Over the last 20 years I have noticed an ever-increasing shift of responsibilities from the Government to businesses. Let me list some of the burdens introduced:
- Unpaid tax collectors.
- Policemen: Financial services firms must have robust systems to detect money laundering. The penalties for getting this wrong are harsh, ranging from fines to even imprisonment for the money laundering officer.
- Welfare benefit providers: Firms have had to pay statutory sick pay, as well as maternity and paternity pay, for many years. Over the next few years, the minimum wage is set to increase from £6.60 to £9 per hour (an increase of 36 per cent) at the same time as benefits are cut further. This clearly signals a switch of welfare benefits provision from the state to businesses.
- State pension providers: What is auto-enrolment other than compulsion for firms to provide pensions for staff while the Government increasingly reneges on its promises? The postponement of the state pension age, for example, is bound to get worse. Forcing employers to retain older staff and, as such, denying young people the chance to work, is simply age discrimination.
- Greater bureaucracy: The FCA has created a massive increase in regulatory costs to businesses, for example.
- Stealth taxes: There are far too many to mention. The FCA fees and Financial Services Compensation Scheme levies are just disguised business taxes.
- Tax on jobs: Employer’s National Insurance contributions (a significant 13.8 per cent on top of salaries) provide no benefits whatsoever apart from boosting the Government’s tax coffers.
- HR legislation and regulation: The fear of being taken to the cleaners by a disgruntled ex-employee means many firms are afraid to dismiss staff no matter how bad they are.
- Health and safety overregulation: The stories of ludicrous rules typically invented in Brussels beggar belief. The ultimate penalty for the employer is corporate manslaughter, including fines and a possible prison sentence.
The consequences of these crazy policies are clear: less employment and lower overall pay and benefits for those in work, as well as a deterrent to entrepreneurism, risk taking and hard work by would-be business owners.
And the solutions for business owners? Increased automation, such as utilising robotics and taking on the likes of virtual assistants from low cost countries, thus exporting jobs.
When you think about the current onslaught on businesses you start to wonder why anyone would even bother setting one up in the first place. Certainly, if I were to start a business today I would avoid financial services like the plague or at least be wholly web-based, not employing anyone. No wonder the rise of robo-advice is so inevitable.
I consider many of these measures to be more akin to those of a communist dictatorship than of a free enterprise Western democracy. They are the silent killers of entrepreneurism and the free market economy. They are truly shameful. If the Monster Raving Loony Party had dreamt up these polices 20 years ago we would have laughed at them. It is not so funny now…
Tony Byrne is financial planning director at Wealth and Tax Management and author of Wealth Magic