This week we have been discussing our priority areas for reform ahead of the Chancellor's autumn statement. In this, the fourth and final post, I will lay out some of the key changes government should make to reduce the regulatory burden on business.
Why focus on regulation?
While not all regulation is problematic, there is no question that regulation is costly to business. And in the last decade the costs have risen significantly. Between 2002 and 2010 the net cost to UK business of the flow of regulation more than doubled, from £5bn to £11.5bn.
Not only is regulation costly, but a flow of new regulation adds to uncertainty in the business environment.
What has been done so far?
We recognise that the government has taken some positive steps to reduce the regulatory burden such as its one-in-one-out policy; the Red Tape Challenge; and the Employment law review.
We support these initiatives – here at EEF we have been working with the government to ensure manufacturers' views are fed through to the Red Tape Challenge – but given the government has stated its ambition to make the UK the best place in Europe to do business there are other areas of regulation, both at home and in Europe, that the government should act upon.
In the UK government should:
- Deliver on its proposal to increase the qualifying period for Unfair Dismissal from one to two years.
- Scrap plans to introduce a fine on employers who lose Employment Tribunals
- Make good on its proposals to reform Employment Tribunals to make greater use of pre-conciliation measures that will reduce the number of cases getting to Employment Tribunals
- Drop proposals to introduce Equal Pay Audits for companies losing Employment Tribunals on Equal Pay grounds.
- Ensure that any new measures on the right to request flexible working and parental leave make it simple for employers to turn down requests on economic grounds.
- Move forward with its proposals to remove Equality Act provisions imposing liability on employers for third party harassment which they do not take reasonable steps to prevent.
However, as somewhere between half and two-thirds of new regulation comes from Europe, it is crucial that the government acts to stem the flow. In particular:
- Maintaining Britain's opt-out from the Working Time Directive and resisting demands from unions in Europe for changes to the Directive
- Resisting the additional costs and regulation associated with the Pregnant Workers Directive from Europe, which would add £2.5bn of extra costs to business
In addition, the government should push for reform in Europe, particularly with regard to the quality of impact assessments for regulation. We recommend that the government work with its European partners to push for the establishment of a body similar to the Regulatory Policy Committee that would provide a robust, public and independent challenge to impact assessments.