Small Businesses (Hansard, 31 March 2004)

§ Mrs. Curtis-Thomas
To ask the Secretary of State for Trade and Industry if she will make a statement on the steps she has taken to encourage small businesses to grow in the United Kingdom. [163310]

§ Nigel Griffiths
The latest Barclays figures on Start-ups and Closures show that there were 384,900 start-ups in England and Wales in the 12 months ending September 2003, an increase of 3 per cent. on the year before.
A range of financial support is available to improve SMEs' access to finance, including the Small Firms Loan Guarantee scheme, R&D grants, Regional Venture Capital Fund, the Community Development Venture Fund, and Early Growth Funds.
OECD's review of EU countries ('Regulation, Productivity and Growth Economic Survey of the United Kingdom' (January 2003) shows the UK has almost the lowest administration cost and fewer regulations for entrepreneurs than any other EU country and that across Europe tax burdens on small business are lowest in the UK. The OECD Economic Survey—the United Kingdom (January 2004) indicates that in the UK economic and administrative regulations inhibiting competition and barriers to trade are among the lowest in the OECD.

§ Mrs. Curtis-Thomas
To ask the Secretary of State for Trade and Industry what steps her Department has taken to reduce the regulatory burden on small businesses. [163323]

§ Nigel Griffiths
Government are committed to reducing the regulatory burden on small business, in particular those regulations that act as a barrier to start-up and growth. We are determined to ensure that we only regulate when there is good reason to do so and when the benefits clearly justify the costs. Government have strengthened both the Regulatory Impact Assessment process and the guidance on the small firms impact test. Costs and benefits of proposed regulations are now properly analysed—and published.
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Some of the highlights of the specific measures we have introduced to improve the regulatory environment for small business include: Publishing the Government Action Plan for Small Business reiterating not only the commitment to better regulation but also our commitment to improving the regulatory environment for small firms. Cutting form-filling and red tape for 700,000 small businesses with the new flat rate VAT scheme as well as abolishing automatic penalties for late filling of VAT which cost businesses £99 million in 1996–07. Securing agreement across Government that there should be 12 weeks between the making of new regulation and its implementation, thereby allowing small firms more time to adopt and adapt to new regulations. Publishing the Regulatory Reform Action Plan—setting out over 250 proposals for better regulation and reform. The Action Plan is designed to make it quicker and easier to repeal out of date legislation. Raising the small company audit exemption threshold to the EU maximum of £5.6 million, saving 219,000 small businesses up to £274 million.
Announcements in the recent budget also highlight Governments commitment to reducing the regulatory burden for small firms. A further increase in the VAT threshold to £58,000 keeping 5,000 of the smallest businesses out of the VAT system. Government Departments reporting on their own regulatory performance. The independent Better Regulation Taskforce will publish its own analysis of these reports and Departments regulatory performance will be taken into account in the 2004 spending review. Regulatory proposals that are likely to impose major new burdens on business will have to be cleared by the Panel for Regulatory Accountability, chaired by the Prime Minister, based on a thorough Regulatory Impact Assessment that has been agreed by the Cabinet Office Regulatory Impact Unit. We have already introduced common commencement dates for employment legislation two days per year in April and October. The Small Business Service will be consulting with Government Departments and small business on extending common commencement dates to other areas of legislation. Government accepts in principle the benefits to business of moving to direct payment of the Working Tax Credit. This has the potential to reduce the cost of payroll administration benefiting 1.2 million small businesses.
All of these measures are designed to reduce the regulatory burden on small firms but it should be noted that the UK is not over-regulated compared to other countries.