By some measures, the UK’s economy is the second-least regulated of all developed countries, but this doesn’t stop the reduction of ‘red-tape’ for business owners being used as a political football by parties trying to win favour by using the right buzzwords.
Approximately 35% of non-employing businesses report that regulation is a major obstacle to their business, yet 24% of these couldn’t actually point to any specific set of rules or requirements. Nonetheless, headlines constantly deride regulation as pointless meddling, with the ill-sentiment perhaps reaching its apex during the build to the EU referendum.
With this perception of paperwork being a problem for the self-employed, few are likely to cheer at the prospect of new regulations. But as The Entrepreneurial Audit (a joint project from the RSA and Crunch) attests, the boring truth is that without regulation, businesses could get away with cutting corners; creating an unfair situation for workers, customers, and competitors.
In 2010, the Coalition Government introduced a ‘one-in, one-out’ rule to manage the volume of regulations affecting businesses, and extended this to ‘one-in, two-out’ in 2013.
Another vestige of this strategy was the ‘Red Tape Challenge’ of 2011-13, which resulted in over 2,400 regulations being scrapped or amended, and was said to have saved the UK’s businesses £1.5 billion.
While the reduction of regulation was a popular move, there are concerns that setting high, arbitrary targets for deregulation will have damaging effects – including the culling of entirely necessary regulatory safeguards that protect business owners and their customers.
The aforementioned Entrepreneurial Audit opines that while complying with overly complex rules can take excessive amounts of time, “sweeping statements about red tape and intermittent calls for a ‘bonfire’ of regulations are unhelpful”.
Instead, the report suggests that for regulation, there should be a focus on quality rather than quantity, with each rule and requirement to be judged by its individual merits. In other words, the decision on whether a rule should stay in place should be made with common sense and practicality in mind, rather than the hitting of arbitrary targets.
The report proposes the removal of the ‘one in, two out’ rule on regulation, as well as doing away with the £10 billion target for cuts which could do more damage than good, and risk throwing the proverbial baby out with the bathwater.
Issues with Health and Safety at Work
Up until 2015, the self-employed were clearly covered by the Health and Safety at Work Act, which protects others in the workplace from potentially hazardous machinery, equipment or substances.
Previously, they were subject to the same strict examination and competence requirements as regular businesses, but a 2011 review proposed that if the self-employed person’s work poses no harm to themselves and others, then they should be exempt from the act.
As critics pointed out at the time, it was already the case that the only time the Act could be applied to self-employed workers was when they posed a risk of causing harm to themselves or others. Despite the needlessly confusing wording change, the self-employed would still need to conduct some form of risk assessment.
It was eventually stipulated that the self-employed would be affected by the Act if they are carrying out an “undertaking of a prescribed description”, which includes work in sectors such as agriculture, forestry, construction and health and social care.
This has actually ended up creating even more confusion than the original proposal, since many of the self-employed will incorrectly assume that they’re exempt from the conditions of the Health and Safety at Work Act because their sector isn’t explicitly listed.
To make sure the self-employed are clear of their obligations, the Entrepreneurial Audit suggests that the Government should reverse the new ruling and reinstate the original, much less confusing wording of the Act.
What do you think of these proposals? What has affected you more – needless regulation, or reckless deregulation? Let us know in the comments below.