Companies 'face 60 red tape rules'


Government departments do not communicate effectively on the regulations they impose, a report suggests

British businesses typically have to comply with 60 different regulations governed by a range of different official bodies, and many breach the rules simply because they do not know which regulations apply to them, according to a new report.

The National Audit Office (NAO) report warned that Government departments do not communicate effectively on the regulations they impose and do not know what the total impact of red tape is on British businesses.

A study by the Better Regulation Executive (BRE) last March projected a £9.9 billion additional cost of 265 new regulations which could be imposed over the following year – but calculated that the benefit to society of the new rules would be £11.6 billion.

But there was no estimate available of the total cost to business of the vast array of regulations introduced over the years, said the NAO.

The report found that the BRE – established in 2005 – and Government departments are “not yet in a position to achieve value for money in their management of regulation”. However, the spending watchdog found that they have have developed important elements of a structured approach to reducing regulatory costs and have delivered significant benefits.

Last year’s Coalition Agreement promised a “one-in, one-out” rule under which no new regulation can be implemented by ministers unless an existing one is scrapped. The Government also promised to end the culture of “tick-box” regulation and to subject new regulations to “sunset clauses” which will see them automatically lapse unless they are renewed by a certain date.

But the report found there was so far “no detailed plan for achieving the new Government’s regulatory reform objectives”. Departments are conducting evaluations of their existing regulations, but the NAO found that they have not been taking a systematic approach and no overall attempt has been made to review the total number of regulations that businesses face.

The report said: “Businesses, in particular small and medium enterprises, often lack clarity about how to comply fully with regulation. Many businesses interviewed could not identify all the regulations affecting them. As a result, some businesses fall into non-compliance, which can counteract the intention of the original legislation and lead to significant costs for the business.”

BRE chairman Sir Don Curry said: “I welcome the work which the NAO has done to look at this important part of the Government’s agenda.

“Although the report focuses on work before May 2010, I am pleased that they have recognised that the Better Regulation Executive has developed important elements that will bring sustainable reductions in regulatory costs and deliver significant benefits. I recognise, however, that there is more to do to communicate our plan for regulatory reform and we will be working with officials and ministers across Government to deliver this in the coming months.”

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