Since it first came to power, the government has promised to reduce the excessive red tape that is strangling British business, and SMEs in particular. It introduced a ‘One In One Out’ system where new regulation would only be introduced where another piece of regulation could be removed. It also created its own red tape regulator, the Regulatory Policy Committee (RPC), whose job is to scrutinise proposed regulations to see whether their benefits exceed their costs and are fit for purpose.
I agree wholeheartedly with Business Minister Mark Prisk when he said, “Only when regulation is used as a last resort can we create the right conditions for growth and strengthen the economy.”
All this sounds great but how has the government actually performed?
A damning report by the RPC published today said that 44% of new red tape submitted to it between September and December 2010 was rejected as being inadequate. 31% had no analysis of likely costs at all and 36% had no idea of likely benefits.
Its Chair Michael Gibbons said, “We’re still seeing a worryingly high proportion where an adequate case for regulation is not made, where the costs and benefits haven’t been fully assessed, a range of options has not been considered, and the evidence has not been properly evaluated.”
On top of this, the British Chambers of Commerce have criticised a whole new raft of employment regulations that are to come in over the next 4 years which they say will cost UK businesses £22.87 billion.
The government has also decided to go ahead with implementing the Bribery Act which requires all businesses to have anti-bribery procedures in place and which puts British business at a distinct disadvantage as against foreign competitors in securing overseas contracts.
Public service cuts are not enough in themselves to get the economy growing and new jobs created. The government needs to walk its talk and tackle the very real problems that SMEs face when it comes to excessive regulation.
Gary Cousins
Business Lawyer
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