Inside Track

One of the key themes set out in the new government's coalition agreement is reducing the burden of regulation.  Spearheading this is an ambitious commiment to "cut red tape by introducing a 'one-in, one-out' rule whereby no new regulaton is brought in with out other regulations beinc guct by a greater amount."  If that target of actually reducing regulation is deliverd that would have a major impact on the costs to business of complying with health and safety, climate and environment and employment legislation.

It's certainly bold, but haven't we been here before?  The Major government promised 'deregulation', whilst 'better regulation' was a constant theme of New Labour's appproach to business under both Blair and Brown.  And yet throughout that time the cost of regulation continued to rise every single year.

So are things different this time?  Well in some ways it's too early to say.  There are some promising signs, but structures are still being established and are yet to be tested (there are many proposals for regulation wating in the Whitehall wings, but I understand that civil servants are holding back, waiting for someone else to test the water first!)  However, work does seem to be progressing apace, with both Business Secretary Vince Cable and Cabinet Secretary Oliver Letwin driving things forward.  Regular progress updates continue, with EEF contributing to the debate.  So what do they have planned?  The key proposals include:

• ·       a review of all the regulatory proposals in the pipeline;
•         a ‘one-in-one-out’ system to tackle the rising regulatory burden whereby no new regulation can be brought in without the cost of other regulation being cut by a similar amount; 
• ·       ‘sunset clauses’ for all regulations and regulators to ensure that their performance and the ongoing need for them is kept under regular review; 
• ·       strengthening the scrutiny of all new regulatory proposals by giving greater powers to a body called the Regulatory Policy Committee - it was formed in late 2009 and has really hit the ground running.
• ·       giving the public and the business community the opportunity to identify and challenge the worst regulations - an eye-catching initiative but not one likely to have far-reaching impact;
• ·      ending the so-called ‘gold-plating’ of EU legislation whereby the UK government adds additional requirements that increase the regulatory burden on British businesses;
• ·       making greater use of alternatives to government regulation, such as co-regulation and professional standards, to achieve policy objectives; 
• ·       better targeting and a more risk-based approach to inspection;

There are some big opportunities to reduce unnecessary costs to business, whilst still maintaining essential protections.  But there are also some potential elephant-traps lurking.  For example sometimes the alternatives to regulation can be even more bureaucratic - just take a look at carbon trading and some British Standards.  And the reality is that half or more of all regulation comes from the EU, changing it's approach means building broad alliances with other member states.

All of that said, we have an unprecedented opportunity for change.  That is why an EEF Task Group on Regulation was formed to carry out a thorough review.  The Task Group, composed of senior representatives of EEF member companies, has heard from key figures in regulation.  Its report is just being finalised and is due to be launched in September - ahead of the party conferences and in time to inform development of the government's plans.  

That report is intended to be more considered than just a simple 'we don't like regulation'.  The reality is that regulation does have a place in a civilised society:  it provides important protections, and at its best ensures that everyone competes on a level playing field.  The challenge is finding the right balance point, between protections and the cumulative cost to business of complying.

This is likely to be an important area that has a very significant impact on all areas of regulation.  We'll keep you updated on developments.