Rising consultants' fees hit small employers in the manufacturing sector with £2.6 billion in annual compliance costs.
16/09/2014 The Forum of Private Business Limited (FPB)
With annual compliance costs rising by almost £500 million small business manufacturers are advised to rethink their own procedures and shop around for more affordable business services.Compliance will cost the 145,000 small and medium sized employers in the manufacturing sector a massive £140 million to comply with new regulations including the distance selling act or around £1,000 per company. This takes the estimated cost of compliance up for manufacturers up to £2.6 billion.
This is the highest amount for any industry sector, greater even than those in education, health and social work. Overall 40% of the cost is provided internally and 60% are external costs. In total external advisors now account for around £1.6 billion while the internal cost of compliance has risen to £1 billion.
Although new regulation over the last year has been seen as relatively light, the right to request flexible working, environmental regulation, distance selling act and the need to begin the auto enrolment means that the legacy of regulation from the last 12 months will cost businesses and estimated £102 million or 71% of the additional amount that they are have had to spend on regulation.
The Forum's Chief Executive Phil Orford MBE, added: "SMEs in the manufacturing sector struggle to control costs - particularly in the current economic climate - and remain frustrated by the amount of red tape they have to negotiate every day.
Manufacturers are central to the rebalancing of the UK economy, but have borne the brunt of new regulation as typically they require employees to be in a specific place at a specific time so managing the right to request flexible working can be problematic.
As with other sectors, understanding what is required to be compliant is a big issue for this sector and companies need to be kept up to date with major legislative changes.
"The increasing cost of fines for non-compliance on everything from health and safety to unfair dismissal has made the ongoing support we provide to our members through our helpline and guides all the more important. We have recently introduced quarterly updates to ensure that business are aware of what legislation they need to know about and what regulations, such as the 2013 defamation act are unlikely to have a great impact"
Mr Orford continued. "It is vital that regulators communicate effectively major changes to compliance - even improvements to regulations add cost onto the bottom line of good compliant businesses as they make the changes. The problem with a lot of the regulatory environment is that businesses are not being able to take advantage of deregulatory changes because the time to make the assessment and trust in enforcement agencies is simply not there."
In addition to its legal expenses insurance, the Forum continues to help small businesses negotiate employment law pitfalls via its Employment Guide. The 2014 guide is to be published in October and updates will be provided to members on a quarterly basis.
The health and safety guide provides sector specific guidance for warehousing, food hygiene etc and is produced by the Forum every April.
For more information, please visit: www.fpb.org
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