FSB: Delay new laws that could cost small businesses £800 million.

The Government must delay passing new laws which could cost small businesses nearly £800 million a year, the Federation of Small Businesses (FSB) said.

Ahead of the Prime Ministers National Employment Partnership meeting on Wednesday (February 11), the FSB is urging the Government to hold off on passing new laws on the next business law start date, because they will only put more financial pressure on already-struggling small businesses.

In a recent poll of FSB members, one in four said they believe small firms will pull the UK out of recession. However, the FSB is concerned that they will be unable to do so, or to retain or employ extra staff if they are burdened by new legislation. A recession is no time to be making changes to existing laws, which will have such an enormous financial impact on small firms.

Every year, new and amended regulations come into force on common commencement dates – April 6 and October 1. In 2008, 57 new pieces of regulation came into effect on these two dates. The FSB is now calling on the Government to consider each new law to see if it can be delayed, in order to put off the cost to small businesses in what is going to be a difficult year.

The FSB is calling for the Government to review the introduction of the following laws:

. Extending flexible working to parents of children up to the age of 16 will cost small businesses £61 million;
. Increasing staff holidays by four days could leave the small business community paying £724 million;
. Changes to the Home Information Packs will cost an extra £1.5 million, adding a burden to the consumer at a time when we already have a struggling housing market; and
. Extra Waste Control measures which the Department of Environment, Food and Rural Affairs estimates will cost business between £3.61 and £14 million.

With two common commencement dates each year, the FSB wants to see a moratorium on new employment law until October. The FSB urges the Government to take a common sense approach, and assess the economic situation and consequences this could have on small businesses before new legislation comes into effect later this year.

John Wright, National Chairman at the Federation of Small Businesses said:

“The cost of new laws to small businesses this year is huge. Small businesses should be concentrating on keeping jobs, rather than spending time and money carrying out paperwork.

“The FSB demands that the Government reconsider all regulation that will cost small firms and help our small business community thrive. This is no time to hold small businesses up with extra costs and burdens. The Government should wait until October to see if the economy is in a stronger position to cope with this added pressure.

“In these tough economic times, small businesses are already battling with red tape; with the burden and confusion of existing legislation. In 2008, we saw 57 new or altered pieces of regulation affecting small companies. A similar number is expected this year. The small business sector is confident it can help pull us out of the recession. Suspending legislation that could cost small firms up to £800 million will allow them to concentrate on getting the economy back on track.”

ENDS

Notes to Editors

1. The FSB is the UK’s leading business organisation with over 215,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at http://www.fsb.org.uk

2. The Government holds two Common Commencement dates each year – April 6 and October 1. This sees Government departments issuing all their regulatory changes. A comprehensive list of legislation to come into force in April is not yet available.

3. The figures detailing the cost of legislation come from: 1) The Department of Business, Enterprise and Regulatory Reform (BERR) from an impact assessment. Small businesses would pay for filing paperwork and the replacement labour for lost hours; 2) an impact assessment from BERR. Small businesses would pay for replacement labour for lost hours and productivity costs; 3) an impact assessment from BERR. Small businesses would pay for changing labelling and branding; 4) Department for Communities from an impact assessment. Small businesses would pay for filing new paperwork; 5) an impact assessment from Department of Environment, Food and Rural Affairs would see small businesses paying new fees to business.

4. Over 4,000 small businesses were surveyed between Friday 30 January and Monday 2 February 2009 on the effect of the economic climate.

5. The FSB has proposed a Five Point Plan that could not only keep people in jobs but also create over 400,000 new ones. The blueprint includes simplifying legislation; cutting payroll taxes; promoting part-time work; providing more opportunities for small businesses to bid for public contracts; and investing in training apprentices as solutions to rising unemployment.

Contacts:

Stephen Alambritis: 020 7592 8112 / 07788 422155
Sophie Kummer: 020 7592 8128 / 07917 628 998
Prue Watson: 020 7592 8121 / 07825 125695
Marc Shoffman: 020 7592 8113 / 07595 067068

For regional FSB contacts please go to www.fsb.org.uk/regions