Red Tape No Barrier for Start-ups
The Federation of Small Businesses (FSB) has disputed claims from former Dragon Doug Richard that it is difficult to start a business in the UK, saying red tape is only a burden for established firms, writes Kate Horstead.
In his Entrepreneurs Manifesto and Declaration of Rights (230k PDF) released this week, the former Dragons’ Den investor and founder of the School for Startups said that excessive red tape was deterring people from starting in business and that the Government’s Simplification programme was failing.
“People should be able to start a business in an afternoon,” he said. “According to the Global Economic Monitor, which measures economic freedom and the ability of countries to support small business – including the number of days it takes to start a business – Britain is halfway down the league table.”
However, the FSB’s head of public affairs, Stephen Alambritis, said that the Government has reduced the barriers to setting up a business.
“They have simplified the obstacles people face setting up a business, but if you want to grow the business, for example, by moving from self-employed to employer status – then it can be more difficult.”
Alambritis also agreed with a Government statement that people can set up a business in the UK in less than a day.
“We have one of the easiest regimes in the world for setting up a business, but it is the ongoing regulations that are a burden.”
A Department for Business, Innovation and Skills (BIS) spokesman said that research from the European Commission found that it takes, on average, less than a day and costs only £20 to register a company in the UK, compared to a European average of £382.
“The UK is recognised as having one of the best business environments in the world,” said a BIS spokesman. “But we are not complacent and take costs to business, and barriers, very seriously.”
“We’re on track to cut £3.3 billion a year — or 25% — from the administrative burden of regulation by May 2010. We’re already saving UK businesses around £8 million every day.”
However, Richard said that both the Government’s Simplification pledge to reduce the burden of red tape that businesses face, and the business support system itself had failed.
“The Government’s Simplification initiative aimed to reduce 3,000 business support programmes to 100 without ever analysing which the successful programmes were. They also didn’t simplify, they categorised, so we still have all these programmes in place, but they’ve just put one of a hundred titles on them.”
In his manifesto, Richard also called on the Government to ensure that a specific percentage of all its procurement will be through small businesses.
“In the US, five per cent of all federal procurement is mandated to be rewarded to small business. This has had more impact on the success of small business in the US than any other programme in history.”
However, the BIS spokesman argued that a similar proposal was considered in the Government-backed 2008 Glover Review and rejected.
“The review found that small firms want to compete on an equal basis and on the basis of quality rather than have special treatment. They decided that efforts should focus on addressing problems and removing barriers, not on meeting targets.”