February 22 2010.

Legislators need to think smallest first in order to safeguard the future of Britain's small firms, according to the Forum of Private Business (FPB).

In response to a Government consultation, the FPB has argued that policies are often thought up with only big businesses in mind.

The FPB believes little consideration is given to the disproportionate impact new rules and regulations have on smaller firms, which often employ just a handful of people and lack the expertise needed to comply with the law.

And with much less time and money available to understand and interpret the UK's ever-changing regulations, it is increasingly difficult for SMEs to compete with their larger rivals.

This, the FPB believes, is an alarming trend which could lead to Britain's economy being dominated by large companies, depriving consumers of choice and variety.

The FPB submitted its points to the 'Thinking Business in Policy' interim report review, which is looking into the effects policy-making has on business.

Among other questions, the consultation asked how policy-makers can better understand the impacts their decisions have on businesses.

The FPB responded by highlighting the forthcoming Equality Bill as an example of how the Government often under-estimates the effect legislation has on small firms.

The Government's own 'impact assessment' claims that an SME will need just an hour to understand the section of the new law dealing with disability discrimination.

However, the FPB believes that a typical SME owner/manager, inexperienced in understanding and interpreting complex legal documents, will take much longer to comprehend the document and make any necessary changes to his or her business.

FPB policy representative Matt Goodman said: "We believe that, through improved understanding of the nature of small businesses and by making much more accurate assessments of the implications of the legislation, decision-makers can make informed judgements about the advantages and disadvantages of policies.

"Policy-makers should also consider how their policies are going to boost the UK economy.

"It's not enough simply to consider the social benefits of legislation without giving thought to the bigger picture. Many businesses feel they are often seen as those which should automatically pay for attempts at influencing social change."

The FPB also recently responded to another consultation - the Better Regulatory Executive's call for evidence on the 2010 to 2015 simplification agenda.

The BRE is a government body tasked with reducing the burden legislation has on trade and industry. It has been set a target of saving businesses £6.5 billion over the next five years.

The FPB has welcomed this but believes a comprehensive regulatory review, looking at every existing piece of regulation and asking if it can be scrapped or simplified, would be the best option.

Mr Goodman said: "We feel that a comprehensive regulatory review would, most importantly, help government departments understand how pieces of legislation interact with each other, creating cumulative administrative and policy burdens.

"This would help identify areas of real cost to government and how those costs filter down to businesses, ultimately tightening the targets set under the better regulation agenda and creating realistic opportunities for savings."