Research and analysis

Executive summary: Business perceptions survey 2020

Published 16 December 2020

For the full report read the Business perceptions survey 2020: research report in PDF format.

The 2020 Business perceptions survey covers several topics. These include the businesses’ performance and challenges over the last 12 months, their attitudes towards regulation and the effort and cost of dealing with regulation. Businesses were also asked about their use of external support to comply with regulation, their experiences of dealing with regulators, and their views on the government’s approach to regulation.

Survey methodology

The 2020 survey was commissioned by the Department for Business, Energy & Industrial Strategy (BEIS) and conducted by IFF Research, an independent research company. The survey consisted of 2,014 25-minute telephone interviews with the person responsible for legal and compliance issues at each business. The interviews were with a random sample of private sector UK businesses, with selection based on size, sector and country, which was then weighted to BEIS business population estimates such that the data is representative by these criteria. 

Fieldwork was conducted between 17 February and 1 May 2020, and 2,014 interviews were completed using computer assisted telephone interviewing (CATI) software. A key driver analysis was also conducted to investigate the drivers of businesses’ perception of regulation as an obstacle to success. More detail on the methodology can be found within the technical report.

Changes to the survey format

For the 2020 survey, new phrasing was used to ask about innovation, which was broader in scope but also more precise in language. There were also several open-ended questions added to the survey, to investigate the reasons why complying with regulation was a challenge, why regulation was an obstacle to success and how regulators can affect innovation. 

In 2016 and 2018, there was additional focus on specific areas of law that businesses might find burdensome, as well as businesses’ perceptions of the specific regulators that they dealt with. These topics were covered more generally in the 2020 survey and several questions were also added. In addition, a second, smaller survey was carried out to investigate the effect of alternative wording for some questions, using more neutral language. 

Impact of the COVID-19 outbreak on the survey

Due to the COVID-19 outbreak starting during fieldwork, the data was analysed for any statistically significant changes to responses after 16 March, which might be attributed to the outbreak. None of the key measures on the burden of regulation showed a statistically significant change when comparing these two time periods, although some questions were affected. The impact of the COVID-19 outbreak on fieldwork is discussed further in the methodology section of this report.

Business performance and challenges

In 2020, more businesses reported that their sales turnover had increased (57%) than decreased (22%) in the last 12 months. In 2018, fewer businesses had increased their turnover (50%) but fewer had also decreased their turnover (18%) in the previous 12 months. Similarly, more businesses had taken on more staff in 2020 (32%) than in 2018 (25%), while more had also reduced their staff headcount (16% in 2020 vs. 13% in 2018). 

Attracting and retaining customers was the biggest challenge faced by businesses (31%), followed by staff recruitment (16%) and level of tax (14%). Complying with regulation was the greatest challenge for 1 in 10 businesses (11%). A further 7% said that regulation preventing or hindering implementation of a new or significantly improved product or service was their greatest challenge. This challenge statement was an addition to the 2020 survey, meaning that the proportion selecting other challenges could be reduced compared to previous surveys.

Overall attitudes towards regulation

Just under 2 in 5 businesses (37%) agreed that regulation is an obstacle to success. This was not a statistically significant reduction compared to 2018 (40%).

The proportion of firms expecting the burden of regulation to increase over the next 12 months has decreased significantly (45%, compared to 53% in 2018).

Of the 45% who expected an increase in regulatory burden over the next 12 months, uncertainty around Brexit was the most common reason given (38%). 

The 2 most important motivations for businesses when complying with regulation were:

• complying with the law (94% considered this essential or very important)

• the need to maintain their reputation with customers (94%)

Key driver analysis

A model was produced to investigate the key drivers of agreement with the statement “the overall level of regulation in the UK is an obstacle to your businesses’ success”. The 4 most important drivers are:

• businesses that agreed regulation is fair and proportionate were more likely to disagree that regulation is an obstacle to their success

• businesses that said the length of time taken to comply with regulation is a burden were more likely to agree that regulation is an obstacle to their success.

• businesses that agreed that regulators have sufficient resources to adequately enforce non-compliance were more likely to agree that regulation is an obstacle to their success

• businesses that said that complying with regulation is a challenge were more likely to agree that regulation is an obstacle to their success

Effort of dealing with regulation

Businesses were asked whether the cost of complying with regulation had increased, decreased or stayed the same in the last 12 months. Medium and large businesses were more likely to report an increase in costs (77% and 65% respectively) while businesses with 1-4 employees were less likely to report an increase (51%).

Businesses were asked whether they found a series of activities related to regulatory compliance burdensome:

• 55% considered keeping up to date with information about which regulations they have to comply with burdensome

• 54% considered having to provide the same information more than once burdensome

• 53% considered the length of time it takes to go through the whole process of complying burdensome

All 3 of these measures were significantly lower than the equivalent figure in 2018 (60%, 63% and 59% respectively). 

External support

Almost all businesses (96%) used some form of external support, with a significant increase in the use of external business advisers (76%) compared to 2018 (64%).

Of those using external business advisers, the main reason was for their specialist knowledge (41%), followed by businesses needing assurance of compliance (22%) and lacking internal resources (15%).

Perception of the government’s approach to regulation

When asked about the government’s approach to regulating, almost 2 in 3 businesses (64%) agreed that the purpose of regulation was clear. 

Businesses’ perceptions of the government’s approach to regulating have remained mostly consistent since 2018, with just under half (45%) agreeing that it is easy to comply with regulation and 44% agreeing that government informs businesses of changes clearly and with sufficient warning. However, there was a significant increase in the perception that most regulations are fair and proportionate (51% agreed vs. 44% in 2018) and that government understands businesses well enough to regulate (32% vs. 26% in 2018).

Dealing with regulators

Businesses felt regulators’ behaviour can have a significant impact on many aspects of compliance, with more businesses saying that regulators’ behaviour could affect implementing new products (66%) than in 2018 (60%).

Of businesses that said regulators could affect the implementation of new products, the most common reasons were due to the impact on costs (15%), and lack of clarity of guidance (10%). 

Over half of businesses said that they had confidence in advice regulators provided (54%), with 2 in 5 businesses (19%) disagreeing with this. A similar proportion agreed that regulators provide advice to help them comply (53%), with 18% disagreeing. 

Businesses were more likely to disagree that regulators provide timely responses (38%) than agree with this statement (32%).

Alternative wording testing

A separate, smaller survey was also piloted in 2020, to look at the impact of changing the wording of several questions. The chapter on the alternative wording testing reports the differences for the questions where wording was changed. In general, changing the wording of several questions in the survey had a statistically significant impact on the results of those questions. For example, by removing the word “burden” and “obstacle” and using “impact” and “amount of work” attitudes towards regulation were less negative.

Innovative businesses

2 case studies were conducted to investigate significant differences for innovative and high growth businesses across all questions. The definitions of these can be found in the reporting conventions section.

Innovative businesses were more likely to say that their greatest challenge was access to finance (17% vs. 9% non-innovative) and less likely to say this about the level of tax (10% vs. 17%). They were also more likely to say regulation hindering the implementation of new products, processes or business models was their greatest challenge (8% vs. 5%). 

Innovative businesses were more likely than non-innovative businesses to say that establishing whether a new product is compliant was a burden (42% vs. 29% non-innovative). They were also more likely to expect the burden of regulation to increase in the next 12 months (50% vs. 42%).

High growth businesses

High growth businesses were more likely than others to cite staff recruitment as their greatest challenge (18% vs. 14%) as well as access to finance (14% vs. 10%) and the level of tax (15% vs. 11%).

High growth businesses were particularly likely to agree that providing the same information more than once was a burden (56% vs. 50% of non-high growth companies). They were also more likely to say that establishing whether a new product is compliant (37% agree vs. 30% non-high growth companies) and understanding national differences in regulation (23% vs. 19%) were a burden.