Why Is New Labour So against Small Businesses?

Daily Mail (London), July 9, 1999 | Go to article overview
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Why Is New Labour So against Small Businesses?


Byline: JAMES BARTHOLOMEW

ONLY this week Tony Blair told the British Venture Capital Association that entrepreneurs were the new elite - 'the frontline troops of Britain's new economy'.

And his Trade and Industry Secretary Stephen Byers recently promised the Federation of Small Businesses that he would promote small business enterprise and avoid over-regulation. He said he wanted to encourage people to take the risk of setting up wealth-creating small businesses.

But as with so many other aspects of New Labour, these warm words have not been matched by action.

A catalogue of red tape imposed on enterprise is the real proof of the way New Labour treats it. Small businesses are becoming convinced that they are hated by the Government.

They have watched as, over a period of months, by stealth, the biggest-ever increase in burdens has been imposed on them.

In the past few years, usually without a secretary to help, let alone a personnel department, they have been faced with mastering a swathe of new rules.

At first sight, the number of new employment laws such as paternity leave and changes to other working practices seem few. But when all this legislation is pulled together, the list is formidable.

The latest demand on the country's four million small firms is that they must administer the new stakeholder pension. It has been estimated that the extra costs will total [pounds sterling]220 million a year.

Other burdens include the minimum wage being raised to [pounds sterling]3.60 an hour; new paternity leave rights; more generous payments and entitlements to maternity leave; extra rights for union recognition; more freedom for staff to be given emergency leave or domestic incident leave; and easier access to industrial tribunal claims for workers.

All this comes from a government that professes to be sympathetic to entrepreneurs.

In each case, the changes are complex with exceptions and conditions varying according to the size and type of business.

SUCH burdens have consumed huge chunks of management time and have significantly added to the cost of running a small business.

The irony is that, in nearly every case, the laws and regulations were introduced by people who thought they were doing good. They believed, for example, that the minimum wage would create a better Britain where nobody was paid less than [pounds sterling]3.60 an hour.

Another plan is to make elderly people in care homes happier by ensuring their accommodation offers at least 12 square metres of space.

Again, the good intention is obvious.

But when I visited Cameron Warwick, who runs a care home with five full-time and five part-time staff, which is featured here (right), it became clear that the Government is achieving the very opposite.

The much-fanfared minimum wage is costing Mr Warwick, from Blyth in Northumberland, an extra [pounds sterling]12,000 a year. And the new rules on holidays, part of the working time directive, mean he must increase employees' paid holiday from two weeks per year to three - and pay someone else to cover the extra week's leave, setting him back another [pounds sterling]4,000.

Next year, employees will receive a minimum of four weeks' holiday, costing Mr Warwick yet more in temporary cover.

But while these costs have risen dramatically, his income - from local authorities, which pay for the care has a risen only a fraction. Business has therefore become less profitable.

Mr Warwick, like many other bosses across the country in the same position, has been forced to employ one less person - reducing the quality of care he offers to his elderly customers.

It means he will not be able to expand his capacity as he wanted. So the result is less employment and fewer care home places.

This merely emphasises how such a surge of new rules and regulations is not only an oppressive burden for businessmen and women, they also affect the rest of us.

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