Red tape and its advantages

21 April 2016
Incorporation, regulation and poultry

There is a consistent argument coming from various directions, and interwoven with the “Leave” argument on the EU, which says that regulation is bad. Business, it is argued, is suffering because of regulation.

The most recent attempt to change this at Government level was by lifting the mandatory regulation on the welfare of poultry in preference to an industry monitored set of guidelines. This beautifully outlines the costs and benefits of regulation. If I were a poultry farmer I guess I would welcome this loosening of regulation. If I were a chicken I’m damn sure that I wouldn’t.

The new National Living Wage (Mr Osborne’s not the real one) has been cited as an example of regulation that will hurt businesses, especially in the care industry. Conversely business in the care industry could be said to have been hurting their staff by underpaying them to the extent that they are forced to rely on welfare benefits to feed their families. The arguments are polarised according to the side from which you are arriving at them.

A couple of times recently I have heard small charities using the anti-red tape argument for staying unincorporated. The argument goes that there is no need to incorporate to protect ourselves as Trustees because we are doing good and the burden of regulation is too great.

This doesn’t hold water.

Firstly the definition of doing good can be plastic and, where you are employing staff or working directly alongside beneficiaries, there are significant risks when this definition is differently perceived.

Secondly, especially with the new Charitable Incorporated Organisation form available, the regulation for an incorporated charity is not significantly different from that of an incorporated one. The benefits of protection and clarity that arise from incorporation heavily outweigh the tiny extra administration.

If you are currently looking at this issue then please give me a call. I can assist in making the transfer to incorporation painless and helpful.

My advice, in an eggshell, is to think like a chicken…