Research and analysis

Executive summary: Business perceptions survey 2018

Published 28 June 2018

For the full report read the Business perceptions survey 2018: research report in PDF format.

The 2018 Business perceptions survey was commissioned by the Department for Business, Energy and Industrial Strategy and conducted by OMB Research. The survey took place between February and April 2018 and comprised 2,001 20-minute telephone interviews with the person responsible for legal and compliance issues.

Business performance and key challenges

Half of businesses (50%) reported that their sales turnover had increased in the last 12 months while less than 1 in 5 (18%) reported that it had decreased.

1 in 4 businesses (25%) reported taking on more staff (25%). Over 1 in 10 businesses (13%) reported reducing their staff headcount.

1 in 3 businesses (32%) had increased their capital investment. 1 in 4 businesses (27%) had started offering new products or services. 1 in 5 businesses (20%) had started working in new markets. A minority (6%) had increased the amount they export.

Respondents were read a list of 6 challenges which may affect their business, before being asked which of these was the greatest challenge. Complying with regulation was cited by 17% of businesses as the greatest challenge (increasing to 49% of those in the finance sector).

Although attracting and retaining customers remained the greatest business challenge (32%), this was less of a concern than in previous years (36% in 2016 and 45% in 2014).

Overall attitudes towards regulation

The proportion of firms expecting the burden of regulation to increase in the next 12 months has remained static (53%, compared to 52% in 2016), as has the proportion of businesses who felt complying with regulation is their greatest challenge (17%, compared to 15% in 2016).

However, the proportion agreeing that the overall level of regulation in the UK is an obstacle to business success has decreased (from 49% in 2016 to 40% currently). This perhaps suggests that businesses have become more adept at dealing with regulations, and as such, while the overall burden of regulation might stay the same (or increase), it is less likely to be considered an obstacle.

The UK’s exit from the EU was the most common reason provided by those expecting an increase in future regulatory burden (22%). Whilst only 3% of firms expect the burden of regulation to decrease in the next 12 months, the EU Exit was also the top mention (26%) among this group.

The most important motivation in complying with regulation was simply to comply with the law (93% considered this essential or very important). This was closely followed by businesses’ need to maintain their reputation with customers (92%).

Effort of dealing with regulation

As was the case in 2016, more than half (53%) of businesses believed the total cost of complying with regulation had increased over the last 12 months, and this proportion increased with business size (51% of micro firms, up to 73% of large).

3 in 5 businesses (59%) agreed that the length of time it takes to go through the whole process of complying was a burden. Having to provide the same information more than once was considered the most onerous activity (63% agreed this was a burden).

Time spent on regulation increased with business size (micro firms spent on average 5.1 days per month compared to 29.6 days for large firms). Time spent on regulation was highest in the finance sector, with 3 in 10 businesses (32%) in this sector reporting spending more than 10 days dealing with, or learning to comply with, regulation each month.

External support

Most businesses (91%) used external support to help them to comply with regulation, with external business advisers/consultants (64%) and government or regulator websites (53%) the most common. Those operating in the construction sector were more likely to make use of external support (98% used any form), while those in the hotel/catering sector were least likely (84%).

The mean annual spend on external business agents was £8,400, and this increased with firm size, reaching £48,970 among large employers. 

The main motivations for seeking external advice were to get more specialist knowledge (39%), to provide assurance (19%) and because firms lacked time or internal resource (18%). 

Perceptions of the government’s approach to regulating

Perceptions of the government’s approach to regulating have improved significantly from 2016:

• over half of businesses (57%) agreed that the overall purpose of regulation is clear
• 4 in 10 businesses (44%) agreed that regulation is fair and proportionate
• 4 in 10 businesses (43%) agreed that the government informs them of changes clearly and with sufficient warning
• 4 in 10 businesses (40%) agreed that it is easy to comply

While larger businesses were generally more positive about the government’s approach to regulating, micro firms found it easier to comply with regulations.

Dealing with regulators

Businesses felt that regulators’ behaviour can have a significant impact on many aspects of compliance. 

3 in 4 businesses agreed that regulators’ behaviour could affect how confident they are that they are complying (78%), how much it costs them to comply (74%) and how easy it is for them to comply (73%).

Around 3 in 5 businesses felt regulators’ behaviour could influence their willingness to invest in new products/areas (63%) and their efficiency of bringing innovative products/services to market (60%).

When businesses were asked specifically about the regulator with whom they had most contact, 72% agreed they provided helpful advice/guidance and 66% had confidence in the advice and guidance. A similar proportion (67%) agreed that the guidance published was easy to locate. 

Whilst only 1 in 3 businesses (33%) agreed that the process to appeal against a decision was easy and transparent, this was a positive increase from 2016 (27%). 

1 in 3 businesses (34%) felt that their regulator does not understand their business well enough to provide advice tailored to their circumstances.