BUSS4 The impact of legislation relating to business, and the government’s Red Tape Challenge

Yesterday, David Cameron told the Federation of Small Business conference that more than 3,000 rules affecting business are to be scrapped or amended, saving more than £850m a year. BUSS4 students need '...a broad understanding of the scope and impact of legislation relating to business', and will be well aware that the legislation adds to business costs. Cameron is proud to say that his government would be the first in modern history to end a term in office with less regulation on the statute books than when it came into power.

The Prime Minister said that "We need to be a country that celebrates enterprise and backs risk takers," and he acknowledged that in the drive for economic growth, the role of small businesses and their ability to grow is key: he wants to "make it easier for you to grow, to create jobs and to help give this country the long-term security we are working towards."

On the other hand, business and society cannot thrive without some regulation and must take account of the needs of all stakeholders. The role of business legislation is to:

•Regulate the rights and duties of people carrying out business in order to ensure fairness

•Protect people dealing with business from harm caused by defective services

•Ensure the treatment of employees is fair and un-discriminatory

•Protect investors, creditors and consumers

•Regulate dealings between business and its suppliers

•Ensure a level playing field for competing business

Key areas in which legislation has an impact on business are in Employment, Consumers, Environment, Competition, and Health and Safety - so the aim of reducing red tape cannot be to remove these regulations and protections, but rather to simplify and amend them.

The government's Red Tape Challenge website says that

"Good regulation is a good thing. It protects consumers, employees and the environment, it helps build a more fair society and can even save lives. But over the years, regulations – and the inspections and bureaucracy that go with them – have piled up and up. This has hurt business, doing real damage to our economy. And it’s done harm to our society too. When people are confronted by a raft of regulations whenever they try to volunteer or play a bigger part in their neighbourhood, they begin to think they shouldn’t bother."

In most cases, the emphasis is on cutting out over-lapping and confusing regulations, for example where new requirements may have been introduced at different times into the same market, without taking account of changing the regulations which were previously in exsitence - Cameron gave the example of helping house builders by cutting down 100 overlapping and confusing standards applied to new homes to less than 10 – these reforms are estimated to save around £60 million per year for home builders, equivalent to around £500 for every new home built.

So how much regulation do we need, in order to protect health, safety and the rights of consumer and employees, and how much can be scrapped? One of the reasons that industrial relations are better now than they were in the 1970's and 80's is the security provided to employees by the rights and protections that they have been given through legislation. It is worth looking at the description of the Red Tape Challenge process, which has been in operation for nearly three years and has invited business owners, who are those implementing and operating the legislation, to submit ideas of how regulations could and should be simplified. The site also lists some of the ways in which things have changed so far, including:

6 million vehicles will no longer need a paper tax disc (due in 2014).

£21m annual savings to business from simplified registration system for company charges.

20+ consolidation of regulations outlining how you apply for planning permission, or if you need it, down to 2.

100s live music and community events now exempted from entertainment licensing between 8am and 11pm.

Doubled to 2 years – the qualifying period for unfair dismissal, saving business £4.7m a year.

At least 1 million self-employed people to be removed from Health and Safety regulation (this is in the Deregulation Bill).

100,000s of low risk businesses removed from unnecessary Health and Safety inspections.

23 million paper waste transfer notes no longer needed every year after moving to an electronic system.

£66 million per year savings from changes to collective redundancy rules.

£100 million estimated annual savings to business after Defra trim environmental guidance by over 80%.

Students could evaluate each of these, considering the impact on different stakeholders - the policy and campaigns director for Friends of the Earth are concerned that "Important rules that safeguard our health and environment are being lost in this ideologically-driven war on red-tape."