The government today unveils new proposals to deal with the cost and burden of regulation. In efforts to
establish better attunement between business and regulators, government departments are to be set cost limits on the regulations they administer, forcing them to think carefully before introducing new regulations.
Companies spend an estimated £13.4 billion each year on regulation, a cost which blunts the UK's competitive edge. Small and medium sized businesses are hit particularly hard; the OECD estimates that a business with less than 20 staff bears a regulatory burden five times greater than that faced by an organisation with 50 plus staff. Efforts to improve the guidance available has not curbed complaints that business of all sizes spend too long, and too much money, on regulatory compliance.
If today’s proposals are enacted, each government department will be allocated an annual regulatory budget; an estimate of the total regulatory burden they oversee each year. Impact assessment reports will reveal the full cost of each regulation they administer, and departments will have to offset new measures by ditching old ones.
On the face of it, this seems like a step in the right direction. Any move which encourages Whitehall to think twice before creating new regulation is a positive thing. However these proposals should not be mistaken for a bold attack on the UK's regulatory burden. They chime more with the notion of 'better rather than less' regulation, looking to 'streamline' instead of explicitly cut back. Nor is the terrifying threat of parliamentary chastisement - should a department exceed its regulatory budget - likely to focus bureaucratic minds.
The most surprising thing about the proposals though, is the complete absence of reference to the EU. As most new regulations in the UK are created in response to EU directives, the government is limited in what it can achieve. Each year will bring a number of new regulations from Europe, and unless departments bravely slash pre-existing rules and measures (which seems unlikely) the regulatory burden will continue to rise. This won't matter of course if the annual regulatory budgets rise every year too. The proposals make clear that the government is at least thinking about how to lessen the dead weight it imposes on
British business, but what we really need to see is concerted action.