In the midst of severe recession, one industry has been thriving. As small businesses struggle to survive the downturn, the army of bureaucrats and inspectors tasked with regulating their activities has arguably never had it so good.
The regulation industry has boomed under a government that has enthusiastically embraced state intervention and micro-management of the economy. But the cost has been very high, particularly for small businesses.
Smaller firms generally can’t afford to set up the compliance departments, install the dedicated software or employ the specialist consultants that enable large companies to deal more easily with regulation. The economies of scale simply aren’t there. To take one example, a recent IEA study, Taxation and Red Tape, found that the administrative costs of tax compliance bear approximately sixteen times more heavily on the smallest businesses than on the largest.
But political attitudes may be changing. There are almost five million small businesses in the UK, employing over ten million people. Clearly the main political parties cannot afford to alienate the small-business vote. The sector – known for its innovation and flexibility – is also crucial to a sustained economic recovery. And gi