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News - 22 February 2008

Cost of red tape goes up and up

The cost to British business of complying with government regulations continues to rise and has now reached a new high of £66 billion. These new figures have been published by the British Chambers of Commerce (BCC).

According to the latest annual Burdens Barometer from the BCC, the cumulative cost of red tape is now £65.99 billion, an increase of £10 billion over the last year.

Despite government efforts to reduce the administrative burden imposed by regulations, including two Acts of Parliament (the Regulatory Reform Act of 2001 and the Legislative and Regulatory Reform Act 2006), compliance costs continue to rise.

The Burdens Barometer is compiled by the Manchester and London Business Schools and is calculated using the government’s own figures that evaluate the risks, costs and benefits of any new regulatory proposal with an impact on business.

Two of the burdens highlighted by the BCC are the Data Protection Act and the Flexible Working Regulations.

The BCC said that the Data Protection Act has so far cost business more than £7 billion. Given the length of time it has been in operation, the BCC said that it is an ideal candidate for review.

The Flexible Working Regulations have so far accounted for £1.58 billion, costs that are accumulating at a rate of £296 million a year.

There have been some reductions in cost, though only in the case of three regulations.

The BCC cited the Fire Regulatory Reform Order, which has produced a saving to business of £67 million annually. However, its effect on the Burdens Barometer was to cut the cumulative total by just one tenth of one per cent.

Sally Low, director of policy at the BCC, said of the findings, “The success of the government’s drive for better regulation must be judged on the extent to which the UK’s regulatory burden has been reduced. On this basis the government’s record does not stand up to scrutiny.”

Ms Low added, “Our Burdens Barometer figure now stands at almost £66 billion compared to a figure of £10 billion in 2001 when we first compiled it. Initiatives without delivery will do nothing to help keep British Businesses competitive. We desperately need an Impact Assessment system that will challenge the need for regulation and a parliamentary process established that provides real independent oversight.”

Professor Francis Chittenden of Manchester Business School commented, “The entry, for the first time, of regulation that reduces cost to business is welcome. However, the annual costs of regulation are still rising and government must deliver much more if its promises to business are to be realised.”


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