The CBI stated that tens of millions of pounds in extra business red tape coming from Whitehall and Europe was preventing economic growth.
In its new report ‘Changing the rules – eight steps to a better regulatory regime’ the CBI calls on ministers to get a hands-on grip on the red tape and bureaucracy created in Whitehall and says that urgent action is needed to tackle an ingrained culture where there is too little detailed thinking about the real impact of regulation on business.
The report also suggests that the net added cost of regulation on UK businesses will increase by £177.7m as a result of policies created in 2011 alone, when for every £3 of costs removed, another £5 was added.
According to the CBI, businesses welcomed new plans announced in the Chancellor’s Autumn Statement to make regulators more accessible and accountable, along with other strong reforms, including the “one-in, two-out” rule. However, it says that businesses now need to see swift implementation, and the Government must go further.
It said that not doing so would risk the UK becoming less internationally competitive and will also hold back investment at home. A CBI survey found that three-quarters of firms said that the regulatory burden has made the UK a less attractive place to do business in the past decade.
Katja Hall, CBI Chief Policy Adviser, said:
“Regulation has an essential role to play in a thriving market economy, promoting competition and protecting consumers, but we know it can be a major barrier to growth.
“The Autumn Statement contained some really welcome proposals to improve the accessibility and accountability of the regulators that enforce many of the rules, but the facts speak for themselves. Small and medium-sized businesses are the engines of growth, but they’re telling us they are drowning under the weight of extra regulation coming out of Whitehall, layered on top of outdated red tape which has not been repealed.
“We’re calling on the Government to back up its words with action. We want to toughen up the law so there is a presumption that every piece of regulation has a sunset clause, so it expires after a set date unless it is actively renewed.
“We want a culture shift in Whitehall, with greater transparency and accountability in how regulation is created, and more detailed analysis of what it will mean for businesses, with civil servants bringing in external expertise to fully inform thorough impact assessments.”
The eight practical recommendations to improve the quality and volume of regulations that businesses have to comply with are highlighted in the CBI report and are as follows:
In the short-term:
- The Regulatory Policy Committee should be made truly independent.
- A presumption in favour of sunset clauses.
- Improving Impact Assessments.
In the medium-term:
- Economic regulators should be made more accountable to their sectors and the wider economy.
- Parliament should be tasked to interrogate regulations.
- Embedding the Red Tape Challenge into Government practice.
In the longer-term:
- The Government should deliver a clear regulatory lifecycle.
- The civil service should more often commission and curate – not create – policy options.
In response to the findings, the Government has disputed the £178m figure and instead, its calculations suggest the Coalition has reduced the cost of domestic regulation on business by almost £850m since the start of 2011.
Business Minister, Michael Fallon, said:
“Our new one-in, two-out rule tightens the screw across Whitehall, so that departments see legislation as a last resort, not the default option.
“We are bringing common sense back to how regulations are enforced, working hard to stem the flow of regulation from the EU and are already tackling many of the points the CBI raise.”