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Forum of Private Business

Red tape adds £2.0 billion onto the cost of construction - the highest cost per employee of any sector in the UK.

16 July 2015 15:00

UNDER EMBARGO UNTIL 16 July 2015 15:00

Compliance now costs the nation’s builders around £13,500 or almost £2,300 per employee

• Red tape costs the UK construction £2.0 billion or £2,275 per job
• Internal compliance costs have jumped to £1.5 billion
• Despite accounting for 8% of SME employment, builders are responsible for 11% of internal compliance costs
• Consultants account for £0.5 million, a reduction on 2013
• Changes to the need for risk assessments in domestic refurbishment projects, due to be introduced in October will increase the cost of health and safety still further
• Despite this, Forum members spend around half as much on external consultants than non-members firms.
• Members also spend 15% less time on employment law

Red tape now costs UK builders with 1 to 250 employees around £2.0 billion or 10% of the total cost for the UK’s micro, small and medium sized employers despite accounting for 8% of employment. This means that compliance with legislation now costs firms in this industry £13,500 or around £2,275 per employee – according to research from the Forum of Private Business.

Internal compliance costs have risen to £1. 5 billion, eclipsing the modest savings on external consultants which have dropped to £0.5 billion.

Time has now become the most pressing issue for the industry and it is not difficult to see why as the time spent internally meeting regulatory compliance rose to 35 hours per month, up 5% on 2013, but due to the small average size of firms in the construction industry this time is increasingly hard to find.

“Construction sites are extremely high risk so our members and other good businesses realise the importance of robust compliance methods, however our members are increasingly worried about other trades on site potentially putting their employees at risk” said the Forum’s Managing Director, Ian Cass.

“Our members find employment law can be difficult as employees need to be told what to do in a firm manner for their own sakes as well as the rest of the team. As a result the Forum has raised our game and increased cover for our members in this industry removing the pernicious 51% prospect of success clause on our standard cover and including support for companies that have to act before they have time to take insured advice.

The Forum has found that small firms across the UK pay external contractors a total of £6.5 billion for regulatory compliance services, while internal time costs are £13.5 billion in total.

“There is also evidence that the government are failing to consider the implications of regulations on the regions smallest and most numerous employers as micro businesses are paying almost ten times more per employee than medium sized firms,” continued Mr Cass.

“Micro and small manufacturers are looking to disrupt traditional markets and to become the market leaders of tomorrow and we feel that compliance should enhance innovation not hamper it”

The Forum has also bolstered its support for members in light of concerns about tax investigation, cyber crime and the complexity of legal compliance. Overall Forum members pay around half as much for employment law and health and safety specialists as other firms, but spend a similar amount of time on health and safety compliance and 15% less on employment law.

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Notes to editors

Representing thousands of small businesses across the UK – including retail, service providers and manufacturing companies – the Forum is recognised by the Government as one of the six main business support and lobby groups. It uses this position to influence decision-makers in the UK and Brussels on the issues that matter to small businesses.

Media contact for this press release

Thomas Parry
Research Manager
Tel: 07885 888085

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Leanda Hickman

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Tel: 01565 626023


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