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Forum of Private Business

Red tape adds £6.4 billion onto the cost of distribution in the UK.

16 July 2015 16:00

UNDER EMBARGO UNTIL 16 July 2015 16:00

Compliance now costs the nation’s independent retailers, transport companies, restaurants and hotels around £15,900 per firm

• Red tape costs distributive trades £6.4 billion or £1,845 per job
• Internal compliance costs have risen to £4.1 billion
• Consultants account for £2.3 million, a reduction on 2013 but still disproportionately high compared to other industry sectors
• Despite this Forum members in this industry spend around half as much on external consultants than non-members firms.
• Members also spend 15% less time on employment law despite changes over holiday pay and evidence that small and medium firms are preparing for auto-enrolment

Red tape now costs distributive trades around £6.4 billion or 32% of the total cost for the UK’s micro, small and medium sized employers. This means that compliance with legislation now costs firms in this industry £15,900 each or around £1,845 per employee – according to research from the Forum of Private Business.

Internal compliance costs have risen to £4.1 billion, eclipsing the modest savings on external consultants which has dropped to £2.3 billion, however companies in this industry account for 35% of consultant costs despite being 32% of overall employment

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 40 hours per month, up 11% on 2013. Time taken to complete payroll requirements has risen 1.2 hours across the industry with small and medium companies (those with over 10 staff) seeing the biggest rises in time spent on payroll.

“This industry is very price sensitive – particularly in the current economic climate – and red tape can make good companies uncompetitive as a result” said the Forum’s Managing Director, Ian Cass.

“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.”

Retailers, hoteliers and other business owners in the industry work long hours and need support that is designed around them so we have introduced video training modules, case studies alongside our employment and health and safety guides to support them when they need help.

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

“Paying commissions on holiday pay has been a bolt out of the blue and businesses with less than 5 people say that they simply cannot get shared parental leave to work without it harming their ability to grow”

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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Press Contacts

Georgina Hodge

Campaign Communications Executive

Tel: 01565 626036


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