The cost of regulation on British business rises to £65.99 billion
17/02/08 | 09:30
The 2008 edition of the British Chambers of Commerce’s Burdens Barometer shows that the cumulative cost to business of new regulation since 1998 has risen to £65.99 billion, up by more than £10 billion from last year.
On a more positive note for the first time there are three regulations in this year’s barometer, which actually produce an annual saving for business. Unfortunately, they are too few and far between.
For example, the Fire Regulatory Reform Order (regulation 77 in our Barometer), has provided a saving to business of £67 million. The impact on this year's Burdens Barometer of this saving was to cut the cumulative total by one tenth of one per cent. While this is a start, many more are required if the £10.4 billion cost of regulation that falls on business annually is to be reduced.
The uncomfortable truth for government is that despite two Acts of Parliament designed to make this possible: the Regulatory Reform Act (2001) and the Legislative and Regulatory Reform Act (2006), the increase surges on.
As a result of the first Act (2001-2005) the Government only issued 29 Regulatory Reform Orders and since the new 2006 Act only one Legislative Reform Order has been laid before the House: the Local Authorities Consent Requirements (Laid 25 July 2007). This compares with over 300 new regulations each year.
Two burdens from our ‘top ten burdens’ in the Barometer that the Government should review are:
- The Data Protection Act – according to the Government’s figures this has so far cost business more than £7bn and given that it is nearly a decade old it would be a perfect candidate for Post-Implementation review.
- The Flexible Working (Procedural Requirements) Regulations 2002 have cost business £1.588 billion since 2002. Given that the Walsh Review on flexible working has already started it would be sensible to revisit regulations, which are accruing costs at a rate of £296m p.a.
Sally Low, Director of Policy British Chambers of Commerce said:
“The success of the Government’s drive for better regulation must be judged on the extent to which the UK’s regulatory burden has been reduced. On this basis the Government’s record does not stand up to scrutiny.
Our Burdens Barometer figure now stands at almost £66 billion compared to a figure of £10 billion in 2001 when we first compiled it.
“Initiatives without delivery will do nothing to help keep British Businesses competitive. We desperately need an Impact Assessment system that will challenge the need for regulation and a parliamentary process established that provides real independent oversight”.
Professor Francis Chittenden of Manchester Business School, said:
“The entry, for the first time, of regulation that reduces cost to business is welcome. However, the annual costs of regulation are still rising and government must deliver much more if its promises to business are to be realised”.
Tim Ambler, Senior Fellow at London Business School, said:
"The torrential rate of new regulation may explain why the Government cannot comply with its on rules. At the time of compiling this Barometer (six months after the end of the period), 25% of Regulatory Impact Assessments were either not available or wrongly recorded."
ENDS
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NOTES TO EDITORS:
The Burdens Barometer is an independently produced calculation of the cumulative cost to business of new regulation compiled by the Manchester and London Business Schools. It is calculated using the Government’s own figures as each Department is required to complete Regulatory Impact Assessments that evaluate the risks, costs and benefits of any new regulatory proposal that has an impact on business.
- The figures in the Burdens Barometer are compiled from the Regulatory Impact Assessments (RIAs) produced by government departments and now downloaded into the British Chambers of Commerce RIA Database.
- All government departments are required to complete RIAs that evaluate the risks, costs and benefits of any new regulatory proposal that has an impact on business.
- The figures show the Government’s own estimates of the compliance costs of a series of regulations affecting business up to 1 July 2007. Half of all RIAs claim that new regulations provide benefits to businesses, consumers or the environment. However, these benefits are quantified in the minority of cases. As a result it is difficult to calculate the total value of the benefits that it is claimed justify the costs.
The British Chambers of Commerce (BCC) is the National Voice of Local Business.
The BCC sits at the heart of a powerful nationwide network of Accredited Chambers of Commerce serving business across the UK, which employ over five million people.