Red tape 'sets back businesses £80bn a year'

Government regulation costs business more than £80 billion a year, according to a report today.

The Institute of Directors urged the Government to "step out of the way" of industry, warning that a culture change was needed to release firms from being "over burdened".

The group, which measured the cost of regulation based on the experiences of business owners, said the cost of red tape was equivalent to 5.7% of the UK's economic output and was causing directors to put aside more than a month a year, or 13 hours a month, to deal with it.

The burden on workforces was equivalent to one member of staff working continuously on regulation for five and a half months to complete a business's annual regulation administration, it said.

The IoD's director-general, Miles Templeman, said: "More than £80 billion is effectively being taken out of the UK economy each year due to regulatory paperwork.

"When the regulatory burden is so large that it typically occupies one employee in every private enterprise in the UK for nearly half a year, it's obvious we have a problem.

"This isn't a debate about diluting protections, because form filling doesn't protect anyone. This is about getting a culture change in Whitehall. Officials are incentivised to produce legislation.

"Unless the next Government changes the way civil servants are evaluated and rewarded, businesses will continue to face a large and ever increasing burden of paper work that hinders them from growing and, ultimately, creating jobs."

The IoD said that instead of relying on Government figures, it had quantified the working hours that company directors and their staff spent each day handling Government regulation and then costing the working hours using remuneration data.

The report said: "The results are startling. The Government claims that the estimated burden of regulation is £13 billion a year. We think the administrative burden of regulation is nearer to £80 billion a year.

"This figure is the cost of all the hours spent form filling, reading guidance, taking advice and performing other administrative duties associated with regulation. It doesn't even include the cost to companies of having to adapt their behaviour to comply with regulation."