Tuesday, 5 December 2006

Over-regulating the smallest of businesses

As most fellow bloggers will agree, blogging does not pay the rent. Man cannot live off Ad Sense alone (a few of the blog-illuminati aside), and like most of us I have a day job. I try to keep it away from this site, however, lest my bosses take umbrage.

However, as a policy analyst in a business that is receiving increasing attention from the Government, I do come across some excellent examples of how government undermines small business.

Take today’s story. Childminders – as you may know – are self-employed individuals that care in their own homes for other people’s children. They are regulated by Ofsted and are usually allowed to care for up to six children under 8 at any time. They are the ultimate small business: one estimate found that barely half turn a profit. The Government is keen to promote childcare in general, both because it enables (particularly lone-) parents to return to work and because good quality childcare can help boost the cognitive and behavioural performance of children from poor backgrounds.

Yet childminders are constantly being strangled by petty regulations. A childminder contacted my employer today to complain that her local council had decided to start charging her to remove her household rubbish because she was conducting a business out of her premises. They were only aware of her existence because she contacted them to ask for a larger wheelie-bin. Many large domestic households do this, but this particular council likes to check why a larger bin is needed. When they discovered that she cares for a handful of other people’s children for profit in her household, they deemed her a business and are threatening to charge her accordingly.

This is an execrable example of over-regulation. Though she does conduct business in her house, it is still a domestic premises. It has not been re-designated for planning purposes; she is not VAT registered; and the waste she is producing is no greater (or qualitatively different) from what would be produced if she had a large family. Yet short-sighted bureaucrats are prepared to hit her with unnecessary and costly extra fees because their rigid rules pay no attention either to the specifics of her case or to the broader objectives of national or even local government.

This is not an isolated example. Other childminders have been told they have to meet the same kitchen standards as commercial premises, even though they are only preparing meals for a handful of children, much as my mother did for twenty years without Government interference. One can imagine the above council also requiring those of us selling items on eBay to pay commercial rates for refuse collection too – all those jiffy bags clearly put us in the same category as Primark and the cement works!

Small business in Britain is being increasingly squeezed by well-meaning but ill-conceived regulation. This focus on the little things is damaging important, over-arching objectives: competitiveness; child welfare; liberty. It stems from the unwillingness of those in authority to trust individuals to do what is in their best interests, which is generally what is in everyone’s best interests – a bad business would be a bankrupt business very quickly. Instead of letting individuals make these judgements, Government seeks to judge for them, but because they cannot be everywhere at once they must do so with blanket edicts that undermine the greatest asset in our society: the enormous amount of information that is distributed among individuals.

This is hard to change; Governments of all stripes struggle against the temptation to meddle in our affairs. Se be glad you’re not making a profit out of your blog. If you were, the bureaucrats would be after you!

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