Tangle of red tape holding back economy, warns CBI

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BUSINESS leaders have urged the Government to do more to cut red tape and bureaucracy, warning that the problem is holding back the economy.

The CBI said tens of millions of pounds in extra business red tape was coming from Whitehall and Europe. Action was needed to reverse an “ingrained culture” where the impact of regulation on business was not properly considered, said a report. Policies created in 2011 alone would cost UK businesses £177m, the CBI said, when for every £3 of costs removed, another £5 was added.

CBI chief policy director Katja Hall 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they’re telling us they are drowning under the weight of extra regulation coming out of Whitehall, layered on top of outdated red tape which has not been repealed.”

She added: “We want the regulation minister to personally sign off each extra piece of regulation and business laws to be subject to greater scrutiny in Parliament. 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.”

But Business Minister Michael Fallon said the Government had reduced the cost of domestic regulation on business by almost £850m since the start of 2011. He said ministers were “determined to go further and faster to lighten the load of regulation”.

“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.”

The new “one-in, two-out” rule, applicable from next month, requires that for every new cost imposed on business by new regulations, the Government will demand equivalent savings of double that value over the remainder of the Parliament.