Wednesday, August 2

The cost of regulation to businesses

In a posting on Tuesday this blog referred, controversialy to a report issued last week on the cost to business of major regulations introduced since 1998. The total has risen amazingly to a massive £50 billion, according to a detailed analysis and figures released last week by the well established and infuential British Chambers of Commerce (BCC).
The 'Burdens Barometer', the independent calculation of the costs to business based on the Government’s own figures, reports that the total cost has risen from £39 billion in 2005 to over £50 billion in 2006. The BCC’s ‘Burdens Barometer’, is independently compiled by experts from the London and Manchester Business Schools.
It is an accepted fact that British businesses are fed up with paying for Government regulation. Businesses must be free to compete in the global economy. As well as the increasing cost, businesses are having to divert valuable time from running their businesses to dealing with more and more paperwork.
The British Chambers of Commerce ‘Burdens Barometer’ is extracted from the BCC’s database of over 1,400 Regulatory Impact Assessments produced by Government departments that evaluate the risks, costs and benefits of any new regulatory proposal that has an impact on business. The ‘Burdens Barometer’ tracks the cumulative cost of 69 major regulations introduced since 1998, which have annual costs to business of over £15m per year. Additional regulations introduced in 2004/5 have added to the burden from previous regulations, pushing the total increase in business costs this year up from a potential £47 billion to £50 billion.
Now it does not take someone with an MBA to work out that the World's fastest growing economy, China does not have the burden of fast growing regulatory costs. It therefore obviously follows that British goods and services are at an ever increasing international price disadvantage because of the burden of business regulation. No prizes for guessing the source of most of the regulation.
Small businesses are of course more effected by regulatory costs than larger businesses since they are less able to absorb the costs; yet as we commented on Tuesday the Federation of Small Businesses (FSB) is not obviously banging on the door of government in protest. Perhaps their methodology is more subtle, perhaps we need to be told exactly what the voce of small businesses is saying and to whom.


Anonymous said...

A quick internet search found the FSB with different press releases in 18 newspapers during the period 25 July to 1 Aug. The CBI came up with 17 and the BCC with 10 in the same period. These searches aren't infallible of course but I filtered out duplicate entries for each organisation.
Draw your own conclusions but it seems to me that while all these organisations are active, the FSB is saying more than you give them credit for.
One thing I have noticed is the different organisations websites.
The CBI has up to 7 adverts per page, the BCC has 1 different advert on each page, The FSB has none.
As a member of all 3 organisations, I find the information sent to me by the FSB to be the best followed in 2nd place by the CBI with the BCC coming in 3rd. In fact I seem to get very little from the BCC except countless adverts for their training courses.
Robert Black

Peter Troy said...

Thank you for your comment. The issue here is not quantity but quality.

The point I am making in the article concerns the specific and vital issue of the cost or regulation, the severity of the problem requires effective protest. The issue is one of quality of protest not quantity of material.

Two weeks ago I commented that the head of the BCC, David Frost, was reported as saying that: ''on Monday I shall be calling on the Small Business Minister and demanding ....''. That is the type of comment that commands attention. The FSB is as you say very good and sending out material and surveys, I have one in my pending file to return but what counts is effective campaigning, the direct approach. It gives me no pleasure to remark that the FSB appears to have lost the skills to perform.

I talk to a number of Journalists on a regular bases, when they seek comment on small business issues they first ask the CBI or the CBI in preference to the FSB because they know they will get a more combative (and more reportable) quote. As a journalist said to me, quite literally in Whitehall two weeks ago: ''The FSB is a sleeping giant, with nearly 200,000 members and millions of pounds in the bank they should be banging on the door of the Government.''

The FSB's appeasement approach is doing long term harm; it is actually making matters worse. On any of the key issues that effect small businesses (taxation, regulation, business support and planning permission ) by any measure our government is imposing more and more constraints on small businesses.

The solution is effective campaigning and the first battle to win is in the main line media (MLM). So long as the FSB presents a tame response it can (and will) only get worse

Anonymous said...

I have to disagree that the first line of campaign is the MLM. I would look on it as being the last because you are seeking public opinion to win a battle that you have been unable to win by direct persuasion.
I agree wholeheartedly with your statement "On any of the key issues that effect small businesses (taxation, regulation, business support and planning permission ) by any measure our government is imposing more and more constraints on small businesses"
This means that all 3 organisations have failed yet you still single out the FSB.
By your own admission, the CBI shout the loudest (also agreed) yet what good is it doing? This government listens to no one.
I've noticed that all 3 organisations are making various claims of success in their websites yet none of these "successes" have made the MLM. Why do you suppose that is?

Peter Troy said...

All politicians read newspapers, they care very much what is published because what newspapers say effects public opinion which in turn effects voters intentions at the ballot box. Thus, QED the national media is a priority when one is campaigning on issues that effect small businesses (or any issue for that matter). The FSB needs to campaign, not hold cosy meetings with politicians and not just to write letters and make bland statements.

The process of Government is now so vast that in order to make an impact one needs a bold strong message and a strategy that the MLM will pick up on and run with. The roll of the campaigner is then to control the news output - this is what professional publicists do.

The role of the FSB is to campaign, not to appease. As history confirms the result of appeasement is to give strength to those that can seriously harm us. The regulation army's panther tanks are already rolling over the sprit of enterprise, the only effective response is a direct counter attack which of course requires a planned campaign.

The alternative, is of course to do nothing, to surrender; which is probably better than to appease, for one thing it would be cheaper.

Jerry Allington said...

Under the rules of the Maastricht Treaty, Britain is committed to run its economy of the benefit of the EU as a whole - and not the British people. We have no power to veto punitive and very costly 'Single Market' legislation.