Government must take ‘a bold new approach’ to regulation, says EEF

The Government has been urged to take a “bold new approach” to regulation by introducing a transparent system that sets limits for the total cost of new laws and then sticks to them.

A new report from manufacturers’ body EEF argues that the UK needs a major cultural change across government and a “relentless drive” to control the costs of new regulation.

The call follows an EEF survey of almost 300 manufacturers which revealed that more than half (52%) saw regulation as an obstacle to growing their business, rating it as the second worst aspect of the UK business environment behind taxation.

Steve Radley, EEF’s director of policy, said: “Regulation is an essential part of a well-functioning society and can deliver major benefits. However, where it is excessive, ill-conceived or poorly implemented, it can impose significant cost on individuals, businesses and the wider economy with little or no benefit.

“Over the past two decades we have been promised reductions in costs, only to see them rise year on year. A bold new approach to regulation is now needed to meet the Chancellor’s aim of making the UK economy say ‘open for business’. We need an open and transparent system that sets limits for total costs of regulation, whether they originate in Brussels or Westminster, and then sticks to them.”

The EEF report makes 10 recommendations:

Controlling costs

  • Shift focus from simply reducing bureaucratic costs arising from existing legislation to reducing the overall flow of regulation and cost to business.
  • Ensure that all proposed regulations are subject to robust challenge by providing the recently established watchdog – the Regulatory Policy Committee – with sufficient resources and the independence to carry out its role effectively.
  • Use the “one in, one out” system for new regulations as a stepping stone to the introduction of transparent and enforceable regulatory budgets covering both European and domestic regulation by 2015.
  • Continue to work with European partners to establish a body providing a robust and independent challenge to regulatory proposals and to improve the quality of EU impact assessments.
  • Reduce the burden created by frequent changes in non-statutory standards by setting clear ground rules for standards-makers as well as clarifying their relevance to interpretation of legal requirements.

Changing the culture

  • Redefine the culture amongst policymakers with a focus on actually reducing the net costs of regulation, with a presumption against regulating unless there is an overwhelming case for it and the alternatives have been exhausted.
  • Use seven-year “sunsetting” reviews as an opportunity to examine the cumulative effect of regulation and consider major reforms before looking at individual regulations.
  • Provide policymakers with clear guidance on the range of alternatives to regulation, their strengths and weaknesses, and the circumstances in which they are likely to be effective solutions to policy issues.
  • Continue building a broad alliance in Europe to turn the Commission’s “Smarter Regulation” activity from theory into practice.
  • Require that more civil servants have secondments and non-regulatory visits to industry. EEF and others will play an active role in providing the opportunities.

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