Balancing act required in red tape cuts

“GOVERNMENT bins business red rape” read the headline on a news release from the Department for Business, Innovation and Skills last week.

We have, of course, heard it all before, not just from the previous Labour government but from Tory administrations before that.

Whether the coalition manages to make any real impression on the burden of red tape, and whether it does so in a way which balances the interests of existing employees as well as helping businesses to create new jobs is very much open to question.

On the positive side, the proposed moratorium to exempt businesses with fewer than 10 employees, and genuine start-up businesses, from new domestic regulation for three years is sensible and welcome, as is the plan to lighten audit requirements of smaller firms by matching the minimum requirements of European directives, so removing a classic example of “gold plating”.

The planned “public audit” of more than 21,000 statutory instruments also sounds encouraging, with businesses to be given the chance to comment on regulations and how the system can be improved.

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The Government’s stated intention is that “any overly burdensome or unnecessary” regulations should be removed “unless departments can prove there is a good reason for them”.

Given the scope for departments to influence Ministers in deciding whether there is a “good reason”, it is too early to assume that the Government’s worthy objective will be achieved in any meaningful way, but let’s hope it is.

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However, the decision not to extend the right to request time off for training to firms with fewer than 250 people is a backward step. The threshold for any such exemption should be set at a far lower number, given that a culture of enterprise must, necessarily, also include a culture of improving skills.

The decision to repeal regulations extending the right to request flexible working to parents of 17-year-olds for all businesses, which was due to be introduced next month, will also disappoint some parents, albeit probably a small minority.

Looking beyond the specific contents of last week’s news release, there is the far wider issue of how the coalition might reform employment law and the tribunal system.

It is one thing for Ministers to talk, as the Conservatives did in opposition, about the need to make it easier for businesses to take on employees.

It is another matter entirely to make it easier for employers to sack staff, which appears to be an objective for some business lobby groups.

Apart from the question of fairness, increasing the already fragile sense of job security will not help the recovery.

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