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Red tape moratorium to be extended to more businesses


An initiative that exempts small businesses from new regulations looks set to be extended under new plans announced by the Government.


The existing Micro-Business Moratorium, which was introduced in the 2011 Budget, currently applies to firms with fewer than 10 employees. However, the new Small and Micro Business Assessment (SMBA) will extend this moratorium to businesses with up to 50 staff.


Under a ‘rigorous’ cross-government assessment process, firms will also be exempted from new regulations if there is any evidence that they will result in disproportionate burdens that could impede growth.


Announcing the proposals, the Business Minister Michael Fallon said: ‘On my watch, new regulations will now only extend to small businesses if they are essential, justified, and where disproportionate burdens are fully mitigated. And where regulation is not fit for purpose it will be reformed or binned.’


The move has been welcomed by many of the UK’s leading business groups, which have long called for more action to reduce the red tape burden on small enterprises.


John Allan, National Chairman of the Federation of Small Businesses, said: ‘The Small and Micro Business Assessment should help to make future regulation more manageable and proportionate for the smallest firms, and is to be welcomed. This should mean that business owners will be able to devote time to growing their business and creating jobs rather than form filling.’


Meanwhile, Hayley Conboy, CBI Principal Policy Adviser for Enterprise, commented: ‘Regulation disproportionately affects smaller businesses which lack specialist resources to manage it, so this extension to the moratorium will help free up more of these firms to focus on growth.


‘However, it does not apply to many new rules impacting on companies so must not distract from the need for the Government to always ‘think small first’ when designing regulations. This will ensure that all firms can comply without disproportionate cost.’


The SMBA will apply to new regulations that come into force after 31 March 2014.