Red card for red tape: 96% of firms say regulation is failing them

Britain’s businesses have shown the country’s regulatory regime a red card, with 96 per cent of respondents to an official government survey saying regulators are “creating unnecessary problems” in their industries.
Some 89 per cent said rules and regulations, often applied inconsistently and processed slowly, were imposing “unreasonable costs”. Even more of the 271 respondents to the Department for Business and Trade’s detailed Unlocking Business questionnaire said the way regulations were being imposed was limiting their ability to grow, develop new products and services, and become more efficient.
For SME owners, the department’s own summary will read like a diary of their working week. The feedback showed “the UK regulatory system is often complex, inconsistent, slow and burdensome, with disproportionate impacts on small and medium enterprises”, it said, adding that the responses provided “a rich evidence base” for its efforts to “reduce administrative burdens”.
A recurring complaint is duplication. Businesses are frequently “submitting the same information to multiple regulators” that seem unable to co-ordinate their activities, a problem compounded by “fragmented responsibilities, inconsistent guidance, and divergence between UK and international (especially EU) standards”.
The regulation most commonly cited as hindering growth is the extended producer responsibility (EPR) scheme for packaging, which has operated since April last year and requires brands to cover more of the cost of managing household packaging waste. Its reporting requirements were cited “as among the most resource-intensive requirements” businesses face.
Firms also flagged environmental permitting, chemicals regulation, financial reporting and the administrative burden of complying with IR35 rules on contractor taxation.
Silence from regulators is another sore point. Businesses said they receive limited updates once applications are submitted, leaving them in the dark about completion dates, with delays ranging from “weeks to years” that “can incur substantial costs”.
Their prescription is clear enough: “simplification and streamlining of regulatory processes”, alongside “predictable, timely, and transparent decision-making; clear, consistent regulatory guidance; digitisation, including single portals, acceptance of digital records, and interoperability between bodies; proportionate and risk-based regulation, particularly for SMEs”.
The findings echo research published in March by the Federation of Small Businesses, which put the annual cost of regulatory compliance for SMEs at £36 billion and 379 million hours of their time.
The government has pledged to cut that burden by 25 per cent by the end of this parliament, a target that sits alongside the chancellor’s promised £6 billion blitz on business bureaucracy. The FSB welcomed the goal but warned that “previous governments have not matched their lofty promises about pruning back overly burdensome rules with concrete action”.
Tina McKenzie, the FSB’s policy chair and co-chair of the department’s small business taskforce, said: “It’s no surprise that the questionnaire found overwhelming dissatisfaction with how the regulatory regime works – or doesn’t – for businesses.
“An overhaul of regulation is badly needed, with the recent decision to force all companies regardless of size to file profit and loss accounts with Companies House just one example of an additional regulatory burden that will add extra stress and expense to many independent companies.”
She said progress against the 25 per cent target had been “slow”, but that it had to be achieved.
Kate Shoesmith, director of policy at the British Chambers of Commerce, which also sits on the taskforce, said the lack of joined-up thinking between government agencies was a particular problem, with the same information requested in different formats, multiple times.
“It can feel like box-ticking for box-ticking’s sake,” she said. “A new prime minister will undoubtedly have new ideas. But policy changes must be viewed through the prism of delivering growth. Will they reduce, rather than add, to the cumulative burden that has been placed on business through the actions of successive governments?”