The IoD is calling on the coalition to reduce the excessive burden of red tape that is bogging down UK enterprises and umbrella companies.

Although the government promised to reduce the regulatory constraints of employment law, the Institute says these have actually increased since the coalition came into power. Spokesman Alistair Tebbit said that employment law has been increasing gradually over the past 10 to 15 years, an activity that was encouraged by the Labour government. The current government appears to be doing exactly the same even though they pledged the reverse in pre-election campaigning.

The IoD made its comments after David Cameron appointed Lord Young as his new enterprise adviser. Tebbit said Lord Young would need a wide scope as the red tape surrounding employment law affects all businesses, not just a particular sector.

Proposals that are currently under consideration include abolishing the default age of retirement, extending paternal leave and encouraging flexible working, but far from reducing the regulatory burden, these would cause firms additional problems, said Tebbit.

The FSB last month reported that EU regulation costs businesses £107.6 billion per year – 3.5% of the annual European Union GDP. 1.7 million businesses fail in the EU every year and more than half of them say the regulatory burden was a significant factor in their failure.

Earlier this year, Nick Clegg asked the public to visit the Your Freedom website and say which laws they would like to see changed. 46,000 ideas were submitted but Clegg has apparently given up and passed the ideas over to the Home Office which will propose a smaller civil liberties bill. Ironically, Clegg passed it over due to too much detail. Isn’t that exactly what businesses are currently complaining about?

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Vince Cable, the business secretary, has announced that the new ‘one in, one out’ system of regulations will come into effect as from the first of September this year, a move that has been welcomed by the FSB.

The coalition has said that new regulations should only be introduced if they are absolutely essential. A strengthened Regulatory Policy Committee will oversee the system by scrutinising all proposed regulations and EU legislation before policies are formed.

All government departments will have to follow a set of ‘principles of regulation’ when new laws concerning businesses and social enterprises are considered.

Although the FSB welcomes the move, it warns that the committee must have the power to enforce the principles and influence government departments when it comes to regulatory practice.

Jane Bennett, the Head of Campaigns at the FSB, said it was good that the government was going ahead with its promise to improve the regulatory landscape, but in order for the measure to be successful many government departments will have to change their behaviour.

A survey conducted by the Forum last year found that smaller employers spent an average of 37 hours each month on red tape administrative tasks at an annual cost of £9.3 billion. Administering and monitoring legal responsibilities was a major bugbear with 74% of the survey’s respondents and 73% cited understanding new regulations as excessively time consuming. SMEs spend £2.4 billion per year on employment law, £2.1bn on administering health and safety regulations and £1.8 bn on tax.

The BCC has also welcomed the announcement saying that the new scheme will help to boost the UK’s business growth. The Chamber’s director of policy, Dr Adam Marshall, said we now need to see tangible results so that umbrella contractors and businesses get to see the benefits as soon as possible.

Interested parties can have their say on which regulations they would like to see changed or removed completely by visiting the government’s Your Freedom website.

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The coalition launched its ‘Your Freedom’ website last Thursday; a move that has been welcomed by the FSB.

The website, launched by Nick Clegg, will give the public the opportunity to nominate which laws they would like to see abolished.

The site asks members of the public three questions. Which laws restricting civil liberties should be abolished? Which laws are unnecessary and should go? And which regulations should go to make it easier to run a business?

As well as answering these questions, people can submit ideas and comment and vote on the views of others.

The coalition says that all suggestions will be read and the relevant department will respond to the best ideas through video messages and comments. Freelancers may even be invited to discuss their suggestions with government officials.

Members of the public, including umbrella company contractors, have obviously been keen to express their views. On the first day, the site received more than 2,205 suggestions, 7,419 comments and 18,000 votes.

Your Freedom will run until the autumn and the views of the public will feed into a new Freedom Bill that is expected to include measures on the right to peaceful protest, CCTV cameras and rules surrounding the DNA database.

In 2009, 33% of SMEs and limited company contractors said regulation was holding back growth, and the Federation set up a portal to encourage its members to provide feedback on the regulations they would like to see abolished.

The new Cabinet committee, chaired by Vince Cable, tasked with reducing the onerous burden of red tape, met for the first time last Thursday.

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