Roger Trapp: Enterprises thrive most with a challenge

SMEs should worry less about red tape and seize the opportunities in front of them
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The Independent Online

Gather any number of owners or managers of smaller business together and it is unlikely to be very long before they start to complain about regulation, tax and other burdens visited upon them by the Government. In this respect, the first Small Firms' Summit, held last week by the Forum of Private Business (FPB) went according to type. Delegates were vociferous in moaning about employment rules that apparently put firms off taking on new employees, about the detrimental effect rules and regulations from Europe were having on business performance and about high, confusing taxes.

And the results of a survey, published to coincide with the event, revealed that there was general discontent with these issues. Thirty per cent of those responding thought that health and safety was the area of regulation that placed the greatest cost on their business, with employees' tax and National Insurance Contributions next, cited by 25 per cent of respondents.

In what will no doubt dismay a government that has spent a lot of time talking about reducing regulation, Len Collinson, national chairman of the FPB, said red tape continued to restrict the growth and profitability of small firms. "Smaller businesses feel the cost of red tape more acutely than their larger competitors as they have fewer resources to deal with it," he said.

These points were not lost on David Cameron in his keynote speech. Showing the knack for addressing the concerns of any given audience that was once a hallmark of Tony Blair, the Tory leader said he and his colleagues understood the "vital role" of small and medium-sized businesses in the economy and would seek to help them in four main areas - taxation, regulation, business support and procurement.

Tax would be made less complex, while regulation would be reduced, with - controversially - Britain opting out of the Social Chapter, which covers many employment laws. Business support, too, would be made easier to understand and to access, with greater emphasis placed on helping British businesses of all sizes compete on the world stage.

The public sector should be opened up to smaller businesses, Mr Cameron said. At present, less than a fifth of all government money spent on procurement of goods and services went to smaller businesses.

He pointed out that the established practice, whereby local authorities sought records of three years of trading before considering dealing with a business, discriminated against smaller businesses that might benefit public-sector organisations through their dynamism and ideas. He called for a requirement that a significant proportion of state contracts go to smaller businesses.

Above all, Mr Cameron said there needed to be a change in attitude in the Civil Service, in education and in society as a whole.

This is all very easy to say when you are in Opposition and not preoccupied with making the NHS work and ensuring that the books balance. But, while it is also the sort of thing that should have sent the FPB delegates home with a bit of a glow, it should have given them pause for thought.

Yes, we can understand that regulations can be overbearing and can tempt businesses to stay small. But many of these rules and regulations are there to protect individuals from being injured at work or discriminated against - and nobody should object to that.

Of course, businesspeople would like to pay less tax and to have unfettered freedom to hire and fire. But they must also be able to see that if they were an employee they would want to be protected or paid fairly.

Mr Cameron needs to be wary of giving the impression that businesses would be feather-bedded under a Conservative government. Businesses thrive most when presented with challenges. And the FPB, and other organisations like it, should reduce the volume of complaint and concentrate more on showing how dynamic their members are through thriving in the face of adversity while suggesting that perhaps a bit of extra help might assist them in doing even better.