Brown will go Dutch to slash red tape

Gordon Brown is to announce a package of Dutch-style measures to cut through the layers of red tape stifling small firms when he delivers his ninth Budget on Wednesday.

In a speech expected to be light on 'giveaways,' the Chancellor will focus on alleviating the multi-billion pound burden of regulation and inspection, blighting the progress of UK entrepreneurs.

He is also due to announce the creation of an executive body to oversee future regulations in a new "one in, one out" approach to business compliance.

The body, known as the Better Regulation Executive, will implement recommendations made under last year's Hampton Review, which set out to examine inspection and enforcement regimes.

Under Philip Hampton, it is likely that penalties for rogue firms will toughen, while inspection regimes for reputable firms will simplify, through a new 'risk-based' assessment.

Such enterprise measures will form a central plank of Brown's Budget, in order for the Chancellor to better equip small firms to meet the competitive threat posed by China and India.

Mr Brown has also pledged to sweep away any "unnecessary regulation" that impedes the progress of smaller companies, effectively bringing the UK in line with the Dutch enterprise model that cuts red tape through targets.

David Frost, director general of the British Chambers of Commerce, said he met Brown last week and was "encouraged" at the Chancellor's crackdown on excessive regulations.

"The effects on British business of the burden of regulation appear to have been highlighted by his [Brown's] trip to China. His whole emphasis was on deregulation, and we have been encouraged by this," said Frost.

Meanwhile, the Federation of Small Businesses says entrepreneurs have grown naturally sceptical over red-tape busting promises, given past treatment at the hands of government.

"Small business have been promised on at least 30 occasions over the past 20 years that the government is going to address the problem of red tape," said David Bishop, spokesman for the Federation. "There needs to be some very radical action."

His comments point to figures from the BCC, which reveal that the cumulative red-tape burden on business under Labour is about £39 million.

This figure is likely to play a part in Wednesday's Budget, when the Better Regulation Task Force will make their first report whether or not to support the Dutch-style model of regulation.

In Britain, it is estimated that following the Netherlands model of aiming to slash the administrative burden by 25 per cent in four years, could reduce red tape by about £10 billion.

Alongside measures for enterprise, it is possible Mr Brown will unveil a sweetener for voters of up to £2 billion.

This is according to analysts at Ideglobal.com, the financial research group, which predicts most of the sum to go on pensioners and children.

The predictions come in the same week Sir Digby Jones, CBI Director General, has urged Brown to deliver "boringly, predictably, nothing," rather than a package of politically motivated tax treats.

His appeal has found support from Stephen Almabritis at Federation of Small Businesses, whose comments on the Budget have been selected by the Times as 'quote of the day.'

"What businesses will not want is gimmicks," said the FSB's chief spokesman.

Meanwhile, it is not just small business groups lobbying for an enterprise-friendly Budget package.

Mike Warburton, senior partner at Grant Thornton, told the Sunday Times that some type of incentive should be introduced to level the playing field for entrepreneurs.

"If the government's desire is to encourage entrepreneurship, then it must provide tax incentives that are genuinely fair to people who are starting up on their own by introducing tax rates that are lower that apply to company employees," he said.

"At present, there is no level playing field. Lowering the tax rates for small firms would be an incentive to ordinary people to break the mould of being an employee and help them to do extraordinary things."

Predictions by Grant Thornton for Wednesday's budget include a widening of the research and development tax credits, to be extended to self-employed people and partnerships.

Another small business adviser, Moore Stephens, said they would like to see a review of the 19 per cent dividend tax because of the confusion it has caused for start-up individuals.

They acknowledged that while it is unlikely to be withdrawn, there could be a marginal reduction for the smallest of firms to 18 per cent.

In a message to all political parties, Sir Digby Jones has said the race to secure the small business vote is officially on – with firms wanting to see praise for entrepreneurship and wealth creation.

He said: "I want to hear politicians in this campaign praising the success of profitable companies. The business vote is up for grabs and deserves to be fought for."

 

15th March 2005

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