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Small firms' fear of red tape puts them off taking on staff.

Byline: By RHODRI EVANS Western Mail

Red tape is making Welsh businesses less likely to take on new staff, a survey has revealed. More than 60% of Welsh small businesses admitted to either reducing the number of people they employed or avoiding employing more people because of the concern over the increased burden of paperwork, according to a survey by Mentor, the advice service from NatWest.

The survey also found that when firms make the decision to become employers, a third choose to restrict or even reduce the number of staff they employ.

Nearly two-thirds of Welsh respondents didn't think that they spent too much time complying with government regulations, although this does vary for those businesses with a turnover of more than pounds 500,000, where two-thirds felt they had to deal with too much paperwork.

On average, Welsh small businesses spend 3.1 hours a month dealing solely with employee-related paperwork, with a fifth admitting to spending well over five hours on employee regulations. Those firms operating in the hotel and catering sector spend an average of seven hours dealing with employee-related paperwork, compared with only 1.3 hours for those in wholesale.

Welsh small businesses spend on average 21 hours a month dealing with all government regulations and paperwork, although this almost doubles for businesses with more than 11 employees which spend 26 hours a month on compliance-related paperwork.

The research also shows that the higher the turnover of the business the more time it spends on dealing with government regulations - those respondents with a turnover of more than pounds 500,000 take at least 22.5 hours a month.

The transport sector reports the largest burden when it comes to regulatory paperwork. An average business spends 29.1 hours a month and 33% admitted to spending between 31 and 50 hours a month completing the necessary paperwork.

Taxation, however, is the biggest concern for Welsh small firms, with 31% saying that they spent the most time dealing with VAT and 23% dealing with PAYE.

Despite the general feeling that the time taken to complete government regulations is about right, 83% of Welsh small businesses still think that there is far too much paperwork related to employees, particularly for those with a turnover of more than pounds 500,000.

Diane Christie, head of NatWest Mentor Services, said, 'The time that it takes to comply with government regulations is clearly a top priority for small businesses, although many agree that the regulations are necessary.

'It is concerning, however, to see that small firms are thinking twice about employing more staff, and have even reduced jobs because of the amount of regulation involved.'
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Title Annotation:Business
Publication:Western Mail (Cardiff, Wales)
Date:Jul 21, 2004
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