11th January 2010

Hotel and restaurant owners face £2.7 billion bill each year for regulation

Britain’s smaller hotels and restaurants are among businesses losing more than £2.7 billion every year due to government red tape, according to research carried out by business lobby and support group the Forum of Private Business (FPB).

The figure, drawn up using feedback from members of the not-for-profit FPB, is based on the amount of company time, and therefore money, spent on government-imposed bureaucracy. The research found that restaurateurs and hoteliers are forced to spend an average of 33 hours of company time each month on form-filling and paperwork. Those with nine or fewer employees spend an average of 29 hours, those with between 10 and 50 employees spend around 41 hours and larger organisations with up to 249 workers devote approximately 131 hours.

In terms of costs, complying with health and safety legislation alone was found to leave shops and suppliers in a bracket of firms left £606 million out of pocket each year. The cost of complying with employment legislation was put at £687 million per year.

The legislation surrounding waste and the environment was calculated to cost £318 million, equality and diversity £149 million, ISO and industry standards £211 million, tax £510 million and building and property £284 million.

Wholesalers and retailers were placed under the UK SIC’s ‘TRAD’ category in the research results, which also includes other businesses such as garages, restaurants, hotels and transport firms. Those under the TRAD category in the South East were found to face the biggest annual bill for regulation at £372 million, followed by London at £353 million, the North West at £306 million and Eastern England and the South West, which were both found to face costs of £263 million. The figure for the West Midlands was placed at £236 million, while Yorkshire and Humberside’s annual bill was £231 million, with £216 million for Scotland, £203 million for the East Midlands, £136 million for Wales, £95 million for Northern Ireland and £91 million for the North East.

The FPB is now urging the Government to cut down on red tape for small businesses and believes that reducing the time and cost of complying with legislation must not be sidelined, particularly as many firms are struggling to survive because of the recession.

“Our research shows that complying with red tape remains one of the major cost burdens facing smaller businesses, swallowing up valuable time and money that could be used more profitably elsewhere,” commented FPB policy representative Matt Goodman.

The FPB provides a member helpline, a 24-hour legal advice service and Health & Safety and Employment Guides. For further information visit www.fpb.org and www.smallbusinesschannel.co.uk