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January 28, 2009

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Call for “insured” advice to improve SME compliance

SMEs need more clarity and certainty from government health and safety-related guidance, according to a new independent report published today by the Department for Business, Enterprise and Regulatory Reform.

The Anderson review calls on the Government to take more responsibility for its guidance by removing disclaimers and encouraging discretion over prosecution of firms that have made an effort to comply. Another suggestion is to offer SMEs access to “insured” advice on how to comply with employment and health and safety regulations, via a telephone helpline, which should be free to such businesses for the first year.

The recommendations are designed to increase compliance with the law and cut costs for small businesses by more than £800m a year. They also include: creating a single access point for all government guidance; creating a central contact point for reporting inconsistent or inaccurate guidance; and ensuring that all guidance is accompanied by a ‘quick-start’ summary.

The review consulted more than 750 businesses and was based on face-to-face discussions with more than 90 SMEs. It found that almost half of all businesses use external advice about how to follow regulation, and spend at least £1.4bn each year on such services. Some 75 per cent of medium-sized enterprises said they have paid for advice on health and safety, or employment regulations.

Author of the report, small-businesswoman Sarah Anderson, told SHP: “Businesses are expected to take the risk and yet the Government is not prepared to take a risk on its own guidance.” But she emphasised that the “insured” advice would relate to potential legal costs and there was no guarantee that a firm would not be prosecuted even if it had taken reasonable steps to comply. She added that an individual’s rights to instigate a civil claim for damages, or take a matter to an employment tribunal, would remain unaffected.

Professional bodies, local authorities and regulators are also urged to examine how to broaden the skills of inspectors, so that they are better equipped to provide advice and guidance that is based on the needs of business sectors.

Commenting on this specific issue, Anderson said: “At the moment, you have one expert in environmental health, one in health and safety, one in fire safety, etc. Businesses don’t work in silos, they work in sectors. . . I want to encourage more work where there is joining-up [on regulatory issues]. Why don’t they train some generalists as well as experts?”

She added that the recession gave added importance to her recommendations, particularly given the rising unemployment figures and her view that “many people do not take on an employee because of their fear of employment law”.

Small-business groups largely welcomed the proposals. A spokesperson for the Federation of Small Businesses told SHP: “It is really important that SMEs can rely on Codes of Practice and government guidance, and this should provide much-needed stability so that SMEs can put greater reliance on guidance, particularly on health and safety.”

He also welcomed the call for more generalist inspectors, adding: “We support a general push to ensure there is consistency among the inspectorates, and this should do it.”

Matt Goodman, policy representative of the Forum of Private Business, told SHP: “I would like to applaud Sarah Anderson for making the right decision in asking the Government to stand by the guidance it produces. This will give many small businesses confidence that they are complying with both the spirit and letter of the law without having to learn to speak in legal jargon.”

However, he added that the Review asks more from the Government than he felt it could deliver, saying: “Practical business advice is not the Government’s strong point, and placing too much faith in a helpline won’t mean real savings for most small businesses.”

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