Private sector 'cannot create jobs while it faces a £23bn red tape bill'

CHANGES to employment law and other "red tape" will cost UK businesses almost £23 billion over the next four years, the British Chambers of Commerce has calculated.

The lobby group warns regulations such as the forthcoming requirement for employers to allow staff time off to train will add to companies' costs at a time when they are needed to generate growth and jobs.

It has calculated that at least 15 major pieces of employment legislation are due to come into force between April this year and April 2015.

This year alone seven changes are planned to legislation - including the removal of the default retirement age and an immigration cap.

In Scotland, firms will collectively see their bills rise by almost 1.6bn over the next four years, which although less than other parts of the UK, will hit the economy at a time when the public sector is downsizing and policymakers will lean on the private sector to boost employment. London firms will see the biggest rise in costs at 3.8bn during the period, according to today's study.

The BCC is urging the coalition government to make good on its promise of cutting red tape. Earlier this year, Business Secretary Vince Cable pledged a "one in, one out" system where one regulation will be scrapped for every new one brought in.

BCC director general David Frost said: "The government claims business growth is top of the agenda, yet UK firms will be hit with huge costs once these new regulations come into force.

"Companies cannot generate growth and create jobs when they are facing a 23bn bill, just to implement new employment legislation."

He continued: "Unless the government reduces this kind of red tape, we will continue to have high levels of unemployment and could end up derailing the recovery.

"These new regulations, such as changes to the right to request flexible working, paternity leave, and the abolition of the default retirement age, will leave employers confused, and distract them from growing their business. The government must use the upcoming Budget to act on its promises and deliver concrete reductions to the regulatory burden faced by the private sector."

Among the most costly regulations due to be implemented over the next four years are the proposed pension reforms, which when they come into force next year, will saddle UK firms with an annual recurring cost of 4.53bn.The right of employees to request time off to train, enforceable from April, will cost businesses some 175m a year, the BCC has calculated.

David Lonsdale, assistant director of CBI Scotland, agreed that red tape should not be allowed to hold back private sector expansion.

"The CBI's latest economic forecast predicts only a modest recovery over the next couple of years with unemployment remaining high, so government must ensure that future employment laws help rather than hinder job creation," he said.

"That is why we have called for the introduction of a 'sustainable employment test', to block all new employment regulations that cost jobs and hold back growth."