Employers warn red tape is costing them billions

The CBI this week threw down the gauntlet to the Government over employment red tape in the run-up to next year’s General Election.

It urged politicians not to promise more employment rights in the next parliament and put the cost of implementing the current raft of workplace legislation at an estimated £12.3bn.

The CBI also criticised the Government for introducing its policies too quickly leaving business struggling to cope.

A CBI report published this week pins the blame for excessive red tape on poor drafting and consultation, and hasty implementation. It says these shortcomings left businesses uncertain about the steps they needed to take. It also meant they had insufficient time to argue for business-friendly procedures and weeks rather than months to prepare for the policies.

Director-general Digby Jones said, “Excessive red tape has caused most of the headaches rather than the rights themselves. This has led to an incalculable cost with firms diverting resources into administration and losing business opportunities.”

The report’s findings come nine months after Personnel Today launched its campaign for better regulation. The campaign, in association with the Employers’ Forum on Statute and Practice, called on the Government to issue clear guidance and consultation documents, and give employers more time to respond to consultations.

Jones, at the CBI, said, “It is also blindingly obvious that many firms have been struggling with the pace of the changes some of which are still to come into effect. The Government must give business a breathing space.”

The report – on the impact of workplace legislation introduced since 1997 – was launched at the CBI’s national conference at Birmingham this week.

Based on responses from more than 400 companies, it puts the cost of red tape created by the Working Time regulations alone at £7bn. The estimated cost of the minimum wage is put at £4.5bn.

It found 55 per cent of the organisations taking part regard the amount of administration they face as unacceptable.

A further 61 per cent said they had insufficient time to implement policies, while 43 per cent said ongoing administrative tasks have a significant negative impact. Nearly half (49 per cent) said red tape has diverted management time.

The report adds that one in five companies cut staff as a result of the legislation it was required to implement. Some 42 per cent said it cut profit margins.

By Helen Rowe

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