The Forum of Private Business welcomes the Government’s announcement that a ‘one-in, one-out’ regulatory system will be introduced on 1 September 2010 in order to stem the growing burden of red tape on small firms.
The forum is warning, however, for the committee to be truly effective in implementing the new system, it must be able to enforce these principles and influence regulatory practice within government departments.
The forum’s head of campaigns, Jane Bennett, said: "It is good to see the Government pushing ahead with its commitment to improving the regulatory landscape.
"The concept of introducing regulations only as they are needed is absolutely necessary given the existing burden on small businesses, but it will require a change in behaviour for many government departments.
"The independent Regulatory Policy Committee must be a real watchdog influencing departmental practice if it is to bridge the gap between over-regulation, which is what we have now, and lighter-touch intervention. That means being able to enforce these principles of regulation, which are as yet undefined. As with many of the coalition’s new policies, the follow-through is what will be important."
Last year, the forum's Cost of Compliance survey revealed that 81% of businesses surveyed believe the existing regulatory framework is not robust, unrealistic and is unfair.
It found that red tape costs smaller employers £9.3 billion per year in internal costs, mainly the time spent on administration, and found they spend an average of 37 hours per month complying with the law.
Particularly time-consuming were the tasks of understanding new regulations (73% thought this was excessive) and the general monitoring and administering of legal responsibilities (74%). Monitoring and administration were deemed to be the most costly (45% felt the cost was excessive), closely followed by implementing health and safety legislation (selected by 42% of respondents).
According to the forum's research, the amount spent by smaller businesses on employment law – at £2.4 billion – is the highest out of all seven different types of legislation categorised. This surpasses the £2.1 billion per year spent on health and safety administration and £1.8 billion on tax.
The new ‘one-in, one out’ rule will initially apply only to legislation affecting businesses and the third sector but, according to a statement from the Department for Business, Innovation and Skills, it could be expanded in due course.
