A series of new government regulations could cost businesses more than £25 billion over the next four years, threatening economic recovery, a leading business group fears.
In a new report, the British Chambers of Commerce (BCC) will say that 18 British employment and tax regulations due to come into force by 2014 will cost companies money that could be spent on creating new jobs. Only two of the new regulations are European Union measures.
The figures come only a day before new unemployment data is expected to show that the number of people out of work in the UK has breached 2.5 million for the first time since November 1994.
David Frost, director-general of the BCC, said that businesses needed the Government to “get off their backs ... 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.”
The BCC report comes as research by Hay Group, the management consultancy, showed that nearly a quarter of companies that froze pay last year are set to freeze wages this year.
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The BCC is calling for a three-year moratorium on all new employment legislation and is urging the Government to lead a campaign for an EU-wide delay to the introduction of regulations.
“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,” Mr Frost said.
The 1 per cent increase in employers’ national insurance contributions next April will cost businesses nearly £5 billion a year, totalling £14 billion by 2014, the BCC said, citing the Government’s own forecasts.
It is unlikely that the Government will reverse its decision on national insurance as it seeks to raise more tax income. Official data out this week is expected to show that the Government borrowed more than £18 billion in December, up from £13.6 billion in December 2008.
Besides the new national insurance rules, companies will have to foot a £1.5 billion bill to comply fully with the EU Agency Workers Directive, which gives agency workers the same rights as permanent employees.
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New rules for paternity leave, also being introduced next year, will cost businesses about £12.5 million in 2011 and £9 million each year thereafter. The new scheme for workplace pensions will cost about £4.8 billion a year, the BCC said.
The TUC attacked the BCC’s findings. Brendan Barber, General Secretary of the union organisation, said: “The BCC is using spurious statistics to confuse decent pensions, training and treatment at work with unnecessary red tape. The measures highlighted in this report are vital for a sustained economic recovery.”