Government responds to employer criticism of labour market regulation

In March 1999, following a "red tape summit" with employers' representatives, the UK trade and industry secretary announced that he was initiating a review of all regulations that have an impact on business, with the intention reducing the regulatory "burden".

Employers' organisations in the UK are increasingly voicing concern at the implications of what they see as the mounting level of regulation affecting business, especially new employment measures such as the working time Regulations (UK9810154F) and the national minimum wage (UK9807135F). On 18 March 1999, leaders of a range of employers' groups including the Confederation of British Industry (CBI) and organisations representing small businesses met the trade and industry secretary, Stephen Byers, to discuss the issue. Following this meeting, which was described by CBI president, SirClive Thompson, as a "red tape summit", Mr Byers told Parliament on 25 March that he was currently reviewing all regulations that have an impact on business and intended to take quick and radical action to "lift the burden of regulation from business".

The CBI wants the government to place a "moratorium" on new legislation that imposes significant burdens on business and to simplify existing rules and "roll them back where possible". Speaking after Mr Byers' announcement, Sir Clive Thompson said that "What we need is a regulatory environment that is business friendly. But what we've had to highlight to government is a growing accumulation of regulatory burdens, from Whitehall and Brussels." According to the CBI, the introduction of the working time Regulations and the national minimum wage will cost UK firms GBP 4.6 billion.

The Engineering Employers' Federation (EEF) has also criticised the level and timing of recent employment legislation. In a separate meeting with the trade and industry secretary on 18 March, an EEF delegation expressed concern that EU Directives tended to be "gold-plated" when implemented by UK officials, and that companies were given insufficient time to prepare for the introduction of the working time Regulations and the national minimum wage. The EEF argued that in future companies should have at least three months to study the details of new regulations before they take effect.

The government's announcement of its review of "red tape" is reported to reflect concern on the part of ministers about the potentially adverse implications of increased regulation for competitiveness and for the government's business-friendly reputation. Speaking in Parliament on 25 March, Michael Wills, the minister responsible for small firms at the Department of Trade and Industry (DTI), stressed that the "deregulatory" changes made in the final version of the national minimum wage Regulations (UK9902185N) were a "swift and decisive" response to lobbying from employers' groups, particularly those representing small firms. He also said that one of the key tasks of the DTI's new small business service would be "to help small businesses get to grips with regulation and provide them with practical assistance to cut the burdens of compliance".

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