Businesses saved £10bn through red tape cutting

Wednesday 31 December 2014

Businesses have been saved around £10 billion over the last four years because of the government's drive to cut red tape, so says business minister Matthew Hancock.

He also added that this drive to cut regulations deemed to be unnecessary for businesses could save £20 billion by 2020 if it were to continue.

The government introduced the Red Tape Challenge to uncover and abolish regulations that were thought to be pointless and caused problems for businesses.

Around 30,000 firms and members of the public from the UK weighed in on the discussion and helped to overhaul regulations with a view to making them worked for, rather than against, businesses. Areas that were changed included heavy duty rules on employment that get in the way of new jobs and health and safety and environment laws that put a large burden on firms.

These are things that have affected limited companies, sole traders and umbrella company contractors in the past.

Mr Hancock introduced a strict One-in, Two-out rule as part of the government's long term economic plan. This means that government departments planning to impose a new regulation on business must also find a double cost saving.

On the day that the £10 billion saving through the red tape challenge was announced, Mr Hancock said: "Today is a milestone for businesses of all shapes and sizes. I am very proud that the government is the first in modern history to cut red tape and free up business to create jobs and prosperity.

"One in two out has delivered a fundamental change in the way Whitehall works. We are unashamedly pro-business and we will always back those who create jobs for others.

"Now we are officially winning the fight at home – we have to take the battle against red tape abroad. The EU has committed to reduce the burden of regulations and follow our lead."

He says that changes he hopes to see from the EU come with a view of putting jobs and growth ahead of regulation.

In the UK, businesses have benefited from the overhauling of many reforms. For example, company law was changed so that small businesses were given more freedom to decide whether or not their accounts need to be audited. This has shown to save firms at least £300 million each year.

Health and safety rules have also changed so that shops and offices that are considered to be low-risk no longer face unannounced inspections. Additionally, businesses are no longer held liable when there is an accident in their workplace that is not their fault.

There has also been an Early Conciliation service introduced that is intended to help employers and employees quickly settle problems, which saves them the expense and risk of entering into an employment tribunal. The government says that this is saving businesses £24 million each year.

By Victoria McDonnell

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