Research and analysis

Executive summary: Business perceptions survey 2022

Published 20 July 2023

For the full report read the Business perceptions survey 2022: research report in PDF format.

This 2022 Business perceptions survey took place during the COVID-19 pandemic, which brought with it new regulations for both businesses and their employees. The survey took place after the transition period for the UK leaving the European Union (EU) had ended on 31 December 2020. The 2022 survey therefore provides an opportunity to explore how these two events have affected businesses and their experience of regulation and regulators. 

The survey covers several topics. These include:

• the businesses’ performance and challenges over the last 12 months

• their attitudes towards regulation

• 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 2022 survey was commissioned by the Department for Business and Trade and conducted by IFF Research, an independent research company. It consisted of 2,000 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 business population estimates such that the data is representative by these criteria.

Fieldwork was conducted between 5 January and 10 March 2022, and 2,000 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. For the 2022 survey, questions were added to explore the extent to which businesses found EU Exit and COVID-19 regulations/regulatory changes challenging to comply with, and why/why not. In order to reflect the current landscape, the COVID-19 pandemic, the UK’s exit from the EU and supply chain issues were also added to the list that was read out to businesses to ascertain whether they presented a challenge to their business.

Business performance and challenges

More businesses reported that their sales turnover had increased (41%) than decreased (34% ) in the last 12 months. However, slightly more had reduced their staff headcount (20%) than increased (18%). Compared to 2020, businesses were more likely to have experienced a decrease in turnover and staff headcount.

The current economic environment appears to have had an impact on businesses. The

COVID-19 pandemic, supply chain issues and the UK’s exit from the EU were the most commonly cited challenges among businesses this year and the COVID-19 pandemic was the one most commonly considered to be the greatest challenge. These challenges were new to this year’s survey, which meant the proportion selecting other challenges decreased compared to previous surveys.

Overall attitudes towards regulation

The 2 most important motivations for complying with regulation were: 

• complying with the law (93% considered this essential or very important)

• the need to maintain their reputation with customers (93%)

More than 2 in 5 businesses agreed that regulation is an obstacle to success (45%). This is significantly higher than the proportion of businesses who agreed in 2020 (37%). The proportion of firms expecting the burden of regulation to increase is consistent with 2020 (45%).

Businesses were asked the extent to which they found complying with COVID-19 and EU Exit regulation challenging. 6 in 10 businesses (61%) found complying with COVID-19 regulation challenging, compared to 38% who said it was not challenging. Meanwhile, just over 1 in 4 businesses (28%) found complying with EU Exit regulation challenging, compared to 48% who said it was not challenging.

Key driver analysis

A linear regression model was used to investigate what drives businesses to agree with the statement “the overall level of regulation in the UK is an obstacle to your businesses’ success”.

The 3 most important drivers are:

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

• businesses that agreed it is easy to comply with regulation were more likely to disagree that regulation is an obstacle to their success.

Effort of dealing with regulation

Compared to 2020 the average amount of time spent dealing with, or learning to comply with, regulations each month has fallen slightly. Businesses are spending an average of 6.6 days per month dealing with regulation, spanning from 5.1 days for micro businesses (1-4 employees) up to 22.3 days for large businesses.

Despite the small fall in time spent on regulations, more businesses reported an increase in the total cost of compliance compared to 2020 (up from 54% to 58%) and more businesses agreed that the time taken to go through the process of complying is a burden (up from 53% to 58%). Small businesses with 10-49 employees (66%) and businesses in the Agriculture/Mining/Energy sector, the Finance sector, the Manufacturing sector and the Retail/Distribution sector (78%, 74%, 65% and 64% respectively) were most likely to feel that the time taken to go through the whole process of complying is a burden.

External support

As in 2020, almost all businesses (94%) used at least one source of external support to help them comply with regulation. The average annual cost of external support has decreased from £7,750 in 2020 to £6,100.

Larger businesses and those in the Finance, Agriculture, and Manufacturing industries were more likely to spend a greater amount. Of those using external business advisers, the most common reasons given were wanting assurance and specialist knowledge (both 87% ).

Perception of the government’s approach to regulation

Compared to 2020, perceptions about the government’s approach to regulation were less positive. Businesses were less likely to agree with 8 out of the 10 measures included in this research, the sharpest decrease being in relation to the purpose of regulation being clear and that it is easy to comply with regulations. 

Generally perceptions fell back to 2018 levels, but in some cases they were lower than recorded in both 2020 and 2018. Just over a half (54%) of businesses were generally clear about the purpose of regulation, whilst just under a half (45%) agreed that it was fair and proportionate. 

Dealing with regulators

Around half of businesses agreed that regulators helped them to comply with regulations (49%), that they had confidence in the advice and guidance their regulators provided (48%), and that the guidance published by regulators is easy to locate (47%). 

However, opinion on other aspects of regulators were more mixed, with some relatively high levels of disagreement, particularly for regulators understanding businesses well enough to provide tailored advice (44% disagreed, and only 26% agreed).

Attitudes towards regulators have become more negative in the past 12 months, with a fall in agreement levels for 6 out of the 8 measures included in the research. The greatest fall was for regulators being easily accessible, which fell from 40% agreement in 2020 to 32% in 2022 (a drop of 8 percentage points). 

When asked which regulator businesses had the most contact with over the last 12 months, Her Majesty’s Revenue & Customs (HMRC) was mentioned most often (16%). Next most commonly mentioned were local authorities (9%) and general trade bodies/professional associations (8%). 1 in 5 businesses (18%) said they had not had any contact with a regulator in the last 12 months.

Businesses operating in sectors associated with the Office for Product Safety and Standards  (OPSS) were asked whether they had interacted with them in the past 12 months. 4 out of 5 (83%) of these businesses claimed to have had no interaction at all with the OPSS, and a further 1 in 10 (12%) had never heard of them. These findings were comparable to the 2020 results, when 80% had had no interaction and 12% had never heard of them. Just 1 in 50 (2%) of businesses recalled having interacted with the OPSS which was lower than the estimated 15% based on sample criteria (but on a par with 2020, 2% ).

Innovative businesses

1 in 4 (26%) of the businesses surveyed fell within the definition of ‘innovative businesses’. Innovative businesses were defined as those that had:

• implemented a new or significantly improved product, process or business model in the last 12 months

*  started working in new business markets in the last 12 months

Innovative businesses were more likely than non-innovative businesses to say that a range of issues were presenting a challenge to their business. For example, over twice as many said that access to finance was a challenge for their business compared to non-innovative businesses (21 % vs. 9%), and nearly twice as many said that regulations that prevented or hindered the implementation of a new or significantly improved product was a challenge to their business (33% vs. 18%).

In line with innovative businesses citing a greater number of business challenges, they were also more likely to agree that the overall level of regulation in the UK was an obstacle to their business success - around a half (49%) felt that this was the case compared to 44% of non-innovative businesses. The most common reason for this was because they felt they had to spend too much time on compliance.

High growth businesses

High growth businesses were defined as those that had increased their staff headcount or sales turnover in the last 12 months. Slightly under a half (46%) of the businesses surveyed fell within this definition.

High growth businesses were more likely than non-high growth businesses to say that supply chain issues (66% vs. 59%), staff recruitment and retention (41% vs. 30%) and regulation preventing/hindering the implementation of new/improved products (25% vs. 19%) were a challenge for their business. 

High growth businesses were slightly more likely to agree that keeping up to date about which regulations to comply with, having to provide the same information more than once, completing paperwork, forms and records, and the length of time the whole process of complying took were a burden when complying with regulations.