Red tape strangling firms' profits

THE extent to which businesses are hampered by the raft of red tape introduced since Labour came to power in 1997 was underlined by a survey yesterday.

The amount of time small and medium sized companies spend dealing with 'human resources issues' has more than trebled. Firms spend 10 hours a week on red tape, taking valuable time away from the running of the business.

Almost eight in ten businesses think this has cost them financially in the past year, compared with fewer than half when Labour came to power.

Around eight in ten also believe that growth of their business has been hit, says the survey of 3,600 companies with fewer than 340 staff by employment law firm Peninsula.

The number of firms which think they would be more profitable if there were less red tape has leapt from 45% in 1997 to almost 85% this year.

The problem is particularly acute for small and medium sized firms because they do not have specialist departments to deal with the flood of regulations and edicts.

Many bosses believe the Government is using firms as a 'tax collector', administering tax credits, stakeholder pensions and student loan repayments.

It has also been claimed that family-friendly policies, such as extended maternity rights, are hitting firms.

In April last year, fathers won the right to paid paternity leave for the first time, maternity leave was increased and parents of young children won the right to request more flexible working.

The British Chambers of Commerce estimates that regulations introduced since 1997 cost £30bn, up £10bn on the past year alone.

It has identified 35 expensive edicts which have hit employers since the 1997 election, basing its figures on the Government's own assessments of the cost of complying with workplace regulations.

Peter Done, managing director of Peninsula, said: 'Employers have now realised it is near impossible to balance a healthy business alongside implementing the barrage of employment law which is consistently being introduced by the Government.'

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