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NORTH-EAST small firms say their growth ambitions are being blocked by excessive red tape.

Almost two thirds of firms in the region want to take on more staff, according to a study by the North East Chamber of Commerce.

But 46% of respondents, which were firms with 10-49 employees, said regulations were too burdensome.

Almost one in two (44%) firms found health and safety rules a barrier to growth, while 29% said laws around sickness absence had hit their business.

More than one in five (22%) have been threatened with an employment tribunal and 70% said tribunals were weighted unfairly against the employer. NECC has called for a "simplified and stable regulatory environment" to allow the private sector to expand.

Ross Smith, NECC head of policy, said: "Ever since regulations have been applied to businesses, people have been complaining that there is too much red tape. The Government has got to find a way of boosting growth but it has to do so with not much money to spend. It has to look at other tools at its disposal - and untangling businesses from red tape is one of them."

He said firms had expressed concern over rules around shared paternity leave and the Agency Workers Directive, under which workers supplied through an employment firm will be entitled to holiday pay and sickness benefits after just 12 weeks in their jobs.

The NECC's calls for less red tape has been echoed by other business groups including the CBI and manufacturers' organisation EEF. EEF said the regulatory system could deter companies from taking on staff and urged the Government to reduce the volume and complexity of employment legislation.

This week the Department of Business, Innovation and Skills launched a Red Tape Challenge to deal with excessive regulation following David Cameron's pledge to create a better trading environment for business.

But business groups say not enough action is being taken.

Miles Templeman, the departing head of the Institute of Directors, said "no progress" had been made on cutting red tape, with new rules on pensions set to heap a pounds 3bn cost burden on industry.

From October next year, companies will have to automatically enrol staff onto a pension scheme and make a financial contribution to it - 3% for employees earning between pounds 5,035 and pounds 33,540.

Mr Templeman said: "I do believe this Government aspires to be business orientated, but the Agency Workers Directive and auto-enrolment pensions will overwhelm efforts elsewhere to stop the burden increasing. Ministers need to do much better."
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Title Annotation:Business
Publication:Evening Gazette (Middlesbrough, England)
Date:Oct 5, 2011
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