For some Bri­tish firms, red tape spreads from Lon­don, not Brus­sels


SITTINGBOURNE, Eng­land (Reuters) – Troy Bar­ratt, a small busi­ness owner in this south­east­ern English town, has a list of la­bor, en­ergy and safety reg­u­la­tions that add to the costs of his pre­ci­sion metal fab­ri­ca­tion firm.

But un­like op­po­nents of Britain’s mem­ber­ship in the Euro­pean Union, he puts the blame on Lon­don rather than Brus­sels.

“By far the big­gest frus­tra­tion I have is with home­grown laws,” Bar­ratt, man­ag­ing di­rec­tor of Con­tracts En­gi­neer­ing, said as laser-cut­ting ma­chines sliced into sheets of steel in his firm’s work­shop in an in­dus­trial park about 60 km east of Lon­don, close to the mouth of the River Thames.

Bar­ratt, a 36-year-old for­mer in­vest­ment banker from the United States, points to a new UK pen­sion con­tri­bu­tion sys­tem for his 26 em­ploy­ees and du­plica­tive checks on elec­tri­cal equip­ment that ad­vis­ers rec­om­mend he carry out in or­der to meet sep­a­rate sets of Bri­tish rules.

He also cites commercial power tar­iffs that are among Europe’s high­est be­cause Lon­don raises ex­tra tar­iffs to help fight cli­mate change.

As the coun­try pre­pares for a June 23 ref­er­en­dum on whether to leave the EU, the “Out” cam­paign says rules made in Europe jar with Britain’s tra­di­tion­ally free-mar­ket ap­proach to busi­ness, hurt­ing prof­its and hob­bling eco­nomic growth.

The grow­ing weight of EU leg­is­la­tion rep­re­sents a threat to the coun­try’s sovereignty, it says.

Yet many em­ploy­ers say it’s Bri­tish rules, cou­pled with the some­times overly rig­or­ous Bri­tish im­ple­men­ta­tion of EU rules, that are their main hin­drance.

Two ex­am­ples of­ten cited by busi­ness have noth­ing to do with the EU: last year’s sur­prise an­nounce­ment of a 38 per­cent rise in the min­i­mum wage by 2020 and a planned new levy to pay for ap­pren­tice­ships.

While Britain ranks among the eas­i­est coun­tries in the world in which to do busi­ness, the Con­fed­er­a­tion of Bri­tish In­dus­try warned the gov­ern­ment of Prime Min­is­ter David Cameron late last year against in­ter­ven­ing too much in the la­bor mar­ket.

Es­ti­mat­ing how many Bri­tish laws ac­tu­ally orig­i­nate in Brus­sels is part of the fierce de­bate around the ref­er­en­dum. A par­lia­men­tary anal­y­sis in 2010 found the EU was be­hind be­tween 15 and 50 per­cent of laws and reg­u­la­tions in Britain, depend­ing on the def­i­ni­tion of what con­sti­tutes a law. Some EU rules Britain has signed up to have no im­pact lo­cally, such as those which con­cern South­ern Europe’s olive in­dus­try.

Central to the “Out” camp’s case that Bri­tish busi­ness is tan­gled up in Brus­sels red tape is a study by pro-mar­ket think­tank Open Europe which es­ti­mates that the EU’s 100 most bur­den­some rules cost Bri­tish busi­nesses 33 bil­lion pounds a year to com­ply with, in ar­eas rang­ing from the la­bor mar­ket to fi­nan­cial reg­u­la­tion and re­new­able en­ergy.

Open Europe said by way of com­par­i­son, that is more than Britain usu­ally raises each year in coun­cil tax, which is levied on house­holds across Britain and is a ma­jor source of tax rev­enue.

“Just think of how much more suc­cess our econ­omy could have if we had the power to re­duce the bur­den of red tape and re­place point­less EU rules with sen­si­ble domestic reg­u­la­tion,” said Priti Pa­tel, a gov­ern­ment min­is­ter who broke ranks with Cameron to cam­paign for a Bri­tish exit.

By halv­ing the im­pact of EU so­cial and em­ploy­ment laws, Britain could cre­ate 60,000 new jobs, she said.

The “Out” cam­paign also points to sit­u­a­tions where EU law du­pli­cates UK reg­u­la­tion.

Pa­tel said EU rules on how long self-em­ployed truck driv­ers may spend on the road, how of­ten they must take breaks and how com­pa­nies must keep records of their driv­ing time were just one ex­am­ple of du­plica­tive leg­is­la­tion and cost Bri­tish busi­ness 100 mil­lion pounds a year.

Jack Sem­ple, head of pol­icy at the Road Haulage As­so­ci­a­tion, said the in­dus­try agreed on the need for such rules but the EU leg­is­la­tion meant firms had to keep two sets of records, adding to costs.

Yet, many of the big­gest prob­lems faced by hauliers were due to Bri­tish de­ci­sions, Sem­ple said. He cited high fuel du­ties, in­suf­fi­cient in­vest­ment in roads and a re­quire­ment that ve­hi­cle road­wor­thi­ness tests were con­ducted only by civil ser­vants. The gov­ern­ment said re­cently that it will drop this tests rule.

“Most of the re­ally big is­sues for the in­dus­try are about UK reg­u­la­tions or the ap­pli­ca­tion in the UK of Brus­sels reg­u­la­tions,” he said.

Britain of­ten goes above and be­yond EU re­quire­ments, even if its so­cial laws are not as gen­er­ous as in other coun­tries in the bloc, such as France or Italy.

For ex­am­ple, UK em­ploy­ers must give work­ers 28 days of paid leave a year, less than in other coun­tries in the bloc but higher than the EU re­quired min­i­mum of 20.

Sim­i­larly, em­ploy­ers men­tion parental leave rules that are more gen­er­ous to work­ers and longer con­sul­ta­tion pe­ri­ods over re­dun­dan­cies than set out by Brus­sels.

In the coun­try’s vast fi­nance sec­tor, Bri­tish rules on how much cap­i­tal banks must hold are stricter than in other EU na­tions, re­flect­ing a tough re­sponse to the fi­nan­cial cri­sis.

The gov­ern­ment ac­knowl­edges there are prob­lems which it is try­ing to fix. The busi­ness min­istry says its cuts to red tape since 2010 have so far saved busi­nesses 10 bil­lion pounds, some­thing it wants to repeat by 2020.

In Brus­sels, too, of­fi­cials have made cut­ting red tape a core part of the cur­rent Euro­pean Com­mis­sion’s agenda.

Vicky Ford, a Bri­tish Con­ser­va­tive mem­ber of the Euro­pean Par­lia­ment, said 80 EU laws were re­pealed last year and dozens more are due to go in 2016.

She said even more im­por­tant for Bri­tish firms is the abil­ity to shape the rules that af­fect their mar­kets, some­thing which they could no longer do if the coun­try left the EU.

“The idea that UK busi­nesses would al­low the rules of their trade to be set by their com­peti­tors is bonkers,” said Ford, who chairs the par­lia­ment’s In­ter­nal Mar­ket Com­mit­tee.

If Britain does leave the EU, re­vers­ing the rule­book would not be easy. Open Europe says only 13 bil­lion pounds out of the 33 bil­lion-pound cost for Britain of EU rules could be saved un­der any po­lit­i­cally re­al­is­tic sce­nario, mostly by re­peal­ing em­ploy­ment and en­vi­ron­men­tal leg­is­la­tion.

Even that kind of cull would be met with re­sis­tance from trade unions and many vot­ers.

For many em­ploy­ers, adapt­ing to EU la­bor rules has not been hard as they have sidestepped one of the bloc’s po­ten­tially most oner­ous rules – a max­i­mum 48-hour work­ing week. Many Bri­tish busi­nesses have per­suaded staff to sign an opt-out clause won by Britain in ne­go­ti­a­tions with the EU in 1993 in or­der to main­tain its flex­i­ble la­bor mar­ket.

Tim Parkin­son, chair­man of Airedale Springs, a spring man­u­fac­turer in the York­shire town of Ha­worth, re­sponded to the EU’s Work­ing Time Di­rec­tive by agree­ing a new, flat-pay deal with em­ploy­ees in 1999 in re­turn for agree­ing to the opt-out.

“It was re­ally no bur­den at all for us,” he said.

In Sittingbourne, Bar­ratt said Britain’s pro-en­ter­prise spirit made it the nat­u­ral lo­ca­tion for him in Europe as well as the fact that his wife is from the coun­try.

Since he bought Con­tracts En­gi­neer­ing in 2012, an­nual sales have al­most dou­bled to 2 mil­lion pounds and he has found new clients such as med­i­cal de­vice man­u­fac­tur­ers and ad­vanced light­ing firms.

Like many en­trepreneurs, Bar­ratt is wor­ried by the prospect of a vote to leave the EU, how­ever.

Al­most all of his big­gest cus­tomers ex­port to other coun­tries in the bloc’s sin­gle mar­ket, some­thing that might be harder to do from out­side the EU. Un­cer­tainty over the vote has weighed on or­ders, prompt­ing him to freeze all new hir­ing.

He is par­tic­u­larly vexed by claims from mem­bers of the “Out” camp that only a Brexit can free small firms from red tape and de­liver Britain into a new era of stronger eco­nomic growth.

“What costs will come in when other costs go out? Some­thing will,” he said.

“What I see is a very com­pelling, very rig­or­ously an­a­lyzed case about the ben­e­fits of stay­ing,” he said. “But there is no real de­tailed anal­y­sis of how we are bet­ter off eco­nom­i­cally if we leave, ex­cept ‘Trust me’.”

(Luke MacGre­gor/Reuters)

TROY BAR­RATT, man­ag­ing di­rec­tor of Con­tracts En­gi­neer­ing Ltd, a steel prod­ucts man­u­fac­turer, poses in the com­pany’s plant in Sittingbourne, south­east Eng­land.

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