Independent RPC watchdog reports the full impact of red tape on business
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Today the independent Regulatory Policy Committee (RPC) published its review of the first year of this government’s programme to reduce red tape on business by £10 billion over the parliament.
The RPC has scrutinised nearly 150 government legislative proposals affecting businesses and community and voluntary groups in the last year. Through its independent and rigorous assessment of these measures, the RPC has improved the accuracy of departmental estimates of the impacts by over £160 million each year.
Michael Gibbons CBE, RPC Chairman, said “We welcome the confidence that ministers have shown in the committee’s work by expanding our scope to cover the actions of over 80 independent regulators. We look at regulatory proposals both inside and outside of the Business Impact Target (BIT), and in doing so hold up government claims to scrutiny. We have concerns that not enough learning is being collected from the implementation of previous measures and that in places the system is overly complex and not reflective enough of impacts on society.”
The RPC believes that addressing these identified issues with the framework could provide businesses with greater reassurance than ever before, that any red-tape burdens are reflected in the government’s regulatory target.
Exclusions from the Business Impact Target concerns businesses across the sectors. Terry Scuoler, CEO of the manufacturers’ association, the EEF, said “The RPC report rightly highlights a number of systemic shortcomings in government’s better regulation accounting, with some large costs to business excluded and a number of low-impact measures included. Now, more than ever, is the time for this government to show its better regulation credentials, and for the RPC to boldly hold it to account.”
Commenting on the RPC Regulatory Overview report, Simon Walker, Director General at the Institute of Directors says “the Regulatory Policy Committee serves a valuable purpose in scrutinising the cost of government regulation on businesses. Whitehall departments continue to generate significant burdens for firms, so it is very important the RPC is there holding ministers’ feet to the fire.”
The RPC’s report confirms that the two largest costs to business from regulatory changes coming into force in the past year were not part of this total:
- Introducing new national living wage – £821 million cost to business in its first year.
- Uprating of the existing national minimum wage – £626 million cost to business this year.
In the past month, the RPC has confirmed that another regulatory change which falls outside the target, is the uprating of tuition fees in line with inflation, this will bring a £1.1 billion benefit to universities each year. The impacts of any changes in red tape associated with tax administration are not in scope of the RPC’s work.
The RPC report also found that:
- 40% of the regulatory proposals that the committee scrutinised did not systematically assess the impacts on wider society or the environment; and
- only three of the 38 measures where an exemption for small businesses was relevant applied such an exemption.
Martin McTague, FSB National Policy Director goes on to say that “the RPC has identified crucial gaps in the way the Government measures the cost of regulation on small business, and we agree that more now needs to be done to get the full picture of the burden of regulation on the UK’s small business community.”
“We look forward to assisting the government and other stakeholders to ensure our regulatory processes are evidence based, appropriately incentivised and a robust account is kept” said Michael Gibbons, CBE, Chairman of the RPC.
Published: 18 July 2016