Anger as government backs down on regulatory budgets

The government u-turn on ‘regulatory budgets’ – intended to limit the cost of regulation – has caused outrage among business groups.

Business secretary Peter Mandelson announced yesterday the government had decided not to implement a system of regulation budgets, that would allow the government to better manage the costs of new regulation and take account of their overall impact on the economy.

Following a consultation in March 2008, the government has previously said business and charities would benefit from better controlled regulatory costs and greater certainty about future regulation, allowing them to plan ahead.

But as the world’s media was turned to reporting on the G20 summit yesterday, Mandelson announced that the financial crisis had made it impossible to introduce the budget system now, arguing that the recession itself needed more regulation, especially in financial services.

John Cridland, CBI deputy director-general, said: “The CBI is greatly disappointed by the government’s backtracking on introducing regulatory budgets. It was originally announced as part of the government’s enterprise strategy to help small businesses, and rightly so.”

Head of economic policy at manufacturers’ body the EEF Lee Hopley said: “Business will be disappointed that government shied away from the more radical option of regulatory budgets for managing new regulation. These proposals provide the framework to restrict the flow of unnecessary regulation.”

Hopley urged the government to commit to regulatory budgets and a moratorium on any new regulation that will damage companies’ flexibility.

Next week a wave of employment law comes into force, including the extension of the right to request flexible working for parents of children aged 16 or under, and a new Acas code of practice governing grievance and disciplinary procedures.

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