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October 4, 2009

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Small-business group wants regulatory overhaul

Compulsory booked inspections, joined-up risk assessments, and an

immediate moratorium on all new business regulation are some of the

measures being demanded by the Federation of Small Businesses (FSB) to

help boost the economy.

In its policy paper on regulatory reform, issued on 2 October, the FSB has outlined its proposals for creating and saving more than 300,000 jobs, by calling for a moratorium on all new business regulations until the first 18 months of economic recovery have passed and accelerated simplification of current laws, including health and safety.

A survey of FSB members showed that 27 per cent of businesses that wanted to expand said they were too scared to do so because they were put off by complicated regulation. In addition, of those businesses planning to downsize or close, 50 per cent said their decision was strongly influenced by the regulatory burdens they faced.

As part of its reform proposals, the FSB also called for an overhaul of the local-authority inspection regime, suggesting that the Government should follow the Dutch model, which aims to ensure that a business does not experience more than two inspections a year.

In line with this policy, the FSB also believes that all routine inspections should be booked in advance. It argues that, by turning up unannounced, regulators are denying businesses the opportunity to take full advantage of the inspector’s visit to ask questions and get things right.

The paper explained: “This is not an opportunity for businesses to change what they are doing in order to suddenly comply. Rather, if they are only given a few days notice, it is simply a chance to ensure that they have enough staff, gather paperwork, or re-arrange meetings.”

Another proposal, which echoes that made by Sarah Anderson in her report earlier this year on simplifying government guidance, is for more generalist inspectors. The Federation says the Local Better Regulation Office (LBRO) is well placed to ensure that risk assessments carried out by local-authority regulators are more joined-up and inspections better coordinated.

The paper continued: “This may help common-sense decisions to be made, such as if a business is a good performer in health and safety, then logic dictates that they are probably good performers in food safety as well. Local-authority regulators should also be trained to undertake multiple inspections in a single visit, where possible.”

The FSB’s national chair, John Wright, said: “Around half of all firms planning to close or downsize were influenced in that decision by the heavy impact of regulation. However, we know that small firms want to employ more staff, and the Government should be making it easier for them to do so, especially as we pull ourselves out of recession and into recovery.”

Wright’s comments were echoed by shadow business secretary, Ken Clarke, during the Conservatives’ party conference on 6 October. Announcing a raft of proposals to reduce the regulatory burden on business, he said that a Tory government would curb the powers of intrusive inspectors by allowing firms to arrange their own, externally-audited inspections. Providing these audits are passed, firms would then have the power to refuse official inspectors entry to their premises.

A spokesperson for the LBRO told SHP: “The FSB is challenging local-authority regulators to make sure that they support economic prosperity as well as protect communities, and they are right to do so. 
Local-authority regulators have got better at working with business but there is still more to be done. The areas the FSB highlight all contain possibilities to make the local regulation of business better.
This is a paper that we need to consider in detail. We look forward to discussing these ideas with local regulators, the FSB, and other business federations.”

The FSB policy paper, Regulatory reform – a route to economic recovery, can be viewed by clicking here.


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