SMEs urge government to stop regulatory confusion

(2 minutes to read)

FSB: ‘Constructive, clear regulation is a boon for small firms – ensuring they can excel in safe, productive environments. Complex red tape, by contrast, is a constant drag’.

The government is being urged to learn from the regulatory mistakes made during the pandemic that caused confusion amongst businesses.

A new study from the Federation of Small Businesses (FSB), Newcastle University and the University of Birmingham revealed how a lack of regulatory clarity over lockdowns added to the strain on firms.

Nearly a quarter of firms said that they found the distinction between guidance and legal requirements to be totally unclear, which led to many ‘gold plating’ – going beyond minimum requirements for fear of falling short. This came at a cost of not only money, but worry and time too.

As a result of this, the FSB, Newcastle University and the University of Birmingham are calling on the government and regulators across the UK to:

  • Clearly communicate the distinction between actions that a business must take and the steps that a business might choose to take, when changing or introducing regulatory requirements.
  • Make effective use of intermediary bodies when communicating changes to regulation.
  • Publish illustrative examples of compliance to help small firms understand what good practice looks like
  • Introduce grace periods after regulatory changes are introduced to avoid penalising those doing their utmost to comply.
  • Minimise restrictions or red tape on schemes that are designed to help businesses, like furlough. 

FSB National Chair Martin McTague, said, “With economies now thankfully unlocked, this is the moment to step back and assess what broad regulatory lessons can be learned from the pandemic.

“While it is understandable that governments and regulators had to act at great speed as the circumstances of the pandemic evolved, some of the regulatory shortcomings were consistent with problems encountered in more normal times, including around clarity and communication.

“The gold plating trend that we saw over the lockdowns is not confined to health measures, this is a wider issue that drains firms of the resources they need to innovate, upskill and recruit as we work to secure our economic recovery.

“Constructive, clear regulation is a boon for small firms – ensuring they can excel in safe, productive environments. Complex red tape, by contrast, is a constant drag.

“The government rightly set out its regulatory reforming zeal in the Queen’s Speech, and after Brexit it now has full control on this agenda. We’re now urging it to learn from best practice and adopt the British Columbia model, where they successfully reduced regulatory requirements on business by over a third in three years. This was done through a new smarter approach to remove red tape, and implementation of new regulation only where it is strictly required and effectively communicated.

“By taking forward the recommendations we’ve set out today, government and regulators can reform our compliance landscape so that it helps, rather than hinders, those looking to start-up, invest and expand.”

To find out more about contracting please contact Jaime on 01442 795 100 or email

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