The Daily Telegraph understands that the Coalition’s so called “one-in, one-out” system is due to be upgraded to a “one-in, two-out” system, forcing ministers to scrap more poorly conceived rules if they wish to introduce new regulation.
The decision will be seen as a victory for business groups including the British Chambers of Commerce, which has warned that “Whitehall is holding deregulation back and often creating badly-designed regulation” and that “the Government has a long way to go before it can claim it has got to grips with its regulatory output”.
Under one-in, one-out, which was introduced in 2010, ministers seeking to implement legislation that imposes costs on businesses first have to identify existing measures of “equal value” that can be removed.
However, the drive to reduce the red tape burden on British businesses has been blighted by resistance from Whitehall. Departments have also been accused of manipulating, or simply “flouting”, the system.
They have often exaggerated the savings associated with outgoing regulations in order to allow complex and costly new red tape to be brought in, or just sidestepped the policy by claiming proposals are “out of scope” of one-in one-out.
The Business Department is under pressure to toughen up the rules around the policy to coincide with the expansion to “one-in, two-out”, which is expected to be formally announced next week.
It is thought that Conservative business minister Michael Fallon is the driving force behind the move to reinvigorate the Government’s deregulatory policies.
Mr Fallon, who was installed in Vince Cable’s department in the recent reshuffle, promised to “chase ministers up and down Whitehall” to ensure the Government’s pledge to cut the regulatory burden on business is honoured.
A source said Mr Fallon wants the updated policy to “put much more pressure on ministers to meet more stringent targets on legislation. He wants the cost to business to be the first thought when they’re planning new regulation”.
The Regulatory Policy Committee, an independent red tape watchdog created by the Labour government, on Friday outlined its concerns that too many departments are ignoring one-in, one-out.
The RPC recommended that ministers urgently “review all categories that are currently exempt”.
A report published by the body revealed that one in five regulations proposed by government departments are still not “fit for purpose” and that it had “some concerns” with around 70pc of ministers’ proposals.
Michael Gibbons, the former Powergen director who chairs the RPC, insisted “very solid” progress had been made in the deregulation drive, but said there is “a long way to go”.
“The policy is working. It has brought forward a whole series of ‘outs’ that wouldn’t have been there otherwise, and we are seeing a greater reluctance to bring in new regulations. But there are lots of proposals that are ‘out of scope’. Businesses don’t care where regulation comes from. They see it as a general problem. Our view is that ministers need to review all the exceptions.”
Mr Fallon has beefed up the role of the RPC.
A spokesman for the Business Department said: “We are extremely keen to go further and faster to do anything to help businesses grow.”