Influencing policy and practice through examining UK small business understanding of and response to COVID-19 regulation and guidance
Lead Research Organisation:
Newcastle University
Department Name: Newcastle University Business School
Abstract
Regulations introduced due to the governmental response to COVID-19 force business leaders to take decisions with far-reaching consequences for employees' livelihoods, public and employee health, and the viability and survival of their businesses. Crucially, what underpins such decisions are complex judgements based on their understanding of the regulatory context and their capacity to discriminate between swathes of legal obligation and guidance of different kinds. This presents a particularly significant challenge to small businesses (0-49 employees) due to their constrained resources.
The current pandemic represents the immediate context for this research, which will undertake a large-scale survey with follow-up interviews to understand how small businesses receive, understand and act on the UK's regulatory response to the pandemic and the financial, legal, and emotional costs of complying with this regulatory challenge. The UK regulatory context is further complicated by actions being taken at the level of devolved nations and regionalised variation of regulatory impact at different times.
The research, in partnership with the FSB (Federation of Small Businesses), will provide evidence and insights to inform governmental regulatory responses to future public health crises and to regulation in a post-COVID landscape. It will arm those who formulate regulation and related guidance relevant to small businesses with greater clarity about the means by which businesses receive and interpret guidance, and whether and how they act on it. Regulation informed in this way has the potential to deliver a positive impact on employees' livelihoods, public and employee health, and the survival of UK small businesses.
The current pandemic represents the immediate context for this research, which will undertake a large-scale survey with follow-up interviews to understand how small businesses receive, understand and act on the UK's regulatory response to the pandemic and the financial, legal, and emotional costs of complying with this regulatory challenge. The UK regulatory context is further complicated by actions being taken at the level of devolved nations and regionalised variation of regulatory impact at different times.
The research, in partnership with the FSB (Federation of Small Businesses), will provide evidence and insights to inform governmental regulatory responses to future public health crises and to regulation in a post-COVID landscape. It will arm those who formulate regulation and related guidance relevant to small businesses with greater clarity about the means by which businesses receive and interpret guidance, and whether and how they act on it. Regulation informed in this way has the potential to deliver a positive impact on employees' livelihoods, public and employee health, and the survival of UK small businesses.
| Description | Differential experience of regulations in a time of crisis: Our research provides evidence-based novel insights into the impact of regulations (new, amended and pre-existing) on UK small businesses during the COVID-19 pandemic. Further analysis of the data will identify and explore the salience of generic aspects of small businesses' responses to crises. Our findings provide an understanding of the specific regulations (rather than broad categories such as Employment or Health and Safety) that different economic sectors engaged with, and which of those regulations were experienced as especially difficult or beneficial (when research in this area tends only to be concerned with regulatory burdens). This provides an untypical fine-grained understanding of compliance behaviours. Temporal conceptualisation of regulatory experience: Building on our previous work, this research has developed - both empirically and, with further analysis, theoretically - a temporal conceptualisation of how regulation is experienced by businesses. Eschewing a commonly assumed static model of regulatory impact, we show, for example, that regulatory compliance can be characterised by periods of resource-intensive regulatory activity followed by normalisation . We also found that some small businesses, having managed to adapt to the initial shock of engaging with a raft of new regulatory obligation and information during the pandemic, perceived that their 'new' situation opened up novel opportunities, leading to operational and strategic innovation. This was less as a result of regulatory compliance but, rather, that the (often severe) impact of regulations which upended existing business processes and practices, gave way to innovative business behaviours. Simultaneously, we found that some of these operational innovations (e.g. home-working that was initially mandated by law) led to negative outcomes for some businesses after a period of time. How businesses form their understanding of regulations and their preferences for regulatory communications: Building on our previous research, showing that small businesses do not receive regulatory information undiluted and fully formed, direct from the originator, we have gained an, often neglected, in-depth understanding of how businesses come to understand what regulation is relevant to them and which sources they trust to base resulting actions on. Our findings significantly develop existing knowledge around which sources are relied upon for clear regulatory information and why. This is a crucial issue at all times, and even more so during a health crisis when business decisions can cost lives and livelihoods. Connected to this, we also collected novel data concerned with small businesses' preferences about the nature of regulatory communications. A key finding in this regard is the reported lack of clarity in the distinction between regulations enforceable by law, and non-mandatory government guidance. Fear of falling foul of regulation leads to over-compliance: Our interview data evidenced that when business owners were unclear on what they had to do to comply, they often went further than necessary, 'gold-plating' their compliance response, largely due to fear of enforcement. This overcompliance was also, in certain cases, due to fear of falling ill, but overall led to additional financial losses from a reduction in productivity and additional costs. |
| Exploitation Route | Non-Academic - Our findings can inform governmental regulatory responses to future public health and, potentially other widely felt, crises, and to regulation more generally in a post-COVID landscape. The outcomes of the research arms those who formulate regulation and related guidance relevant to small businesses with greater clarity about how small businesses experience regulation, the means by which they receive and interpret guidance, and whether and how they act on it. This can lead to a regulatory environment that supports small businesses to make sound decisions and take proportionate action, especially at a time of national crisis. Academic - Since our research features analysis of business resilience behaviours in the face of a major socio-economic and health crisis, the findings will also provide an empirical platform for future academic conversations about future extreme events, which are predicted to occur more frequently as a direct and indirect consequence of environmental stress and degradation. As such global challenges threaten status quo socio-economic structures, governments will continue to wish to encourage vibrant small business activity, and debates on the role and nature of regulation, vis a vis SME and general economic policy, will find data and analysis from this project very useful. |
| Sectors | Other |
| Description | see other sections of this report |
| First Year Of Impact | 2022 |
| Sector | Agriculture, Food and Drink,Construction,Creative Economy,Education,Environment,Financial Services, and Management Consultancy,Healthcare,Leisure Activities, including Sports, Recreation and Tourism,Manufacturing, including Industrial Biotechology,Retail,Transport |
| Impact Types | Economic,Policy & public services |
| Description | Response to government consultation exercise: BEIS post-pandemic economic growth |
| Geographic Reach | National |
| Policy Influence Type | Contribution to a national consultation/review |
| Description | Response to government consultation exercise: Living with COVID-19 |
| Geographic Reach | National |
| Policy Influence Type | Contribution to a national consultation/review |
| Description | HSE 'Blue Tape' Roundtable |
| Form Of Engagement Activity | A formal working group, expert panel or dialogue |
| Part Of Official Scheme? | No |
| Geographic Reach | National |
| Primary Audience | Industry/Business |
| Results and Impact | The PI was invited to join a stakeholder group by the Health & Safety Executive concerned to drive down health and safety bureaucracy. As a result of attending, the PI was asked to and did contribute to a paper organised by another stakeholder group member concerned with the difficulties of tendering processes and written risk assessments for small contractors. this paper was submitted to the HSE. |
| Year(s) Of Engagement Activity | 2022 |
| Description | Panel member for Institute of Government event |
| Form Of Engagement Activity | A formal working group, expert panel or dialogue |
| Part Of Official Scheme? | No |
| Geographic Reach | National |
| Primary Audience | Policymakers/politicians |
| Results and Impact | One of the research team, Paul Wilson (FSB), was a member of an expert panel at an event organised by the Institute for Government (IFG) in the context of the launch of a report entitled 'Sense about Science'. Paul spoke about our project's emerging findings, highlighting good practice in terms of how small businesses receive advice. |
| Year(s) Of Engagement Activity | 2022 |
| Description | Podcast |
| Form Of Engagement Activity | A broadcast e.g. TV/radio/film/podcast (other than news/press) |
| Part Of Official Scheme? | No |
| Geographic Reach | National |
| Primary Audience | Industry/Business |
| Results and Impact | The project PI participated in a podcast organised by FSB to communicate the research's key findings and promote the project report to FSB's small business membership. |
| Year(s) Of Engagement Activity | 2022 |
| Description | Presentation to Brexit Opportunities Unit, Cabinet Office |
| Form Of Engagement Activity | A formal working group, expert panel or dialogue |
| Part Of Official Scheme? | No |
| Geographic Reach | National |
| Primary Audience | Policymakers/politicians |
| Results and Impact | The project PI and Paul Wilson (FSB) had an online dialogue with the Head of the UK Government's Brexit Opportunities Unit (BOU) and a member of their team, where we reported on our project's overall findings following the publication of the project report, highlighting the policy recommendations. The Head of the BOU requested that we both attend a future meeting to progress discussions relating to how best to measure regulatory impact. A follow-up meeting was held several weeks later and there is the expectation that there may be future contact. |
| Year(s) Of Engagement Activity | 2022 |
| Description | Presentation to Whitehall and Industry training event |
| Form Of Engagement Activity | A talk or presentation |
| Part Of Official Scheme? | No |
| Geographic Reach | National |
| Primary Audience | Policymakers/politicians |
| Results and Impact | One of the research team, Paul Wilson (FSB), presented at a Whitehall and Industry Group training event for BEIS civil servants, focussing on the impact of the pandemic on small businesses, using our research findings to illustrate how small businesses deal with regulatory change and to highlight good examples of small-business-friendly regulation and bad examples. |
| Year(s) Of Engagement Activity | 2022 |
| Description | Round Table with policy stakeholders |
| Form Of Engagement Activity | A formal working group, expert panel or dialogue |
| Part Of Official Scheme? | No |
| Geographic Reach | National |
| Primary Audience | Policymakers/politicians |
| Results and Impact | the event was organised so that the research team could share with a key group of senior policymakers and industry body representatives the interim findings from the research. Participants were invited to discuss the interim findings and to express issues of particular interest to them, which would be of use to the research team as the research project continued. As a result of this roundtable, the HSE representative invited the PI to join a stakeholder group. |
| Year(s) Of Engagement Activity | 2022 |
| Description | Webinar with participant small businesses |
| Form Of Engagement Activity | A talk or presentation |
| Part Of Official Scheme? | No |
| Geographic Reach | National |
| Primary Audience | Industry/Business |
| Results and Impact | The project team hosted a webinar with a selection of the small businesses who had participated in the study (primarily interviewees who had also taken part in the survey). We informed the businesses of the project's findings and encouraged engagement with them as well as the policy recommendations. We followed up with one of the attending businesses to carry out an interview. |
| Year(s) Of Engagement Activity | 2022 |