Number of bosses who say "never again" doubles

A staggering 41 per cent of company bosses say they would be unlikely to set up in business if the opportunity arose again. The figure, part of the 2005 Sage Heartbeat Survey, is up from 27 per cent in 2004. The survey is an ongoing study into the ups and downs of business life in the UK, conducted by YouGov among more than 2,500 business decision makers, on behalf of Sage UK. Perhaps more worrying is that 49 per cent of women (compared to 36 per cent of men) say they would not start a new business if the opportunity rose again.

The results call into question the reality of the so-called enterprise culture supposedly gripping the UK. They also emphasise the increasing impact on business of red tape, cited as one of the biggest reasons for entrepreneurs turning their backs on future business opportunities.

Employment legislation is a key area of concern:

• 69 per cent of respondents agreeing that the burden of proof has swung too far in favour of the employee
• 61 per cent that the continued extension of family-friendly policies is bad for business
• 71 per cent (76 per cent of men and 62 per cent of women) would support UK opt-out from future enterprise culture weakening EU legislation

Although business is aware of the importance of fair play and equitable rights, the corresponding increase in form filling and resulting complex legal wrangles is having a disproportionate impact on small companies. In fact, 19 per cent - a fifth of all businesses - have considered giving up because of red tape surrounding employment legislation. The growing mountain of red tape has actually stopped 32 per cent of businesses from taking on new employees. One way or another, the overall cost of red tape is starting to bite.

The cumulative cost to firms of regulations introduced since 1998 is now £39bn, according to the British Chambers of Commerce’s ‘Burdens Barometer’, published recently. David Frost, Director-General of the BCC, says: “British business cannot compete with a £39bn millstone around its neck”.

According to the Sage research, UK bosses have particular problems in dealing with issues surrounding poor staff performance, long-term or unauthorised absence and redundancy. Getting it wrong can prove costly. Last year saw 115,042 employment tribunal claims brought against employers, representing a 61 per cent rise over the past decade, according to figures from the CBI. The average unfair dismissal award (2003/4 figures) was £7,275; sex discrimination £12,971; disability discrimination £16,214 and race discrimination £26,660.

Top ten red tape burdens*

1. Working time regulations: £11.1bn (cumulative cost for 1999-2004)
2. Data protection rules: £4.6bn (cumulative cost for 1998-2004)
3. Vehicle excise duty (reduced pollution) regulations: £4.3bn (cumulative cost since 2001; the recurring annual cost for firms is £1.2bn)
4. Control of asbestos at work: £1.4bn since December 2002
5. Disability discrimination rules: £1bn (cumulative cost since 1999)
6. Employment Act 2002: £565m
7. IR35 tax rule: £465m (cumulative cost since 2000)
8. The Tax Credits Act 1999: £465m
9. Stakeholder pensions: £404m
10. Flexible working regulations, 2002: £400m

* Sourced from www.economicsuk.com