Michael Fallon ready to light bonfire of red tape

A “bonfire of red tape” has repeatedly been promised by the Coalition but Government departments’ performance in meeting the commitment has been inconsistent, reports The Telegraph.

Mr Fallon, who was given the role in Vince Cable’s department to be “the voice of business” in the recent reshuffle, said: “One of my briefs is to make sure all departments are playing their part.”

He admitted the red tape drive, which he insisted is now building “momentum”, can be undermined by the “constant pressure” from European regulations – which fall outside the Government’s so-called “one-in, one-out system”.

Ministers seeking to implement new regulations that impose costs on businesses first have to identify existing measures of “equal value” that can be removed.

“I’ll be going to Brussels to ensure a commitment from Europe for smarter regulation is met. But the more constant that flow [of European regulations], the harder we have to work domestically,” said Mr Fallon.

The British Chambers of Commerce has warned that efforts to reduce poorly conceived rules are being undermined by the flouting of the one-in, one-out promise.

In July, the BCC found the volume of proposals for new regulations being made outside the flagship deregulation policy is making “a mockery of the whole system”. Half of all new proposals for regulation this year were “not in scope” of one-in, one-out, up from 42pc last year.

Departments have also been accused of failing to quantify the costs to business of new rules and exaggerating the savings associated with outgoing regulations in order to allow complex and costly new red tape to be brought in.

“There have been difficulties with scoring,” Mr Fallon said. “I’m getting to work on that. With the Prime Minister’s permission, I’ll chase ministers up and down Whitehall.”

Mr Fallon was speaking ahead of his appearance on Thursday at the Made entrepreneur festival in Sheffield, where he announced a plan to free “innovative, challenger” businesses from outmoded regulations. “New innovative, [often] internet-based businesses can face barriers to entry because of regulatory regimes designed for a different age,” he said.

For example, the Government plans to amend the Estate Agents Act to exempt property portal websites from rules which say they should check that the descriptions of homes in adverts are accurate.

The Regulatory Policy Committee, the independent red-tape watchdog, will be asked to scrutinise sectors that may be affected by outdated rules and publicly advise the Government “where regimes should be relaxed”.

Innovative companies will be asked to tell the Government which regulations they feel are no longer appropriate.

“It will help us to identify barriers to growth that hold businesses back,” Mr Fallon said.

He indicated that the Government views self regulation as most appropriate for so called ‘peer-to-peer’ lenders, online services which link up retail investors with private and corporate borrowers.

“We have to be careful the first wave [of these businesses] don’t pull the drawbridge up behind them.”

Rhydian Lewis, chief executive of RateSetter, a consumer lending peer-to-peer website, said this represents a “significant development for the sector”.

He added that it was “testament that self regulation has achieved the goal of providing increased protection for consumers and small business customers”.

Mr Fallon also told entrepreneurs at the Made event that there are now 22,000 trained mentors available “across the UK” for small businesses through Mentorsme, an online advice directory operated by the British Bankers’ Association.