Business regulation - it's quality not quantity

Earlier this month the UK Government announced that the threshold to be defined as an SME for the application of regulations would be increased from 250 to 500 employees.  This is welcome news and is estimated will free 40,000 UK businesses from certain regulations.  What I found interesting was the Business Perceptions Survey 2020  that the Government cited in support of the changes.  It appears that business attitudes to regulation are more nuanced and generally not as negative as you might expect.

What are the challenges businesses face?

For a start, when asked what issues posed the greatest challenge to business, the most frequent answer by some margin was 'attracting and retaining customers' with 'staff recruitment and retention' and 'level of tax' following some distance behind.  Complying with regulations only ranked 5th with 11% stating it was their biggest challenge.

In fact, the industry sector most likely to say that complying with regulations was their biggest challenge was Finance, and after numerous mis-selling and fraud scandals I don't hear a lot of calls for deregulation of financial services.

Reasons for compliance

When it comes to the reasons why businesses think it's important to comply with regulations, complying with the law of course ranks highly, but equal with maintaining your reputation with customers - businesses care about reputation and don't want to be seen as cowboys.  However 70% quote 'saving my business money' and 'giving my business a competitive advantage', and 64% say 'delivering social benefits by protecting staff, customers and the environment'.  This shows that businesses see positives in regulation, particularly on a level playing field.

How does regulation create a burden?

When it comes to why businesses see regulations as a burden, the most common issues are having to keep up to date with information about regulations, and having to provide the same information more than once.

On a positive note, 64% agree that the purpose of regulations is clear, and just over half agree that most regulation is fair and proportionate.  45% agree that it is easy to comply, but less impressively only 25% say that the Government consults well about new regulations and 23% that regulators work in a joined up way.

The survey shows that business generally doesn't object to regulation in principle, and often sees advantage in it.  But it is equally clear that the Government could do a better job of implementation by improving consultation and communication, and by coordinating between regulators to reduce duplication.