Call for Government to live up to pledge to reduce red tape

Margaret Wood, regional chairman of the IoD, called on Ministers to show “clarity and leadership” in cutting the number of rules facing firms.

She spoke as a National Audit Office (NAO) report said many firms might breach rules simply because they do not know which ones apply to them. It also highlighted the regulatory pressure on small businesses.

Businesses typically have to comply with 60 different regulations, according to the NAO, which said Government departments do not communicate effectively on rules and do not know their total impact on businesses.

A study by the Better Regulation Executive (BRE) last March projected a £9.9bn extra cost of 265 new regulations which could be imposed over the following year – but calculated that the benefit to society of the new rules would be £11.6bn.

There was no estimate, however, of the total cost to business of the array of regulations introduced over the years, said the NAO.

The report found that the BRE, established in 2005, and Government departments are “not yet in a position to achieve value for money in their management of regulation” although the spending watchdog found that Ministries have developed key elements of an approach to reducing regulatory costs and have delivered significant benefits.

Last year’s Coalition Agreement promised a “one-in, one-out” rule under which no new regulation can be implemented by Ministers unless an existing one is scrapped.

The Government also promised to end the culture of “tick-box” regulation and to subject new regulations to “sunset clauses” which will see them automatically lapse unless they are renewed by a certain date.

Today’s report finds that there is so far “no detailed plan for achieving the new Government’s regulatory reform objectives”.

Departments are conducting evaluations of their existing regulations, but the NAO found that they have not taken a systematic approach and no overall attempt has been made to review the total number of regulations that businesses face.

Mrs Wood, who founded her specialist engineering and manufacturing firm ICW Modular Glazing in 1991, following the death of her husband Tony, said: “It is time for action, words are not enough. Businesses are moving out of the country. I don’t want to be despondent but it does make us uncompetitive.

“We want to see employment and skills (developed). Regulation has opened the workplace up but it is starting to hold us back. It is extremely difficult to take labour on. That is one of the bugbears.”

Andy Tuscher, regional director of manufacturers’ organisation EEF, said: “The cost of red tape is a real issue. One in one out is a bold statement and as yet we have not seen the Government deliver on this. Our other concern is that EU regulation is outside this (pledge).

“We have seen year-on-year growth in the cost of red-tape. It is a very bold statement but we have yet to see them deliver. We have new regulations coming in but we have not seen those coming out. We are concerned that the amount of regulation that comes out of Brussels falls outside this (coalition pledge).”

Today’s report says: “Businesses, in particular small and medium enterprises, often lack clarity about how to comply fully with regulation. The totality of regulation faced by an individual business is complex and businesses that we interviewed typically have to consider as many as 60 regulations covering areas such as employment, planning, health and safety and sector specific regulation, and governed by multiple regulatory bodies.

“Many businesses interviewed could not identify all the regulations affecting them. As a result, some businesses fall into non-compliance, which can counteract the intention of the original legislation and lead to significant costs for the business.”