SME construction business owners pay £605 million per year to external consultants in exchange for support on complying with regulations - almost a third of their £2 billion annual red tape bill - according to research from the Forum of Private Business.
On average, the owners spend approximately £13,395 on external consultants offering legal advice, including advice on employment law, health & safety and other industry-specific guidance and internal time costs.
Overall, two thirds of respondents (66%) have seen consultancy costs rise since 2011, when the previous ‘cost of compliance’ research took place.
“Small construction firms continue to struggle to control costs – particularly in the current economic climate – and remain frustrated by the amount of red tape they have to negotiate every day,” said the Forum’s chief executive Phil Orford MBE.
“With less than a fortnight to go before October’s common commencement date, there is no hiding from the fact that despite government promises to reduce the time and money spent on red tape, compliance costs continue to hinder job creation and growth.
“Unlike larger construction businesses, small firms simply do not have the internal departmental resources dedicated to complying with regulations, so it is either the business owner or a key senior manager who is forced to devote a large amount of time to this task – an average of almost 33 hours each month – or pay for an external consultant, which can be extremely expensive.
“The increasing cost of fines for non-compliance on everything from health & safety to unfair dismissal has made the ongoing support we provide to our members through our helpline and guides all the more important.
“It is vital that companies ensure they have the correct internal processes in place to avoid the hefty fines and damaging consequences of non-compliance.”
In addition to its legal expenses insurance, the Forum continues to help small businesses negotiate employment law pitfalls via its Employment Guide. The 2014 guide is to be published in October.
New and updated sections of the Employment Guide include: