Since the coalition launched its Red Tape Challenge website, more than 6,000 responses have been received, according to government data.

Businesses and limited company contractors have been invited to submit their comments on current and forthcoming legislation to give the government an opportunity to adapt the regulations before they are implemented.

A lot of the published statements have called for changes in the retail environment and industry sector champion, Dr Kevin Hawkins, urges consumers, suppliers and trade associations to visit the site and express their concerns and solutions. He described the Red Tape Challenge website as a chance “too good to miss”.

He went on to say that this is the first time the government has given those at the sharp end of complex regulation the chance to be heard. This is a golden opportunity for business owners to tell politicians about the bureaucracy that wastes time and money and suggest ways to improve things for both themselves and their customers.

The business secretary, Vince Cable, says that unless ministers can come up with strong reasons why an item of unpopular regulation should remain, government departments will scrap it.

Amongst other legislation up for debate, the website contains 278 environment regulations, 264 concerning pensions and 151 that cover employment law.

The portal has already received concerns over the Care Quality Commission agency and health and safety guidance.

One man wrote that the CQC does not understand that dentists operate small businesses and do not have the staff to spend hours filling in forms and undertaking compliance audits. He went on to point out that too much reliance is put on box ticking exercises and the government doesn’t seem to appreciate that professional staff are regulated and are committed to providing the highest possible standards.

The owner of a small construction company recommended a rethink over the work time allowable for the use of steps and ladders.

However, not everybody is happy about this new government initiative. One lady asked why the public was being asked to contribute their views when MPs are paid to sort out these problems.

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I started a new contract this week, having had rather too long a break from real work. And not a moment too soon, to be honest. Apart from having an income stream again, it’s a lot more fun talking to intelligent people about real problems instead of chatting to the dog about where we should go walkies today. Not that he ever answers me, beyond a slightly lopsided grin and a frantic tail wagging session.

Which is rather how I feel about certain agencies over the last week or so.

Perhaps the stress of having to get up in the morning and go somewhere is getting to me, but I am getting increasingly irritated by the flood of emails from assorted agencies offering me work that is nothing to do with my CV. They obviously have my CV, or some version of it, since they get the name and email address right almost every time (apparently I am a Mr Wells according to one recent email). But hey, does that CV imply that I really can’t wait to go be a permanent change manager in Geneva for twelve months? Or sit on a help desk in Warrington on £20 an hour? (Gosh. Be still my beating heart…). Still, just like the dog, you have to pretend they understand what you’re telling them or run screaming in despair.

And that is why I am seriously worried about the upcoming Agency Workers Regulations.

PCG and others seem fairly confident that the regulations, which are aimed at ensuring temporary workers get the same protections as permanent staff after a short while, won’t apply to genuine contractors working through their own Limited Companies. While that may well be the case, I have a horrible feeling that the agencies won’t quite grasp the point. An industry that routinely confuses a senior Service Delivery Manager and sometime Head of IT with a Helpdesk worker in Warrington is really going to struggle with the concept that not everyone they place in a job wants to be protected.

Which means that rather than move the Agency/Contractor contract more towards a genuine business-to-business one, which would establish the true nature of the relationship with the end client, they will be telling everyone that you need to have even more draconian clauses in the contracts to reinforce that point that the contractor is not an employee of theirs, or the agencies, or anyone else. Honest. Cross my heart…

Which really is the wrong way to go.

After all, the more you try and nail the myth that someone is not an employee, the more HMRC is going to think you have something to hide. All those interlocking clauses about no rights to be implied and mutuality is not assured must be hiding something or why have them?

And anyway, I am employed by someone, in all meaningful senses; there’s this company that I work through that supplies all I need in the way of income and sick pay and holidays and pensions funding and the rest in return for me hauling myself over to Cardiff or wherever and doing my thing. OK, so I own it, but it is a separate legal “person” and operates totally in accordance with a whole pile of relevant statutes. Accept that it exists, and has a real purpose, and all this Agency Worker nonsense, not to mention IR35 itself, suddenly ceases to have any meaning.

If only someone could tell the agencies that…

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The final form of the guidance for the upcoming Agency Workers Directive has been published. This has not been the subject of any great debate so far, but it does have the capacity to really shake up some corners of the contractor market. And it appears to contain a sting in the tail.

The AWD has a noble aim; it intends to ensure that agency workers – which it defines as those providing temporary services to clients via an agency – are not disadvantaged in terms of the protections and rights enjoyed by full time employees. However, being an EU-derived concept, our beloved Civil Service has failed to recognise the very different nature of the “agency” model in the UK compared to the rest of Europe. While protecting the rights of the lower paid employee of the agencies supplying temporary staff to a whole raft of industries from farming to pharmaceuticals, it also wraps up the traditional freelance contractor in its scope. And that’s not a good thing.

In the earlier consultations, the PCG picked up on the potential for this scope mismatch and were assured that Limited Company contractors would be out of its scope. The early proposed form of the Directive did in fact specifically exclude those working through their own Limited Companies. That was not considered to be much of a problem, naturally enough.

Now, however, that phrase has been watered down. It contains a further qualification, “those operating as genuine businesses”. So here we go again, we are once more being presented with the finely crafted clarity of the mud-encrusted IR35 legislation.

You may recall that Osborne kept IR35 on the statute books at the last election as a deterrent to people who may incorporate to avoid the taxes they can no longer save by using offshore EBTs. My suspicion is that they have the same qualification about “genuine business” in the AWD for exactly the same reason. This is fine as long as there is a clear definition of a “genuine business”. Which there isn’t.

One of PCG’s objectives with the HMRC’s IR35 Forum (when it gets of the ground) will be to try and define how you recognise a genuine business. Simple enough if you’re Tesco or the corner shop, rather more tricky if you are a one or two man company selling your skills and knowledge to the highest bidder. The level of debate that has been engendered within PCG about how to make that definition has to be seen to be believed, so I have no expectation we will see a quick answer. .And until we do, we remain exposed to HMRC’s biased concepts. But hey, we’re getting used to that.

The other victims are the umbrella companies who will have to keep their “clients” – who are de facto employees of the umbrella – fed and watered while they are out of contract. Wonder if anyone has told those clients who will be paying for it…?

And finally, of course, those hugely risk averse recruitment agencies will see the AWD as yet another set of hurdles to overcome to prevent any possibility of their being made responsible for the contractors who they sell to the end clients as their own staff. Expect a whole new layer of miasma to creep into the contractor-agency contracts to ensure the contractor is obeying the demands of a law that doesn’t actually apply to them at all.

Plus ca change, plus ca meme chose. What ever happened to “simplification”?

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New research from KPMG shows that whilst the majority of UK companies are optimistic about the prospects for the future, the complexity of rules and regulations are still a barrier to growth.

YouGov conducted the survey of more than 500 firms and discovered that 72% of companies think there is an opportunity for their business to grow despite the government’s austerity measures.

56% of businesses are still confident about the general outlook for their company and 47% said overseas opportunities are helping UK firms compete better globally. 26% of the survey’s respondents also reported an increased production capacity.

60% of businesses and limited company contractors said they were concerned how the budget would impact their firm and 52% highlighted the fact that complicated rules and regulations restricted their ability to grow. 43% of business owners are also still concerned that it is hard to access funding from the banks.

KPMG’s head of UK markets, Malcolm Edge, said businesses agree that the government needs to do more to encourage growth. Companies need the assurance that something will be done to reduce bureaucracy and provide support to help companies achieve sustainable growth.

Whilst businesses are generally optimistic, the opposite is true of consumers. The most recent report from Nationwide shows a significant fall on consumer confidence last month.

The chief economist at Nationwide, Robert Gardner, said consumer confidence has now fallen to its lowest level since the institution started its regular survey.

There are many factors that could be contributing to this, he continued. We still have a fragile labour market, high unemployment and a weak growth in salaries. There is little sign of inflation easing and disposable incomes have been hit by rising fuel costs and the increase in VAT. The economic recovery is still sluggish and there was not much positive news last month to boost consumer’s confidence, he concluded.

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Accountancy recruitment is continuing to increase according to the latest Ashdown Group Jobs Index.

The profession registered a 13.52% rise in recruitment during December and January and a 5.95% increase last month.

The BCC and the CBI have predicted Q1 economic growth and as business confidence returns to the marketplace companies will be looking to increase their headcounts. Financial professionals will be in demand as their numerical ability is vital for businesses looking to implement sustainable growth strategies.

Ashdown’s director, John Lynes, said it is not clear whether churn or departmental expansion is responsible for the increase in vacancy numbers. He pointed out that the considerable growth in online recruitment has made it easier for financial professionals to apply for new positions. Whatever the reason, more accountancy positions are now available.

He continued by saying that unless large numbers of accountants are quitting the profession, the trend points to new hirers. This bodes well for contractor accountants this year, both in terms of prospects and the ability to command higher rates.

Meanwhile, entrepreneurs are concerned that limited company contractors may be receiving poor business development and marketing advice from their accountants.

On the whole, accountants do not understand marketing and business development. Robert Craven, a marketing consultant, said a lot of accountants appeared to be interested solely in surviving and are making no attempt to win new business.

It has been suggested that this lack of interest in marketing could lead accountants to give aggressive cost-cutting advice to business owners.

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Aldermore, the specialist asset finance company, increased its lending to SMEs by 206% in the last year. At the end of last year, the firm had £410.2 million of outstanding loans to small and medium sized enterprises.

Aldermore’s CEO, Philip Monks, said this outstanding performance showed the strong progress the bank has made towards obtaining a significant market position. He went on to say that he was extremely proud that his team had got the right formula for customers, staff and shareholders.

Originally firms came to Aldermore because they couldn’t raise capital from their banks but now they know there is a better alternative to the indifferent service level they obtain from the large banks.

SMEs have been complaining for many years that the business banking market is not conducive to small firms and if Aldermore has been able to expand their business so quickly, it would suggest that the complaint was justified.

Aldermore launched after the credit crunch and specifically focuses on lending to SMEs and homeowners.
Small businesses may well feel that it’s just as well that Aldermore have entered the lending marketplace.

On the other hand, Barclays has now announced that it will no longer provide asset finance to companies with less than £5 million turnover per year. The bank made the announcement within a week of the Project Merlin agreement that was meant to secure additional funding for SMEs.

As part of the Project Merlin deal, the big banks agreed to make an extra £190 billion available to companies this year, £76 billion of which should be for SMEs.

Barclays decision means that it will no longer lend to small businesses and limited company contractors, and if they want to buy computers, machinery and vehicles it will hamper those companies’ ability to create jobs.

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Last Friday, Vince Cable announced that the audit system is to be overhauled; a move that could save SMEs and accountants for contractors £440 million each year.

The reforms will make it easier for new and expanding businesses to negotiate the auditing system, giving them more scope to concentrate on growth and expansion. The EU has less stringent auditing requirements and Cable’s reforms will bring the UK’s SMEs more into line with their European counterparts.

Furthermore, micro businesses and limited company contractors will only need to produce one simplified set of accounts. This amendment could benefit two million companies and save around £400 million annually.

After the announcement, Cable said small firms have to be allowed to grow and the audit reforms will ensure that small businesses can concentrate on growth and hiring, rather than paperwork.

Reaction from the major accountancy bodies was mixed. The assistant director of business policy at the ICAS, Paul Probin, said it was not in the public interest to remove the audit requirement from medium sized businesses.

The ACCA’s head of technical pointed out that the proposals were still at the consultation stage but clearly a lot of firms will be conducting fewer audits and he said he was disappointed that accounting and auditing rules had been labelled as red tape.

The ICAEW, on the other hand, broadly supports measures that ease the regulatory burden on small businesses. The audit threshold is currently £6.5 million turnover and he believes that if it is raised larger companies will carry on having audits voluntarily.

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Project Merlin, the project launched last year to secure consensus amongst the leading UK banks regarding financial issues including lending to small businesses and bonuses, is likely to lose the support of Spanish banking giant Santander.

It has been reported that Santander is eager to reach a unilateral agreement over lending directly with the Treasury. It is thought that the bank does not consider Project Merlin as relevant to it since it is currently aggressively increasing the amount it lends.

Santander becomes the second bank to leave the Project after Standard Chartered’s decision last November. Like Santander, Standard Chartered believes Project Merlin is not relevant to it.

The question of bonuses was raised in the Commons question time last week as MPS complained that banks were not lending to struggling SMEs.

Conservative MP, Philip Hollobone, told Vince Cable that a businessman claimed to have been ordered by Barclays Bank to pay a yearly fee of £25,000 because of “spurious new audit requirements”. Barclays lied to the man and the chief executive should not be awarded with a bonus, Hollobone said.

In reply, Cable said that it would be helpful if bonuses reflected performance in lending. But that’s exactly why George Osborne and I are discussing ways of ensuring that the UK’s excellent enterprises have access to a proper flow of credit, he added.

The government began talks with the banks on acceptable bonus levels before Christmas but there are increasing concerns that mammoth bonuses are set to return now that the recession is over.

John Denham, the shadow business secretary, accused the coalition of giving in to the banks. He pointed out that SMEs and limited company contractors are still struggling to obtain credit and even if they do get it, it is too expensive. He asked why taxation on banks is being cut when the chief executive of Lloyds is reported to be receiving £2 million after leaving his position.

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Shortly before Christmas, the Business Secretary Vince Cable, promised to help British firms compete better against their continental rivals, by cutting European red tape.

The Government plans to stop the “gold-plating” of EU directives in cases where implementation goes beyond the minimum standard decreed. This new policy will take immediate effect.

In future, the text of European directives will be written directly into British law and will mean that the UK’s interpretation of the law is not unfairly restricting British businesses and limited company contractors. Additionally, every five years ministers will review the European directive legislation and will consult with businesses on the application of the rules.

The ARC has welcomed the coalition’s move, saying it will help businesses in the UK compete fairly. Chairman Adrian Marlowe said that nobody has asked for favours, but by helping Britain compete, the way is set for greater employment and prosperity.

Copying EU directives directly into law without adding interpretations makes sense and this should ease the problems of actually implementing the regulations. EU legislation is not subject to open debates unlike UK led regulations. Legislation, such as the AWR, will be able to pass straight into law without parliament voting on it.

Marlowe explained that the Agency Workers Directive contains “gold-plating” that is not essential under the EU directive and this has put both recruiters and employers at a disadvantage.

Marlowe also pointed out that the use of agreements between social partners causes concern. A few organisations get disproportionate authority and if this device continues to be used he urges Mr. Cable to make sure the entire process is open and transparent.

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Contractors could be amongst those set to benefit from internal skills shortages at UK firms as we go into 2011.

The Chartered Management Institute recently said that 43% of managers in the UK think they cannot fulfil their objectives for next year with the staff they currently have. As a direct result, 48% are expecting to make further redundancies in 2011. This could lead to openings for highly-skilled limited company contractors as companies look to complete tasks without increasing the size of their permanent workforce.

The CMI’s chief executive, Ruth Spellman, said that 2010 has been a very difficult year for managers and in many cases they have had to deal with the difficult conditions without a suitable team.

There are also conflicting reports on the state of the UK economy and its jobs market. The latest figures from the ONS show that unemployment reached 29.13 million in the quarter to October. 33,000 of the 35,000 job losses were in the public sector which is to be expected considering the government’s austerity measures.

The CIPD says the figures bring no joy to jobseekers and its chief economic advisor, Dr John Philpott, said the data was far worse than expected. He believes the jobs market has run out of steam which does not bode well for prospects in 2011.

The British Chamber of Commerce, on the other hand, said that whilst the figures were disappointing, they gave no cause for despondency and longer-term trends point to a strong labour market.

The REC was also disappointed by the latest figures. Kevin Green said that employers are still cautious about hiring new employees but he still believes growth will return to the jobs market in the New Year. However, contractors, temporary staff and interim workers are likely to play an important role in helping businesses meet increased customer demand.

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SMEs could find that trading overseas is the best way to survive the economic downturn, according to Mark Prisk, the enterprise minister.

In order to create a truly global business, firms who already trade abroad should offer help and advice to limited company contractors looking to do similarly. International advisers on trade should then work together and ministers should engage with their counterparts abroad to build economic relationships.

The Nat West / RBS banking group says that the UK could see a boom in exports but that will only happen if businesses get the requisite help. 69% of firms believe the time is right to increase their overseas trading but they cannot get the help they need to do so. Two-thirds of companies want to see more help from the banks and 58% say they would have more confidence to export if they received advice from overseas trade experts.

Nat West / RBS is now offering free training courses to advise firms on the best way to manage risk when venturing into overseas trading markets.

A separate survey from telecoms company O2 found that 40% of companies plan to trade overseas next year and over a third of them say overseas economies are becoming more welcoming towards small businesses. Out of the top 10 export markets of choice, six are outside Europe, with the most popular being the U.S.

Another problem facing small businesses is the excessive bureaucracy that comes with exporting goods and services. According to a recent report from the FSB, 25% of UK businesses already export but nearly a third of them say that excessive red tape is stifling their efforts, whilst 48% say they find fluctuations in currency to be a major obstacle.

The chairman of the FSB, Mike Cherry, said that the manufacturing and defence sectors offer big export opportunities for small businesses but in order to be successful they need to know how to access available support. The Federation has called on the government to be more pro-active when it comes to promoting assistance and also to launch a campaign that highlights the advantages of the Services Directive.

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The government is determined to get rid of quangos and yet advisory groups are already popping up around the small business regulations and tax issues that affect contractor accountants and their clients.

On Monday, Vince Cable, the business secretary, created the Entrepreneurs’ Forum to advise the coalition on business and enterprise policies. The group, which is made up of high profile entrepreneurs, will meet four times a year to give informal and personal advice. 16 entrepreneurs have already been appointed to the forum, including Jan Fletcher and Sarah Tremellen, and there may be up to 10 more members.

Setting up the Entrepreneurs Forum was one of the ways Vince Cable marked the start of Global Entrepreneurship Week. He also created a new business mentoring network. The network consists of around 40,000 business mentors who will help start-up enterprises across the country access information and advice on running a successful business.

The business secretary called on firms around the country to join the mentoring network. People who have started up their own successful company have to be the best mentors for new start-ups, he commented.

Cable also remarked that start-up businesses and limited company contractors are going to be important to the country’s overall economic recovery. He said that not only do start-ups create jobs, they stimulate innovation and provide competition for existing businesses which encourages them to increase productivity.

Recently, the government confirmed that the Enterprise Finance Guarantee scheme will continue for the next four years. About £2 billion will be made available to firms through the scheme.

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