sledgehammer as their preferred option for cracking even minor nuts. They impact on the entire business community to close minor loopholes used by a few. Whatever their hollow statements, their actions are anti-enterprise.

Regulations are brought in and then the Government realise that SMEs struggle to understand and comply with them. The solution seems to be to use Business Links to SELL help from consultants!!!!! A leaf could be taken out of Inland Revenue books. The Business support team provides free education for businesses. That is what is needed on a wider scale. It would help Government to achieve other ambitions as well such as workforce development. Once a good relationship is established then other services can be offered.

I am contemplating responding to the current government review into self employment but suspect it will be a waste of time. Having been self employed and an employer for part of the time since 1969, I know that the present level of regulation and interference, tinkering with tax breaks (IR35, treating closed co. divi as liable to NICs , etc, etc.) has seriously reduced the appeal of the self employment option since 1997. If the government wants Britain to be the best place in the world to start a business they just need to turn the clock back ten years in terms of regulation and go back to taxing people according to their income instead of taxing heavily and then expecting employers to return the money as "credits" to employees who a few years ago would not have paid tax in the first place.

Constant changes/increases in regulations are a drag on business growth, if for no other reason the time and expense of meeting regulations and/or getting outside expertise. In these days, all outside experts go for the ultimate in fear of being sued later.

The new pension regulations - bit vague - the new ones are not regulations yet - only proposals.