Politicians have set themselves on a collision course with employers after the Trade & Industry Select Committee claimed in a report that it is "slightly bemused" by the "obsession with the growing burden of regulation" in Britain.
The committee, dominated by Labour MPs with no business experience, claim that employment regulation in the UK is "not excessively burdensome on employers or a threat to UK competitiveness."
The committees claim comes just a week after the government's Better Regulation Task Force (BRTF) calculated that the that the cost of regulation amounted to ten per cent on the UK's GDP and that £25bn a year is spent simply enforcing rules.
Cutting the cost of regulation on British business could increase GDP by more than one per cent and save businesses £7.5bn per year, the BRTF estimated.
Last year the Small Business Council - the government's own small business advisors - also said in its annual report that excessive regulation was stifling small businesses and discouraging the creation of hundreds of thousands of jobs.
Meanwhile, in evidence to the same Select Committee, the SBC said that initiatives to reduce the burden of regulation on small businesses “are not worth the paper they are written on”.
The Federation of Small Businesses told the Committee last year that six out of 10 of its members were dissatisfied with the complexity and volume of legislation, more than half (55 per cent) with compliance costs and the interpretation of legislation (54 per cent), and more than four out of 10 (46 per cent) with the rate of change.
Seven out of 10 firms polled earlier this year said that keeping up to date with red tape would be their biggest hurdle in the coming 12 months while a quarter of small businesses questioned for the ongoing UK Business Barometer project said that they had purposely avoided growing their businesses to avoid the impact of regulation.
Nevertheless, the Select Committee report also proposed extended the right to request flexible working to all those with caring responsibilities, arguing that "with the numbers of working mothers rising and an ageing population, employers will find that accommodating the caring obligations of their employees is a necessity, not a luxury."
Most controversially, it also said that it was "not convinced by the arguments for retaining the opt-out from the Working Time Directive, which has enough flexibility to accommodate the needs of business."
However it acknowledged that "future regulation should only be introduced where there is a clear problem identified which can only be remedied by regulatory intervention."
Martin O’Neill, Chairman of the Committee, said “Employment regulation has been contrasted with flexibility for too long. In reality, regulation need not mean inflexibility. Individual regulations should be judged on their own merits.”
But David Frost, Director General of the British Chambers of Commerce, accused the Committee of being "out of touch" and pointed out that regulation topped the list of concerns from businesses across the country.
"The cost of new regulations introduced since 1998 has now reached £39bn," he said.
"A fundamental strength of our economy is the flexibility of our labour market. Losing the opt-out could damage this flexibility,” he added.