Small UK businesses face more 'red tape'

The UK's FPB warns that changes in age discrimination laws, fire regulations, the National Minimum Wage and maternity rights - due in October - could push many small firms to the limit.

The UK's Forum of Private Business (FPB) is warning that new laws set to come into force in October could push many small firms to the limit.

Changes in age discrimination laws, fire regulations, the National Minimum Wage and maternity rights will pile the pressure on smaller firms.

Campaigns Manager Victoria Carson said the UK Government seems intent on binding small firms with red tape whilst failing on their pledges to cut it.

She said: "Firms are facing the prospect of having to review their practices in order to come into line with fresh age discrimination laws and fire regulations.

That alone will be a costly process to administer and yet another distraction from running their business.

Failing to bring themselves up to date could cost them in terms of an employment tribunal or a hefty fine." FPB member Samantha Bevan is the managing director of Anchorstone, which specialise in care for the elderly in a residential setting in Farnham, Surrey.

She says the new regulations have taken significant time to implement.

"It has taken me nearly a month to implement everything, the extra form filling reduces profitability and distracts me from my core business which is looking after my residents." Meanwhile, small firms will have to carry the cost of another increase in the National Minimum Wage, which continues to rise at a rate way above the increase in average earnings.

Carson says smaller firms are being hit the hardest.

"The only realistic course of action for smaller firms is to pass on the cost of the increase to their customers.

Of course it is unrealistic to increase prices at the same rate as the national minimum wage, so we can see how profit margins are continually being squeezed." Changes in maternity rights will mean that firms with fewer than five employees will no longer be exempt from the rule that says firms must hold a job or similar position open for an employee on extended leave.

Employees will no longer have to serve a qualification period to be able to take additional maternity leave, meaning firms could find themselves holding the baby very shortly after a new employee starts.

Carson said the true impact of the changes has not been considered.

She said: "Employment regulations are one of the biggest worries for our members.

The assessment of the impact of these rules on smaller firms does not reflect the reality.

They are being hit on all sides by extra costs, for example in recruiting cover for maternity leave, if they can find any.

If firms struggle to replace skilled workers, they have to reduce efficiency by distributing missing employees' responsibilities across an already stretched workforce." Bevan has been keeping a close eye on her increasing employment costs.

Bevan said: "Since 2000 I have kept a subdivision in our accounts for costs incurred from new legislation.

Without taking the National Minimum Wage into account, we have seen a 20% increase in staffing costs." She added: "In this country we have demographics that we should be worried about, staffing costs have to be met by an increase in fees and with our ageing population who, in the future, is going to pay for that?" The FPB is warning of the danger small firms cutting their staff as a result of the fresh regulations.

Carson is concerned.

"These new regulations, whilst aimed at improving conditions for employees could, in practice, backfire.

There will be some firms that will fall foul of discrimination laws after becoming reluctant to employ women of a childbearing age, and some that will trip up over new age discrimination laws, despite their best intentions.

The rise in the National Minimum Wage meanwhile is a direct tax on employment and will do nothing to encourage employers to expand their workforce." She added that the FPB would like to see a review of the impact of the new regulations.

"We want the Government to review the impact of these changes six months down the line.

They need to check whether their Regulatory Impact Assessments (RIA) are accurate.

All to often RIA is based on a tick box procedure and does not reflect the practical impact of red tape." * About The Forum of Private Business - The Forum of Private Business (FPB) was formed in 1977 and is a pressure group fighting on behalf of private businesses.

The FPB represents approximately 25,000 UK-based businesses, which employ in excess of 600,000 people, and is a powerful lobbying voice in both the UK and the European Union.

The FPB, as the only full UK member of UEAPME - the organisation that represents small and medium-sized enterprises (SMEs) in Europe - is the most prominent advocate of UK SMEs in Brussels and has a track record of positively affecting legislation prior to its introduction in the UK.

The FPB also provides a range of business services aimed at increasing member efficiency and profitability.

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