The cost of deregulation

Our own research estimates the cost of compliance has risen to £16.8 billion a year for SMEs, with a total of £11.0bn for internal salaried costs and £5.8bn in external support. This is equivalent to £14,200 per small business.

Yet getting businesses interested in government measures to deregulate is hard; it’s hardly a sexy topic. Government initiatives aren’t exactly captivatingly titled – take the ‘Red Tape Challenge’ or ‘Focus on Enforcement’ for example, both recent attempts at engaging the business community through web based, crowd sourcing processes. The Government even needed to be talked out of calling one initiative a ‘clipboard challenge.’

But behind the dull exterior is a veritable mine of good will and action.

The principle behind the most recent announcement of One In Two Out (OITO) is simple; for every regulation that comes in, double the costs that regulation imposes must be removed. A cynic might say the Red Tape Challenge has allowed the Government to remove archaic and anachronistic legislation that didn’t impact on day to day running of businesses in order to impose new regulations that do, but that isn’t really the case.

This policy has already reduced net costs on business by almost £1bn since January 2011. For example, construction has been helped by the simplification of guidance on building on contaminated land, while regulation costs have been removed for hundreds of venues to stage live music.

Whilst these are real life examples OITO should be viewed less as an accounting exercise and more of a statement of intent from the Government. In getting Whitehall to think tangibly and holistically about their impact on business a gradual culture change is going on which be for the good of the British economy.

OITO forms part of a wider package of deregulatory measures and in the years to come we hope businesses really begin to feel some difference on the ground.