Tuesday, 22 January 2008

How much regulation?

The British Chambers of Commerce is among those campaigning for not imposing the projected 2p increase in fuel duty. Given the price of oil and the state of the economy, there is a case for doing this. However, the state of the public finances may not allow it. Government borrowing already overshot last year.

In support of their case the BCC is also arguing that business is having to pay for £55bn of additional regulation. The costs of regulation are notoriously difficult to assess and it is difficult to come up with precise or reliable figures.

However, the OECD has made one of the most serious attempts and their figures, which admittedly go up only to 2003, show tha Britain had the lowest levels of product regulation of any OECD country, including the United States. The UK was also low on state control, barriers to entrepreneurship and barriers to trade and investment. Even if there has been a surge of regulation since 2003, the picture won't have changed that drastically.

Of course 'regulation' for employers is often a code word for human resources legislation that gives more rights to employees, especially paternity and maternity rights which are argued to be particularly disruptive for small businesses.

One of my children who is an entrepreneur confirms that human resources legislation is the biggest challenge they face, but they simply outsource it to a company that specialises in advising small businesses.

Interestingly when the £55 billion figure was quoted on Radio 5 no attempt was made to challenge it by the interviewer.

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