Today the Regulatory Policy Committee published its report on the nearly 400 proposed changes in law that it reviewed in 2013 affecting businesses, charities and community groups. Half of these reached the final stage of the law-making process last year.
76 measures reviewed by the committee reduced red tape for business and civil society organisations, reducing costs by over £274 million each year.
126 measures reviewed by the committee increased the burden of regulation on business and civil society organisations, with those originating from Westminster costing business £128 million each year, and those originating from Brussels costing £1.3 billion each year.
The Regulatory Policy Committee (RPC) is the Government’s independent body set up to review the evidence and validate the costs for all regulatory changes affecting businesses and civil society organisations.
The Committee’s report comes at an important time for the better regulation agenda, with the final year of the Parliament fast approaching. The 2013 report finds:
A drop in the overall quality of the evidence base for regulatory changes, the first time performance has dropped since the RPC was established. The RPC rated 75% of impact assessments fit for purpose in 2013, compared with 81% in 2012.
Review by the RPC improved the estimates of the costs and savings of regulatory proposals by £112 million each year. This takes the total difference between the cost estimates initially submitted by departments and the values finally validated by the RPC to over £475 million each year since the beginning of 2011. The estimated cost savings from reductions in red tape brought in during this Parliament would be £1.6 billion each year rather than the £1.2 billion each year validated by the RPC.
10 regulatory changes still have not yet had their impacts validated by the RPC. These include four outstanding measures introduced in 2011 and 2012: restrictions on Tiers 1 and 2 migrants, restrictions on student migrants, audit exemption for small-sized firms, and the Energy Company Obligation on energy efficiency. Since the start of 2013, there have been two additional regulatory measures (metal theft controls and pre-planning consultation) and seven deregulatory measures introduced prior to RPC validation.
An increase in the number of regulatory proposals skipping stages of scrutiny. In four cases, the RPC published its opinions because the Department had consulted on new regulations despite the RPC rating the underlying evidence base as not fit for purpose. Three of these generated significant interest in parliamentary debates and public discussion of the proposals: trade union registers of members, biodiversity offsetting, and capping the charges in auto-enrolment pension schemes.
Michael Gibbons, Chair of the Regulatory Policy Committee, said:
The final year of this Parliament will be key a test for whether the Government has reduced the burden of red tape on business or not. 2013 saw some improvements in the framework for reporting on regulatory changes, particularly around greater transparency and visibility of the impacts of changes in law.
The RPC has worked hard to make access to our scrutiny of impact assessments easier for businesses, charities and communities. I have been pleased to see this translate into the Committee’s work discussed in some of the major policy debates on new legislation.
Unfortunately there has been a disappointing reduction in the overall quality of the evidence base underpinning changes in law. This is the first time we have recorded a drop of this nature.
We have also seen an increasing number of policy measures avoiding some of the important checks that this Government put in place to ensure that regulations imposing a new burden are subject to proper scrutiny. For the Government to realise its pledge to reach the end of this Parliament with the burden of regulation lower than at the start, all relevant regulations should have their costs validated by the RPC.
I expect 2014 to be a challenging, exciting and busy year, as we move towards the end of the Parliament, and as external organisations make greater use of the work of the RPC.
Regulatory Policy Committee scrutiny in 2013: Improving the evidence base for regulation
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Notes to editors
The RPC was set up in 2009 to provide, for the first time in the UK, real-time independent scrutiny of proposed regulatory measures put forward by Government. In 2012 the RPC became an independent advisory Non-Departmental Public Body.
The RPC does not comment on the Government’s policy objectives. It comments on the analysis and evidence supporting new regulations.
The RPC is a group of independent experts, including businessmen, academics, trade union and consumer representatives. The Committee is supported by a secretariat of officials with a mixture of analytical, policymaking and economic expertise. Further information on the Committee can be found on the RPC website: www.gov.uk/rpc
Departments submit impact assessments (IAs) accompanying regulatory proposals to the RPC, and a RPC Opinion must be given before Ministers on the Reducing Regulation Committee, the Cabinet sub-Committee set up to vet all new regulatory proposals, will consider the proposal. The RPC rates submissions on their fitness for purpose. If an IA is classified ‘Red’ it is ‘Not Fit for Purpose’ – the RPC has major concerns over the quality of evidence and analysis.
Each IA is tested against standards for Government appraisal set out in HM Treasury’s Green Book and the Better Regulation Executive’s Better Regulation Framework Manual. The RPC have also published a set of recommendations used when assessing IAs - https://www.gov.uk/government/publications/how-the-regulatory-policy-committee-scrutinises-impact-assessments
The RPC is tasked with ensuring that the claimed costs and benefits of regulatory proposals are more than just ‘claims’, and provides transparency that the costs and benefits to business have been identified and are a realistic and credible estimate of their potential impacts. As such, the RPC plays a key role in the government’s One-In, Two-Out (OITO) and One-In, One-Out (OIOO) policies through validating the estimated impacts on business and civil society organisations. External quality assurance is essential for both the OIOO and OITO to operate credibly.
Frances O’Grady, TUC General Secretary commented:
We welcome the work of the RPC. It is vital that there is independent scrutiny of the costs and benefits of regulations that affect civil society organisations as well as businesses, particularly as we move towards the end of the Parliament with the increased pressure to press ahead with proposals.
John Allan, National Chairman, Federation of Small Businesses, said:
This report proves once again the vital role that the RPC plays to ensure that regulation receives the independent scrutiny needed to provide business confidence in the Government’s regulatory reform agenda.
However, after the good progress that has been made on this agenda in recent years, we are disappointed the RPC has reported a drop in the quality of the evidence base underpinning regulatory proposals. If Government is to fulfil its promises on regulatory reform, departments must demonstrate they have improved their approach to regulation. It also underlines the importance of the RPC in ensuring regulations are fit for purpose, a role that needs to be hardwired into the regulatory process and extended to the area of tax, which has the largest compliance cost for small businesses.