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THE WORK ETHIC
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Telephone: 0131 336 1619

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Could Cutting The Red Tape Stimulate Employment?

Deputy Prime Minister Nick Clegg has recently unveiled new plans to cut the red tape that keeps regulators “breathing down the necks of small businesses”. In addition, these plans are a deflection to the attacks from some members of the Conservative Party, who describe the Liberal Democrats as “red tape wielding zealots”. But what is Mr Clegg proposing and what effects will his plans have on employment growth?

Culture Change

At the heart of Mr Clegg’s proposals is a culture change within Government. He proposes that company inspections should be limited to a bi-annual timetable and that on-the-spot inspections should be scrapped altogether. In addition, he is asking HMRC, the Environment Agency and the HSE to also loosen their regulations to “liberate small businesses from the grip of red tape.” His aim, he says, is for regulators to: “...intervene where necessary, offer advice and support, but otherwise let you get on with it.” Also included on his red tape ‘hit list’ is the obligation for shops to hold a Poisons Licence if they sell kitchen de-scaler and the necessity for pubs to fill in large numbers of forms if they want to hold small music events.

Business leaders are welcoming the news, seeing it as evidence of the Government removing some of the major barriers preventing job creation. Steve Radley, the director of policy at the Engineering Employers Federation believes that the proposals will give small businesses “greater flexibility to respond to fast-changing markets.” With less red tape to govern them, small businesses will be able to break out into new and emerging markets and the stimulation of employment will be just one of the positive by-products.

Further Proposals

However, the proposals also have their detractors. Unite’s general secretary Len McClusky has said that the Business Department are guilty of creating a “disgraceful reputation as a ‘do nothing’ department when it comes to saving jobs, let alone creating the tens of thousands needed, especially for those aged 16 to 24.” His fears are that: “The red tape challenge doesn’t include EU law. The Government has got to work harder to build an alliance with Europe. The fact we’re now going through a period of much weaker economic growth should help get more countries onside to take a new approach to employment law or risk undermining growth.”

Other reforms included in the proposals centre around unfair dismissal. Under the new proposals, an employee would have to have worked for up to two years before they can launch a claim of this sort. In addition, employees who wish to make a claim before an employment tribunal will be charged a fee to do so. This fee will only be recoverable if the employee wins the case. Employee groups are already citing this as evidence of the further wearing away of employees’ rights. However, the UK Department for Business, Innovation and Skills believes that reforms of this sort will save businesses around £6million per year with a reduction of 2000 claims per year, giving them the chance to create new jobs and further employment opportunities.

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