Red tape costs soar to €631m
A decade after a government promise to cut bureaucracy, it is worse than ever for small firms
Published 20/06/2010 | 05:00
TEN years after a government promise to cut bureaucracy faced by small businesses, the stranglehold of red tape is worse than ever, the Sunday Independent has discovered.
The then Minister for Enterprise, Mary Harney, launched a programme to "alleviate the significant burden of administrative requirements on small businesses" back in 2000.
But bodies that represent family shops, restaurants and small companies told us that it has more than doubled since then, despite an EU-wide promise to cut back 25 per cent by 2012.
It's a "major business problem" for 48 per cent of its members, Small Firms Association research says. And for almost one in 10, the recession isn't their biggest nightmare, or cross-border shopping, or rents and rates -- red tape is top of their list.
Small businesses are being stung for €631m each year in costs to grapple with employment, health and safety and company law regulations, a Department of Enterprise report found.
Each small business is forced to spend €5,500 a year just to keep up with all the permits and licences and regulations, the small firms body Isme and shop owners' group RGDATA reckon. Red tape eats up a 20 per cent chunk of each business's costs, these bodies say.
Here we've lifted the lid on some of the maddest bureaucracy they come up against.
One Department of Agriculture official opens the bags of potatoes to grade their size. An entirely separate department functionary goes to shops to check that the eggs are in date and aren't dirty or cracked.
Local shopkeepers have up to 17 separate inspections like these a year. You can be prosecuted for falling foul of almost any of the checks, closed down for some, or fined or have your licence removed.
"If someone from the department comes to the premises and discovers up to three or four mistakes, one can be fined up to €3,000," says Cavan grocer John Foy. "One example could be where oranges from Spain are listed as being from Chile because a staff member forgot to change the sign."
Shop owners need separate licences to sell everything from torch batteries to freshwater eels -- up to 21 of them, RGDATA says.
You need individual licences to sell stamps, salmon, batteries, DVDs, tobacco, alcohol and Lotto tickets. Not to mention eels.
"I was approached by someone I presumed to be a customer who inquired if I had a licence for the teddy bear machine located just inside the front door," says John Foy of a recent incident.
"I have been in business for 35 years, but I was not aware that one requires an entertainment licence for such machines." Plus each teddy bear is subject to VAT as well.
"A living nightmare" is how Des Cummins of National Recycling described the ramping up of regulations in the waste sector at a recent Dail committee meeting.
"Since 1996, 30 pieces of legislation have been passed in environmental law, as well as untold statutory instruments, which comprise many pages. Small firms cannot cope with this level of regulation.
"The regulations were changed last year and the application form to renew a permit we have had for 15 years is now 48 pages long. The explanatory booklet which explains how to fill in the form is 148 pages long."
That booklet, South Dublin County Council's Waste Permit and Certificate or Registration Application Form manual, is actually now an incredible 372 pages long.
Permit costs have rocketed too. "We renewed our permit three times in the past," Cummins said. "It used to cost €1,000 per year, but the same permit we had last year will now cost us €12,000 a year."
The SFA has met with Environment minister John Gormley, arguing that their waste sector members are being treated as if they were giants like Greenstar.
Dail deputies complain about the new clock-in arrangements up at Leinster house, but small companies have a much worse timesheet ordeal.
A company with 23 staff has to keep the same records of staff hours and breaks, printed out and signed off daily, as say, pharma multinational Pfizer, thanks to the Organisation of Working Time (OWT) Act.
"It's costing an estimated €68m," said Mark Fielding of Isme, "and it's being ignored by the vast majority of people and is of no major benefit. If scrapped it would not make a whit of difference to business."
employees! Be cool
The climate your office staff should enjoy is enshrined in employment law. It specifies that "a temperature of 17.5 degrees must be maintained at every work station during work hours". It's gone up by 0.5 degrees since 2007.
€1,800 an hour
There seem to be some Naomi Campbell types around Dublin City Council (DCC).
Ian Martin of Martin Services gets regular visits from many DCC inspectors. When the cost of one of his licences trebled this year, Martin queried it with the authority.
"The officials said labour costs have increased, office costs have increased, and that a visit to a premises cost €600. Yet they are in the premises for only 20 minutes."
That works out at €1,800 an hour for the visiting DCC inspector's time. Not too far from Campbell's famed 10 grand a day earning rate.
Lost in translation
This is just one choice example of the gobbledegook through which business owners are forced to wade. From the Equality Act 2004:
Section 29 (entitlement to equal remuneration of the Act of 1998 is amended by substituting the following subsection for subsection (4): (4) Section 19(4) applies in relation to C and D as it applies in relation to A and B, with the modification that the reference in it to persons of a particular gender (being As or Bs) is a reference to persons (being Cs or Ds) who differ in a respect mentioned in any paragraph of section 28(1) and with any other necessary modifications.
ISME says a company transporting a wide load from Limerick to Dublin needs to get a separate transport licence for Limerick, Offaly, Tipperary, Laois, Kildare and Dublin.
Plus it costs as much as €250 for one of those individual licences, which have to be sourced from each individual local authority.
From a sandwich outlet to a small factory, every single business in the countryhas to fill out up to a dozen CSO statistics forms annually, every week, month or quarter.
Fines of up to €1,500 can apply if they're not returned in time.
The kicker is the CSO's answer to pleas for mercy on the form-filling. It's produced two tomes, one 38 pages long and one 45 pages long, both titled: Report on Response Burden Placed on Irish Businesses by CSO. And they cost €5 each.
The form-filling is also a man-hour sinkhole, taking up 50 hours a year, RGDATA has found. And Isme has worked out that there are 110 core forms to fill in.
"It's basically treating a small operator as if they were McDonald's," Fielding says.