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UK firms face £1.5 billion bill for regulation

Smaller businesses in the UK construction sector lose more than £1.1 billion every year due to government red tape, according to reseach conducted by the Forum of Private Business.

The business lobby and support group drew the figure, using feedback from members of the not-for-profit organisation, based on the amount of company time, and therefore money, spent on government-imposed bureaucracy.

This latest issue of Referendum, the FPB's quarterly publication, which focused on ‘the cost of compliance’, found that recession-hit construction companies are forced to spend an average of 37 hours of company time each month on form-filling and paperwork. Those with nine or fewer employees spend an average of 34 hours on it, while those with between 10 and 50 employees spend around 28 hours and firms with up to 249 workers devote approximately 131 hours.

In terms of costs, complying with health and safety legislation alone leaves smaller construction firms £277 million out of pocket each year. The cost of complying with employment legislation was put at £283 million per year, comprised of dismissals and redundancy (£41 million), absence control and management (£44 million), maternity (£18 million), and disciplinary issues at £27 million. Meanwhile, the costs associated with legislation on employee holidays and any other remaining matters were put at £154 million.

Cardiff-based FPB member Terry Scarfe, who runs specialist metal structure manufacturers Amrob Engineering Limited, said filling out paperwork tied in with government rules and regulations was a huge burden on his firm: “It costs us a fortune just to comply and it’s not improving anything – it’s just part of this blame culture.

“As long as you sign a piece of paper to say it’s not your fault, it’s fine.”

Mr Scarfe also warned that the regulations were creating more rogue construction companies which ignore the rules and can afford to undercut responsible firms: “The more legislation comes in and the more paperwork you have to do, the more people go underground," he said.

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