April 19, 2024

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Badenoch slashes red tape for medium-sized businesses in post-Brexit boost

3 min read

Costly red tape including climate risk reporting will be axed for up to 40,000 businesses under post-Brexit reforms planned by Kemi Badenoch.

The Business Secretary is on Monday set to announce reforms expected to save medium-sized firms £150 million a year as the government looks to kick-start growth and improve productivity.

Under the proposals, medium-sized companies would no longer have to spend time and money compiling an annual “strategic report” for shareholders, as had been required under European Union rules.

Ms Badenoch will also announce that the number of people a company can employ before it is legally classed as large will rise from 250 to 375.

The move will see 5,000 companies reclassified as medium-sized, meaning they are subject to far less red tape.

Changing the rules

Under the current rules, all medium and large companies have to produce an annual strategic report setting out the risks and opportunities they face.

For large firms, requirements include detailing climate-related risks and opportunities.

As a result of the new reforms, 37,000 existing medium-sized businesses and the 5,000 reclassified large firms will no longer have to comply.

When Britain was in the EU, it was Brussels that set the thresholds which determined whether a business was classed as small, medium or large.

The reforms are expected to be announced in a consultation later this year and it is estimated they may save businesses £148 million a year.

Ms Badenoch said: “Almost every job in the UK is owed to what is, or what previously was, an SME [small and medium-sized enterprise]. They are the engines of economic growth for this country.

“Whether it’s through cutting red tape, unlocking investment or lowering business costs, today’s announcements show that this government is committed to doing all it can to turbo-charge SMEs so that they can go further and faster than ever before.”

Major speech on economy

In his first major speech since the Budget, Rishi Sunak will on Monday announce a package of pro-business reforms as he looks to turn the economy around.

During a visit to Warwickshire, the Prime Minister will pledge £60 million in new investment to help smaller businesses take on 20,000 more apprentices. He will also unveil a new taskforce designed to boost private investment into women-led businesses in an attempt to boost the number of new startups.

Mr Sunak said on Sunday]: “Whether it’s breaking down barriers and red tape for small businesses, helping businesses hire more young people into apprenticeships and skilled jobs or empowering women to start up their own businesses – this government is sticking to the plan and leaving no stone unturned to make the UK the best place to do business.”

Labour dismissed the reforms, saying it was “getting harder and harder to run a successful business” under the Tories.

Jonathan Reynolds, the shadow business secretary, said: “All this ongoing Conservative chaos comes with a cost as under the Tories we have seen a record high in the number of businesses having to close their doors for good.”

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