£25.6bn regulation bill risks job creation and recovery, argues BCC

New research from the British Chambers of Commerce (BCC) reveals that upcoming employment regulations and taxes will cost UK businesses a staggering £25.6 billion over the next four years, which could adversely impact on future job creation.

Despite official unemployment figures likely to surpass 2.5 million tomorrow (Wednesday), and companies continuing to struggle in difficult trading conditions, a blizzard of fresh red tape and taxes directly related to employment are planned between April 2010 to April 2014 – with no less than eight major changes in 2011 alone.

Over half – £14bn – of the £25.6bn comes from employer National Insurance contributions, which will see a 1% increase from April next year.

Some of the most costly regulations in the pipeline include:

• 2010: The Equality Bill will have a one-off cost to business of £190m
• 2011: The Agency Workers Directive will have an annual recurring cost to business of £1.5bn
• 2012: Pensions Reform will have an annual recurring cost to business of £4.8bn

The BCC argues that the daunting extra costs support their campaign for a three year moratorium on new employment laws in the UK. A moratorium would allow the upcoming regulations to bed-in, promote job creation, and help drive economic recovery.

The business group is also calling on the UK government to lead a campaign for an EU-wide moratorium.

Commenting on the research, David Frost, Director General of the BCC, said:

“The cost of employing people must be reduced if future governments are serious about giving businesses the freedom to create jobs and drive our economic recovery.

“What must not happen after a general election is that a new government – from whatever party – comes to power and decides to add to this already sizable burden on business.

“From what employers tell me, they will get on with creating jobs and wealth, but they simply need government to get off their backs and let them do it. A good start would be to abolish the planned increase in National Insurance in 2011 – it’s a tax on jobs and will hinder recovery.”
Further information

The costs and changes in this research do not include anything a new government may wish to legislate for.

The figures are taken from the government’s own impact assessments, which are designed to evaluate the risks, costs and benefits of regulatory proposals, and from budget reports.

A full PDF timeline of the upcoming employment burdens is available.  Click here to download.

A simplified graphic of the employment timeline is also available.  Click here to download.