The Small Business, Enterprise and Employment Bill was introduced into parliament in June and will proceed through the legislative system over the next twelve months. The bill covers finance, procurement, employment and specific trades and its broadness will ensure there is interest from a wide array of industries. Some of the measures are fairly mundane whilst others a little controversial. So what are the main battlegrounds likely for the bill?
The bill proposes measures to push ahead with the electronic scanning of cheques for paying in, together with measures to release small business credit data – with their permission – for other lenders to offer more competitive funding. It also gives the Secretary of State powers to impose reporting requirements on larger companies to detail their payment times and terms in annual reports.
The thinking behind this measure is to increase transparency and accountability of the payment times of larger businesses to their supply chains. Forum of Private Business research illustrates late payment is having a significant impact on business development, productivity and growth. Access to finance, cost of finance and credit trade insurance were all cited by business as problems linked to late payment.
The Forum of Private Business has long campaigned for better measures to tackle late payment and lengthening payment terms and this is a positive step forward. It is rare that a business body calls for more regulation but this is a case where more accountability is needed, to help try and stop the issue from getting worse.
Research indicates that the cost of compliance with regulations continue to rise for small businesses, though there is a case that some of this rise is down to perception. Major costs are health and safety (3.7bn), employment law (4.7bn) and tax compliance (6.0bn).
The coalition intends to be the first government in history to reduce – not increase – the burden of regulation. Measures to tackle the regulatory stock, such as the Red Tape Challenge and One in Two Out, together with changes to the regulatory flow such as the Regulatory Policy Committee and Growth Duty, means that in terms of sheer volume of regulation the Government is likely to meet that objective.
The bill will put into statute requirements for the government to review regulations for their appropriateness after a few years and put in place targets for deregulation over the course of a parliament. It is an area where more needs to be done.
Governments must understand that regulatory impact comes not just from the amount of regulation but the frequency of change too. Minor rules which change often are just as time consuming as major ones that change more infrequently. Whilst the Forum of Private Business welcomes the statutory footing the bill intends to bring in, it will do nothing to support a true reduction in regulatory burden unless politicians of all parties regulate less in the first place.
The ‘employment’ bit of the bill is largely uncontroversial though there are clauses seeking to ban the exclusivity element of zero hours contracts. The growing use of these contracts, primarily their abuse by larger companies, is a concern but there are varied and legitimate uses for them, particularly in retail and hospitality sectors, as well as start ups. The exclusivity issue is certainly the most contentious component of them and a ban on it will be welcomed by many. However, there are some specific uses of the exclusivity clause which are justified (for instance where sensitive information is at risk) so this may become a point of debate in the bill.
The pub trade
The bill looks to introduce a pubs adjudicator and a pub code. The adjudicator is the direct result of a failure of self-regulation in the industry, as many pub tenants have been increasingly squeezed by the pub companies over the last few years – some would argue for much longer than that.
The pub code will perhaps be the fiercest battle of the whole bill. On one side, pub companies maintain there is no need for the code. On the other, many groups want it to go much further, with a compulsory ‘free of tie’ option and an independently assessed rent review, to ensure a tied tenant is no worse off than a free of tie one.
These are the main four clauses for small business but with less than a year to the election, there is plenty left to fight for, for small businesses and many groups will see this bill as a vehicle for further supportive government legislation.
Alexander Jackman is Head of Policy at the Forum of Private Business