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Small firms say central government is the main cause of their red tape hassles
LONDON, AUGUST 2003 - Small firms have fingered central government as the main cause of their red tape hassles, according to new research from Xbridge, the small business finance experts. Brussels - often portrayed as the spiritual home of pointless bureaucracy - actually attracts less complaints about red tape than either Britain's banks or local government.
The poll will be a blow to the Labour government, which has tried to present itself as the friend of enterprise. The DTI website says that it exists "to promote enterprise, innovation and increased productivity - in particular by encouraging successful business start-ups." Small businesses appear to be blowing a raspberry at that notion.
Red tape - along with taxation and late payment - is revealed regularly in research as one of the biggest pressures on the UK's 3.5 million small businesses. In order to ascertain the source of this generic 'red tape', Xbridge asked 1,000 small business owners where the most frustrating red tape came from.
Although national, local and supranational (the EU) red tape combined are seen to generate by far the most red tape (62 per cent in total), banks, insurers and other financial services providers are also responsible for generating time-consuming and annoying red tape (31 per cent in total).
Key findings:
- Central government is the primary source of annoying red tape, with almost one in four (24 per cent) small businesses saying this generates the biggest bureaucratic burden.
- Although the European Union is often cited as the reason why red tape is such a big issue for small business, the EU (17 per cent) is seen as a smaller source of bureaucracy than local government (18 per cent) or central government (24 per cent).
- Devolved government is cited by two per cent of small firms across the UK as the source of the most red tape, although, as one would expect, this rises in areas that actually have some form of devolved government, led by Wales (16 per cent), Scotland (five per cent) and London (five per cent).
- Financial services providers are seen as a major source of administrative burden themselves, led by banks (18 per cent) and insurers (nine per cent), with other financial services providers (e.g. asset financiers) cited by a further four per cent.
- Scottish small businesses are the most likely to see banks as the cause of their red tape woes, with 30 per cent saying they are the biggest generators of bureaucracy. This could reflect the more limited choice of high street banks available in Scotland. Scottish businesses are considerably less likely to blame central government for their red tape burden (14 per cent vs. a 24 per cent UK average).
- Small firms in London appear to be the most EU-friendly in the UK, with only seven per cent of small firms in the capital blaming the EU as the chief cause of red tape. Small firms in the North are three times as likely to cite the EU (21 per cent).
Brad Liebmann, managing director of Xbridge, says:
"Although the ubiquitous 'red tape' is usually seen as a major cause of hassle for small businesses, we wanted to find out who the small business owners really think is responsible for its creation.Government at various levels needs to shoulder a large part of the blame and to help small businesses. The government pays lip service to them on this issue but clearly isn't doing enough to help. But banks and insurers aren't making life as simple as they could be and should be working harder to make their systems as small business-friendly as possible."
Figure 1. Which of the following organisations generate the most annoying red tape?
| Organisation | Percentage |
| Central government | 24% |
| Local government | 18% |
| Banks | 18% |
| European Union | 17% |
| Insurers | 9% |
| Don't Know | 6% |
| Other financial services provider | 4% |
| Devolved government | 2% |
| None of the above | 1% |
Note to editors:
- The research was conducted by Xbridge online among a representative sample of 1,000 financial decision-makers in Scotland, England and Wales by e-mail and Internet response means in August 2003.
- Xbridge was founded in 2000 and is the UK's leading online intermediary for small businesses finances with more than 40,000 small firms using them every month to get quotes tailored to their needs on services from commercial motor insurance to asset finance. Businesses seeking quotes can go to www.xbridge.co.uk.