Government pledge to tackle business red tape

The government has outlined the first phase of its plans to reduce the level of regulation affecting businesses.

Vince Cable, the Business Secretary, has announced a series of measures aimed at tackling the administrative burden of complying with a range of business rules.

Under the plan, a new Cabinet Star Chamber will be set up to lead the government's drive to reduce regulation.

This Reducing Regulation Committee will be chaired by the Business Secretary and will enforce a new approach to regulations, making sure that their costs are properly addressed across the entire British economy.

There is to be an immediate review of all regulation that is currently in the pipeline. The regulations that have already been approved by the last administration include parts of the Equalities Bill on equal pay rights, the agency workers' directive, providing the right to certain benefits after 12 weeks in a position, and the entitlements of fathers to claim up to six months of mothers' maternity leave.

The cost of implementing all of the 200 planned regulations would be £5 billion in this financial year and £19 billion after that, the Business Department said.

Also on the agenda is a new "challenge group", which will be briefed to come up with innovative approaches to achieving social and environmental goals in a non-regulatory way.

And there is to be a "one-in, one-out" policy, designed to ensure that new regulatory burdens are only brought in when reductions can be made to existing regulations. 

Vince Cable said that the deluge of new regulations has been choking off enterprise for too long and that the government needs to move away from the view that the only way to solve problems is to regulate.

The Minister continued: "The government has wide-ranging social and ecological goals including protecting consumers and protecting the environment. This requires increased social responsibility on the part of businesses and individuals.

"This is a real challenge and it will not be easy. We need to reduce regulation and at the same time meet our social and environmental ambitions. This demands a radical change in culture away from the tick box approach to regulation only as a last resort. It's a big task but one worth striving for."

Business groups welcomed the outline plans.

David Frost, director general of the British Chambers of Commerce, said: "BCC research shows that new employment regulations over the next four years will increase business costs by over £11 billion - so the announcement of an immediate review of all red tape in the pipeline is very welcome.

"At a time when we need business to drive recovery and create jobs, the cost of employing people clearly needs to be reduced. Employers consistently tell us that they will get on with creating jobs and wealth, but they need government to get off their backs and let them do it.

"While the initial signs from this government are very positive on reducing the burden of red tape, the coalition should remember that we will be subjecting them to the same level of scrutiny that we have with other initiatives over the years."

Richard Lambert, the CBI's director-general, added: "We welcome this approach to controlling and reducing the ever-growing burden of regulation.

"But it is only the first step in a process, which will require a major cultural change in Whitehall and innovative new thinking about the government's whole approach to risk and regulation."

Mike Cherry, policy chairman at Federation of Small Businesses, commented: “Regulation has long been stifling business growth so these plans to put an end to the excessive legislation that choke small businesses is welcome news. It is a real victory that our calls to simplify the regulation system have finally been heard.

 “Small firms have repeatedly said that the burden of regulation and the time it takes to comply with is just too much and could prevent them from taking on staff – and stunts economic growth.

 “We now need to see the government give detailed plans as to how these will take affect so that small firms can get on with growing their business, rather than spending precious time filling in forms to say they will do just that."

But Phil Orford, chief executive of the Forum of Private Business, had a proviso: “The government must ensure that, in administering the work of the Reducing Regulation committee, it does not create yet more bureaucracy to deal with red tape.

 “If this is achieved – combined with the ‘one in one out' approach and the work of the challenge group in devising innovative, non-regulatory solutions to social and environmental challenges – we look forward to an enterprise culture that is conducive to small business growth rather than restrictive, as we have at present with the record levels of red tape that exist."