The UK is agonising over BREXIT, the debate drags on, the negotiations go nowhere, but we are addressing the wrong problem. Look at the numbers, forget the rhetoric. Small & medium size businesses account for 80% of the U.K. Economy, a figure not too far from that of most industrialised economies. We worry about BREXIT but European exports from the UK account for barely 8%. It is a bit like being a year behind with your mortgage payments but fretting over the milk bill.
What is the main bone of contention for small businessmen & women? Regulation! Heaps of it. There is no aspect of commerce which the State feels it is not duty bound to interfere. Paradoxically neither politicians nor bureaucrats have any experience of small business. The most crippling regulation is employment legislation. It is based entirely on the bizarre assumption that all employers are early Victorian mill owners. That without regulation they would starve & beat their employees unmercifully. Had they experienced real life they would know good employees are solid gold. Employers live in fear of losing them or not being able to attract them in the first place. This is reflected in post war employee benefits the envy of many other parts of the world.
What therefore is the problem? Consider, the State now tells the employer, large or small, how much an employee must be paid, how many hours he or she may work, what leave & pension arrangements must be in place. Maternity & paternity leave. Worst of the lot is the dismissal procedure. It is almost impossible to fire a bad employee. Now if you cannot fire, you cannot hire. This means small businesses stay small. They don’t have HR staff, they can’t afford employment lawyers only big companies can afford that kind of luxury. Family run hotel or restaurant simply can’t.
Yet all this is unnecessary, we are supposed to live in a free society under the rule of law. Why then can we not return to the concept of liberty of contract? What business is it of the State if I want to sign a contract with an employer or employee, I have been both. I sign a mutually beneficial contract which can be terminated at any period of notice agreed in the document. Freedom & flexibility, the bedrock of a successful economy. Until we reform employment legislation our economy will continue to stagnate.
Let me give two examples, I could give many.
My local mechanic works with his wife & son, a successful little business with always more work than they can manage. They were approached by a local bureaucrat to persuade them to take on an apprentice, they liked the idea in principle so took it a bit further. They rejected it they told me because there were acres of small print, none of which seemed to protect anyone but the apprentice. There was no support or protection for them as an employer, so they potter along as they are happy but small.
A local very successful transport company brought me in to look at an expansion & exit strategy for their business, I advised them as best I could, it certainly looked exciting. I heard nothing for nearly a year & followed it up just recently. The managing director told me he just downsized the company, why? He “couldn’t stand the stress of employing people, just more trouble than it’s worth”. He intends to stay small but relaxed & happy.
The same story time & again. Some local businessmen & women now just laugh at me when I suggest employing people. Not worth the candle is the constant response.
I did a TV programme a few years ago, a junior minister asked me what could the government do to help small businesses in the north of England. My answer was easy. They don’t want the government to ‘do’ anything except bugger off.
© Godfrey Bloom – website http://godfreybloom.uk/blogs/