Increasing levels of regulation is costing businesses an extra £1 billion a year, according to a new report.
The survey, by the Institute of Chartered Accountants in England and Wales (ICAEW), reveals that many firms believe the increasing burden of red tape is preventing small businesses from raising adequate finance.
The report claims that the total cost to the economy to implement business legislation is estimated to be £7 billion per year. 69 per cent of this cost falls on smaller businesses, in contrast to just 3 per cent on large businesses.
Such disproportionate figures represent a £1 billion rise from 2003, when 68 per cent of the £6 billion burden was felt by the small business sector.
As a result, most small businesses believe government initiatives need to increase the supply of small-scale equity finance as well as relieve tax burdens, which many firms believe have reached unprecedented levels over the past twelve months.
The smallest businesses cited employment tax, business taxation and VAT as the greatest burdens on their business, with employment legislation a constant source of contention.
Eric Anstee, Chief Executive of the ICAEW, commented: “The survey reveals that enterprise is undiminished in the UK with many businesses seeking to grow over the next few years.
“There are however significant barriers to growth. Government measures to improve access to finance, reduce skills shortages and improve the burden of red tape are falling short of their objectives.”
