Decisions in Whitehall

The media hysteria over “swine flu” – what happened to bird flu and the millennium bug? – provides a distraction from a nasty first quarter for businesses.


The media hysteria over “swine flu” – what happened to bird flu and the millennium bug? – provides a distraction from a nasty first quarter for businesses.

The media hysteria over “swine flu” – what happened to bird flu and the millennium bug? – provides a distraction from a nasty first quarter for businesses. It ended with a 56 per cent rise in company insolvencies, and the demand for UK manufactured goods falling to a 30-year low.

Decisions in Whitehall and Brussels demonstrate yet again that politicians make the wrong decisions about how to assist businesses because they lack any real experience
of what it takes to build a company.

Many owner-managers had low expectations of Alistair Darling’s second budget and, in that sense, the chancellor truly delivered. Of course, Darling didn’t so much have his hands tied, rather, he was bound and gagged in terms of what he could do to boost the economy given the catastrophic levels of public debt. However, it seems more than just an oversight to virtually ignore growing businesses – cancelling a planned hike in national insurance contributions, stopping increases in fuel duties and allowing more companies to qualify for protection under the temporary £5 billion credit insurance scheme would all have been welcome moves.

Easing the pressure

Moreover, anything to ease that perennial enemy of owner-managers, red tape, would have been a godsend. One think tank estimates that, since the government brought in its regulatory reform agenda in 2005, the cost of regulation to business has increased from £16.5 billion to £28.7 billion. The report by Open Europe, which clearly sees Brussels as the dark heart of Europe’s woes, notes that much of the regulatory burden comes from the EU. Apparently, if current trends continue, EU regulations will cost the UK £356 billion by 2018 – or £14,300 per household in Britain. Add to that the £30,000 plus we all owe from the national debt, and this country seems set to turn into a giant reality TV show where each and every one of us fights for the marrow from discarded bones.

Concern over regulation is mounting as everybody feels the squeeze. The private equity industry is deeply alarmed by the EU’s proposals to introduce public company-style reporting for businesses with as few as 250 employees and ?50 million turnover if a company has European investors.

It will hit mid-sized private equity firms – the ones that back fast-growth businesses – particularly hard. Given that the legislation has its roots in the furore that surrounded the large leveraged buy-outs and asset-stripping of a few of the larger private equity firms in days gone by, it’s another example of politicians misunderstanding the problem and applying regulatory force in the wrong places.

Despite Brussels’ increasing dominance, one battle has been won by Whitehall. The EU’s Working Time Directive, which proposed to cap a working week at 48 hours, has been left in limbo.

So at least we can still work long hours.

Marc Barber

Raven Connelly

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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