Red tape still a burden for North East business

Research by R3 suggests around a third of businesses in the region feel bureaucracy has increased under the current government

Crest Photography Allan Kelly, chairman of R3 in the North East
Allan Kelly, chairman of R3 in the North East

More than a third of businesses across the North East believe that the regulatory burden on their operations has increased since the current Government came into office.

Research undertaken by insolvency trade body R3 as part of its regular Business Distress Index found that 34% of firms in the North East, Yorkshire and Humberside felt more weighed down by red tape than they did back in 2010, with an equal proportion feeling the burden has increased slightly (17%) or increased a lot (17%).

Of those surveyed, 15% felt that they were now facing a less taxing regulatory environment than four years ago, with 8% saying this pressure had decreased slightly since 2010, and 7% that it had decreased a lot.

A further 49% of businesses surveyed thought the regulatory burden they now faced had stayed the same under the present government.

In January this year, Prime Minister David Cameron launched a new Red Tape Challenge, which is designed to save more than £850m a year by dropping or changing up to 3,000 rules that are viewed as not fit for purpose.

Allan Kelly, chairman of R3 in the North East and a partner of the Turnaround & Insolvency division with regional accountancy firm Tait Walker, said: “While no one would argue that regulation is at all a bad thing in itself, dealing with unnecessary, cumbersome and time-consuming rules can make a huge difference to a company’s commercial performance, especially in cases where firms are facing significant financial difficulties.

“The time it takes to manage regulatory burdens eats into the capacity that management teams have to actually run the business and deal with the problems it may be facing, which could be crucial in terms of whether they succeed or not.”

As part of the government’s Red Tape Challenge, regulations affecting one specific sector or industry are being published every few weeks with a view to gathering comments on them from the people and businesses they affect.

This feedback is then reviewed by the Government to work out which regulations they want to keep and why, with the default presumption being that burdensome regulations will go unless ministers can make a strong case for keeping them.

Kelly continued: “In my own industry, there are regulations in place which effectively prevent insolvency professionals from having the best possible chance of saving companies in distress, along with the jobs that they support, and R3 has been campaigning hard for several years to make changes that would prevent business rescue being held to ransom.

“All political parties say that they will look to reduce the burden of red tape on business, and the current government should receive some credit for setting itself some stiff targets in this area, but the feedback that we’re getting is that the regulations being removed are not being much noticed by regional businesses.”

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