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Monday, July 19, 1999 Published at 05:14 GMT 06:14 UK

Business: The Economy

Red tape stunting small firms

Small firms complain there is too much form filling

Firms are deliberately restricting their growth to avoid regulations covering health and safety and employment, according to a new report.

Rory Cellan-Jones: "This report will embarrass ministers"
The Better Regulation Task Force found evidence that firms were choosing to remain small in order to stay below the threshold at which regulations apply.

Some health and safety rules, for instance, only affect firms with five or more staff.

[ image: Lord Haskins:
Lord Haskins: "Small businesses need more support"
The task force, appointed by the government two years ago, also found small companies were fed up at the amount of form-filling imposed by the European working time directive.

Fledgling businesses have become increasingly strident about the burden of red tape since Labour came to power.

The latest research, chaired by Lord Haskins, chairman of Northern Food, will no doubt prove a further embarrassment for ministers.

Lord Haskins said the main problem was that firms were more concerned with survival when they first started up in business.

Lord Hoskins, chair of the Better Regulation Task Force: "Most of us recognise that we need regulation"
"As they develop and take on employees, they breach regulatory exemption thresholds and come to the attention of enforcers, but are still too small to justify employing a regulatory expert," he added.

The task force says the answer to the problem is not to exempt small firms from the rules, but to give them compensation for the extra work involved.

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