This article was originally published on The Commentator.
As the UK’s departure from the European Union on March 2019 comes closer, it is more important than ever to reassure smaller businesses across the country they will benefit from the clear opportunities of Brexit.
In other words, the Government must commit to slashing EU red tape once the implications of the Withdrawal Bill are fully implemented.
European bureaucracy and excessive regulation are currently some of the biggest burdens to face Small and Medium-sized Enterprises (SMEs). Many of these businesses are prevented from further growth and greater productivity due to heavy EU legislation.
As part of the Withdrawal Bill, the Government will transfer over 12,000 pieces of existing EU regulation into the UK statute book in order to avoid creating a legal ‘blackhole’. It will overturn the controversial European Communities Act of 1972, meaning EU law will no longer be legally binding in domestic affairs.
This leaves the UK with the possibility of heading toward a transition period from April 2019 to late 2020 where EU rules and directives will continue to be integrated. Elected MPs will then have the necessary power to change these laws.
In 2017, The Telegraph called on Theresa May and her Conservative Party to pledge to a ‘bonfire’ of EU red tape in their next General Election manifesto. This must happen for thousands of SMEs to economically thrive and prosper.
Where EU regulation should be creating the best possible conditions for business to grow and succeed, it actually does the opposite. Many SMEs find themselves constrained by a wide range of EU rules, which are deeply time-consuming for smaller firms with less manpower and fewer resources.
Despite the Government’s recent warnings in their No-deal contingency plans, indicating UK companies trading with Europe could face even more red tape, a high proportion of SMEs do not even engage in cross-border trade within the EU.
They are currently forced to accept and abide by 100% of Single Market rules. There may be some short-term pain for the economy overall, but business will flourish in the long-term once when they are free from restrictive EU rules. It may be a small price to pay to ensure many small business owners in this country have the freedom to succeed.
SMEs make up over 99% of businesses across the UK, and by cutting unnecessary red tape, this can unlock new openings for economic growth to occur in a number of sectors. This can mean more sales are made, more goods are produced, and more jobs are created. As it stands, overregulation is forcing many companies to mainly focus on administrative tasks rather than engaging in business.
In a survey of 500 SMEs, conducted by the online printing company ‘Instantprint’, 8% of business owners claimed they had no time to focus on growth, meaning their enterprises are at risk of stagnation and losing competitiveness. The survey also found particular areas such as Health and Safety and Pension paperwork to be the most burdensome.
A widely cited example is the Health and Safety Framework Directive. This forces small businesses to keep written health and safety risk assessments, even if they are working in a low-risk sector. These legal requirements cost time and money, and it should be up to the UK Government to decide whether small, low-risk businesses need to have written risk assessments. Businesses who only carry out low-risk activities could be exempted, providing greater flexibility.
Another piece of EU legislation disadvantaging SMEs is the Waste Framework Directive, which involves rules on the disposal of business waste. It requires all businesses to register as waste carriers even if the waste being transported is considered low-risk. Again, the time and administrative costs spent, disproportionally impacts the work of smaller firms.
Whilst some companies transport hazardous waste in small and large quantities, the majority do not. Removing such requirements for those who only transport a small amount of low-risk waste, could benefit tens of thousands of small businesses.
It is evidently clear many SMEs, and their already narrow profit margins, are being choked further by a number of bureaucratic laws and regulations, imposing unnecessary additional costs and endless hours of paperwork.
This is clearly shown by EU regulation on the provision of food information to consumers. Many companies currently find it difficult to comply with the European Commission’s stringent criteria for defining the country of origin when it comes to labelling of fresh and frozen meat.
For example, country of origin labelling must apply to meat used as an ingredient in food products, which means wholesale changes have to be made to all processing practices. Businesses have previously warned these strict rules are not only costly for business, but are also extremely impractical.
Furthermore, it requires companies to include the definition of origin on the country of slaughter as well as the country of rearing despite there being little evidence to suggest consumers want information on where farm animals were slaughtered. Collecting this information has proven to only add additional burdens to those operating in the food sector.
Rules like this illustrate the desperate need to Get Britain Out of the EU to ensure real change happens for many SMEs across the country who are being suffocated. If Brexit really means taking back control of laws, then slashing EU red tape is imperative. This will allow businesses to have greater freedom and save huge costs from excessive bureaucracy.
It is time for this Government to act in the best interests of British business and commit themselves to deregulation in order for SMEs to thrive in the post-Brexit era.
Luke Watson is a Research Executive at the cross-party, grassroots campaign Get Britain Out.