Focus business policy on small firms

23 February 2010

The government should put the needs of small firms first when drawing up business policy.

That was the message of the Forum of Private Business (FPB) in its response to a government consultation, the 'Thinking Business in Policy' interim review, which is looking into the effects policy-making has on business.

In the view of the FPB, too little consideration is given to the disproportionate impact new rules and regulations have on smaller firms, employing, as many do, just a handful of people and lacking the expertise needed to understand and interpret the law. 

Asked in the consultation how policy-makers can better appreciate the impact their decisions have on businesses, the FPB responded by highlighting the forthcoming Equality Bill as an example of the underestimation of the effects of legislation.

The government's own 'impact assessment' claims that an SME will need just an hour to understand the section of the new law dealing with disability discrimination.

However, the FPB thinks that a typical small business owner/manager will need much longer to grasp the meaning of the document and to make any necessary changes to their business.

Matthew Goodman, the FPB's policy representative, said: "We believe that, through improved understanding of the nature of small businesses and by making much more accurate assessments of the implications of the legislation, decision-makers can make informed judgements about the advantages and disadvantages of policies."

Mr Goodman also argued that the economic as well as the social ramifications of policy must be taken into consideration.

He continued: "It's not enough simply to consider the social benefits of legislation without giving thought to the bigger picture. Many businesses feel they are often seen as those which should automatically pay for attempts at influencing social change."

The FPB is lobbying for a comprehensive regulatory review to examine every existing piece of regulation and to assess whether it can be scrapped or simplified.

Mr Goodman added: "We feel that a comprehensive regulatory review would, most importantly, help government departments understand how pieces of legislation interact with each other, creating cumulative administrative and policy burdens.

"This would help identify areas of real cost to government and how those costs filter down to businesses."