Businesses warn mountain of red tape will cost billions

A MOUNTAIN of new red tape will cost firms billions of pounds, business groups warned yesterday.

The British Chambers of Commerce (BCC) said a raft of new employment regulation and the new Equality Act, which becomes law today, would hamper job creation and cost businesses £189.2m.

Meanwhile the national minimum wage will today rise by 13p to £5.93 an hour, while apprentices will be entitled to a wage of at least £2.50 an hour.

And employment legislation due to be passed between now and 2014 will cost firms a staggering £11.3bn, despite the government promising a bonfire of red tape during the election campaign.

David Frost, director-general of the BCC, said: “If private sector businesses are to offset job losses in the public sector, the significant costs of employing people must be reduced. As austerity measures start to bite, companies need the flexibility and freedom to boost employment and drive our economic recovery.

“While we have heard some good announcements from the Coalition about reviewing and scrutinising upcoming red tape, businesses are yet to see the benefits.”

The Institute of Directors (IoD) also hit out at the government’s decision to extend the right to request flexible working to parents of children under 18 from next year.

“This is particularly unwise when we know that creating another formal employment right would add to the already excessive amount of administration businesses have to conduct to comply with regulations,” a spokesperson for the IoD said.

Meanwhile, the IoD voiced its opposition to the coalition’s £2bn levy on the banking sector, warning it would pave the way for future governments to increase it while encouraging banks to relocate overseas.

“There is clearly public concern about how some of the banks have behaved which needs to be addressed, but this should be done in a way that doesn’t encourage the banks to move their headquarters out of the UK,” said Miles Templeman, director-general of the IoD.

He added: “There is a risk that the bank levy, as currently designed, will drive banking business away.”