Regulation ‘biggest’ obstacle to business growth

15 October 2008

Business rules, taxes and fuel costs are the most significant barriers to small business development, a new survey has claimed.

According to the latest quarterly survey of its members by the Forum of Private Business (FPB), while worries over access to funding during the credit crunch are a concern, many small firms see red tape, taxation and fuel prices as the most challenging of issues.

In the survey, some 63 per cent of respondents cited health and safety regulations as a ‘significant’ barrier, while 61 per cent listed employment law.

With business conditions difficult, 60 per cent reported that the cost of complying with other legislation was a barrier.

Over a half (55 per cent) identified the cost of fuel as problematic, and 54 per cent regarded tax, including National Insurance, as an obstacle to growth.

Sourcing funds and capital only registered as a major worry with 13 per cent of respondents, well below business rates (50 per cent), skills shortages (26 per cent), the cost of materials (25 per cent) and local parking restrictions (19 per cent).

However, almost one in three respondents said they considered late payment to be a significant problem.

Nick Palin, the FPB’s director of finance, said: “The government’s pledge that small businesses are to benefit from its decision to re-capitalise the banks is certainly good news. Promising to maintain the availability of lending at 2007 levels, before the situation deteriorates, will be welcomed by entrepreneurs across the country.”

But Mr Palin added: “However, the FPB’s research shows that the longer-standing issues of tax and over-regulation are still the main barriers to growing a business in the UK. Addressing the disproportionate tax system and removing regulatory hurdles must be the government's top priorities in supporting small businesses, now more than ever.”