Research and analysis

Executive summary: Business perceptions survey 2016

Published 14 October 2016

For the full report read the Business perceptions survey 2016: report - BEIS research paper 293 in PDF format.

IFF Research was commissioned to conduct the 2016 Business perceptions survey, with specific objectives to:

• examine businesses’ perceptions of regulation and views on regulation, and how these have changed since previous years
• explore what aspects of regulation and the regulatory delivery are most burdensome to businesses
• explore where businesses get their advice on complying with regulation

Mainstage fieldwork occurred between 2 February and 4 March 2016. In total, 2,000 interviews were achieved by telephone using computer assisted telephone interviewing (CATI). Interviews were conducted with a senior member of staff with responsibility for legal or compliance issues. Among smaller businesses this was commonly the owner or managing director.

The questionnaire was adapted from the 2014 survey to focus on the company’s experience of regulation in general rather than a specific law, reducing the ability to compare across surveys. However, several core tracking questions were retained to allow for time series comparisons.

Business performance and key challenges

More businesses (50%) reported that their sales turnover had increased than decreased in the last 12 months (29%), with more also taking on more staff (30%) than reducing their staff headcount (17%).

Business growth varied by industry sector. Those in the agriculture / mining / energy sector were the least likely to report an increase in sales turnover (32%), while those in the construction and hotel / catering sector (both 24%) were more likely to report reducing their staff headcount.

Two in 5 businesses (42%) reported increasing their capital investment, while a similar proportion (39%) had started offering new products and services. One in 4 businesses (25%) had started working in new business markets, while 1 in 10 (9%) said they had increased the amount they export to other countries.

Overall, 15% of businesses felt complying with regulation was their greatest business challenge. Businesses in the finance (44%) and agriculture / mining / energy (31%) were by far the most likely sectors to report this.

Overall attitudes towards regulation

Compared with 2014, the proportion of businesses who felt complying with regulation is their greatest challenge (up to 15% from 11% in 2014). The proportion of businesses who expect the burden of regulation to increase in the next 12 months has risen (up to 52%, from 43% in 2014 and a 38% low in 2012).

Despite rising concerns about the burden of regulation and that businesses expect it to increase, the proportion who felt the level of UK regulation is an obstacle to business success fell to around half (49%), continuing the downward trend from 62% who reported this in 2009.

Most commonly businesses felt the burden of regulation would increase in the next 12 months because of a perception that the burden always increases (38%). In terms of the impact of specific regulations, businesses were most likely to mention pension issues and, in particular, automatic pension enrolment (11%) as the reason why they expect the burden to increase.

The most important factor in encouraging businesses to comply with regulation is maintaining their reputation with customers (95%). 6 in 10 businesses (61%) deem this essential and a further 3 in 10 businesses (34%) consider it very important. This was closely followed by it simply being important to do the right thing (91%) with over half of businesses (55%) considering this essential and 3 in 10 (36%) very important.

Effort of dealing with regulation

While the proportion of businesses citing regulation as an obstacle to business success has been in steady decline, more than half (53%) of businesses felt that the total cost of complying with regulation had actually increased over the last 12 months. Only 3 in 100 (3%) of businesses said it has decreased.

Three in 5 businesses (59%) agreed that the time taken to comply with regulation was a burden, with businesses spending an average of 5.4 staff days per months dealing with, or comply with regulation.

The finance sector:

• was most likely to report an increase in the cost of regulation over the last 12 months (71%)
• as most likely to agree that the length of time taken to comply is a burden (75%) 
• spent the most time complying with regulation (11.5 staff days per month)

Completing paperwork, filling out forms and keeping records on facts and figures was considered the most burdensome of the prompted activities (65%), closely followed by keeping up to date with information about regulations the business needs to comply with (64%) and having to provide the same information more than once (62%).

External support

Almost all businesses (95%) used external support to help them comply with regulation: 

• 7 in 10 businesses (71%) used external business advisers or agents
• 6 in 10 (65%) used government websites
• 5 in 10 (54%) used friends, family and other personal contacts
• 5 in 10 (53%) used trade associations or other business organisations

Companies that used external business agents to help them comply with regulation sought advice from a wide range of experts. Around 9 in 10 (92%) used an external accountant or insurance company (87%). Lower proportions (63%) used an external lawyer for these purposes, while around half made use of specialists in particular fields such as health and safety (46%) and fire safety (45%).

On average, businesses spent £8,550 on the use of external business agents to help them comply with regulation, with this rising to £51,000 among large companies. Businesses in the agriculture sector (£11,450) and especially finance (£20,150) were also more likely to spend more on their external business agents.

Amongst businesses that had used government websites to help their business comply with regulation, the most popular website used was GOV.UK, (94%, equating to 61% of all employers). Local council websites (52%) and specific regulator websites (47%) were less common, while European Union websites were used only by a minority (15%).

Attitudes towards government

Employers were most positive around the clarity of the government’s approach to regulation, with almost half (49%) agreeing that they found the purpose of regulation clear. 

Nevertheless, only 1 in 3 (35%) found most regulation to be fair and proportionate, indicating that while a portion of employers appreciate the need for regulation, they do not feel this is administered in an equitable manner.

While around 2 in 5 businesses (38%) agreed that the government informs businesses of any regulatory changes clearly, only half this number (19%) felt that the government consults well with business before introducing new regulation or changing existing regulation. Indeed more than half (56%) disagreed with this statement.

One in 3 businesses (32%) found it easy to comply with regulations, with 1 in 5 (21%) considering that the government understands business well, (57% disagreed).

Businesses were presented with a list of 8 different areas of law and asked to identify which they found burdensome. At an overall level, employment law and health and safety law were most commonly considered a burden, each mentioned by over half of business (56%). 1 in 6 businesses expressed that they found no area of law particularly burdensome.

Experiences of dealing with specific regulators

Her Majesty’s Revenue and Customs (HMRC) was most frequently cited (18%) as the regulator with which businesses had most contact. The national Health and Safety Executive was cited by 9% of businesses although it is possible that businesses conflated this with health and safety officers working in the local council (6%).

Environmental health (7%), The Pensions Regulator (6%), local council planning (5%) and the Environment Agency (5%) were all reported by at least 1 in 20 businesses.

For those businesses whose main regulator was national, their greatest burden lay with the amount of paperwork or administration involved and the impact this had on their workloads (13%). Licensing, including creating applications and acquiring authorisation, was the next most common burden (7%). 

At a local level, the burden of regulation varied widely by regulator.

In terms of their dealings with regulators, businesses whose main regulator was their local council planning office were more likely to disagree that guidance published was easy to locate and accessible (43%) and that previous compliance was taken into account when scheduling visits and inspections (30%).

Local environmental health offices appeared to provide the best service, as those for whom it was the main regulator were more likely to agree that:

• guidance was easy to locate and accessible (71%)
• previous compliance was taken into account when scheduling visits and inspections (57%) 
• the impact on their business was taken into account when providing advice (45%)

In addition, more agreed (31%) that the process to appeal a decision made by their local environmental health office was easy and transparent than disagreed (11%).