Worthless government pledges to cut red tape

July 25, 2007 12:00 PM

Last year, Gordon Brown committed the Government to reduce the total cost to businesses and charities of regulation from £20 billion a year to £16 billion a year by 2010. In response, Whitehall departments have drawn up plans to abolish unnecessary regulations and reform others.


But a National Audit Office survey of 2,000 firms has found that 85 per cent have no confidence that the Government would reduce the regulatory burden as pledged, 75 per cent felt the cost of red tape would actually increase next year and 60 per cent said it was even now holding their businesses back.


NAO director Ed Humpherson also criticised the Government's method of measuring the burden of regulation, saying that the figures of the cost of red tape were "indicative and not statistically reliable". He described the 25 per cent reduction target adopted by most departments as "arbitrary", and said: "What is clear is that [red tape] is an inhibitor to making business decisions. What evidence there is suggests it makes businesses reject projects that they would like to accept."


This all points to yet another government failure - the burden of regulation is being measured in the wrong way, and so targets to reduce the cost to businesses are more likely to be missed.


There is a better way to go about the worthy task of reducing the cost of regulations to businesses. And if ministers had looked hard enough overseas, they would have found the perfect way to do it. The Canadian province of British Columbia, five years ago staggering under the weight of one of the worst regulatory codes in the country, adopted a simple and successful plan to reduce the burden by a third in three years.


To measure what the regulatory burden was, the provincial government simply counted the number of “regulatory requirements”, which were defined as “a compulsion, obligation, demand or prohibition placed on an individual, entity or activity by or under the authority of a provincial Act, regulation or related policy”.  In plain English, a line for filling your name on an official form is counted as one regulatory requirement. This is far easier than trying to measure cost.


The first count revealed a staggering 382,139 regulatory requirements on the books in British Columbia. Finding a way to reduce this number was not a difficult task.  Each government department had to reduce the number of regulatory requirements it was responsible for by a third over the next three years.  It was a task as simple as reducing the number of lines on a form: halve the number of lines, and you’ve just halved the number of regulatory requirements coming from that form. The results exceeded expectations and went further than the target of a one-third reduction.  By June 2004, there were 237,604 regulatory requirements in British Columbia, a decrease of 38 per cent from the June 2001 total.


Not only do the numbers look good on paper, they are also making a real difference to businesses in the province.  The Canadian Federation of Independent Businesses’ 2005 survey of its members found that more than half of businesses in British Columbia thought that the regulatory burden had stayed the same or decreased in the last three years, the only province in Canada with such positive business opinion.   


If only unnecessary regulatory requirements could be reduced so simply in Britain. 

Last year, Gordon Brown committed the Government to reduce the total cost to businesses and charities of regulation from £20 billion a year to £16 billion a year by 2010. In response, Whitehall departments have drawn up plans to abolish unnecessary regulations and reform others.


But a National Audit Office survey of 2,000 firms has found that 85 per cent have no confidence that the Government would reduce the regulatory burden as pledged, 75 per cent felt the cost of red tape would actually increase next year and 60 per cent said it was even now holding their businesses back.


NAO director Ed Humpherson also criticised the Government's method of measuring the burden of regulation, saying that the figures of the cost of red tape were "indicative and not statistically reliable". He described the 25 per cent reduction target adopted by most departments as "arbitrary", and said: "What is clear is that [red tape] is an inhibitor to making business decisions. What evidence there is suggests it makes businesses reject projects that they would like to accept."


This all points to yet another government failure - the burden of regulation is being measured in the wrong way, and so targets to reduce the cost to businesses are more likely to be missed.


There is a better way to go about the worthy task of reducing the cost of regulations to businesses. And if ministers had looked hard enough overseas, they would have found the perfect way to do it. The Canadian province of British Columbia, five years ago staggering under the weight of one of the worst regulatory codes in the country, adopted a simple and successful plan to reduce the burden by a third in three years.


To measure what the regulatory burden was, the provincial government simply counted the number of “regulatory requirements”, which were defined as “a compulsion, obligation, demand or prohibition placed on an individual, entity or activity by or under the authority of a provincial Act, regulation or related policy”.  In plain English, a line for filling your name on an official form is counted as one regulatory requirement. This is far easier than trying to measure cost.


The first count revealed a staggering 382,139 regulatory requirements on the books in British Columbia. Finding a way to reduce this number was not a difficult task.  Each government department had to reduce the number of regulatory requirements it was responsible for by a third over the next three years.  It was a task as simple as reducing the number of lines on a form: halve the number of lines, and you’ve just halved the number of regulatory requirements coming from that form. The results exceeded expectations and went further than the target of a one-third reduction.  By June 2004, there were 237,604 regulatory requirements in British Columbia, a decrease of 38 per cent from the June 2001 total.


Not only do the numbers look good on paper, they are also making a real difference to businesses in the province.  The Canadian Federation of Independent Businesses’ 2005 survey of its members found that more than half of businesses in British Columbia thought that the regulatory burden had stayed the same or decreased in the last three years, the only province in Canada with such positive business opinion.   


If only unnecessary regulatory requirements could be reduced so simply in Britain. 

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