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Business concerned by regulatory budgets decision

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Plans that would have seen government departments limited by budgetary scrutiny in the amount of regulation they could produce each year have been put on hold, disappointing business groups.

The government had intended to place a regulatory budget on Whitehall departments, obliging them to take account of the burden that any new rules may impose on business.

But Peter Mandelson, the Business Secretary, has announced that, instead of annual regulatory budgets, a committee has been established within the National Economic Council that would examine the impact of planned regulations on businesses.

Lord Mandelson said: “During the recession and recovery we have a particular reason to look very carefully at whether we should delay planned new regulation and avoid introducing new regulation which increase burdens on business except where there is a clear case for action now.”

A new regulatory policy committee is also to give the government advice on whether regulators are taking an appropriately risk-based approach to business rules.

However, various business organisations have expressed their dismay at the move.

David Frost, the director general of the British Chambers of Commerce, said: “This is not the time to scrap regulatory budgets as this is the mechanism that would force departments to take account of the burden of their legislation on business. It is a vital discipline in these current economic times.

“In the absence of regulatory budgets, government must enforce a moratorium on further burdensome regulation.”

John Cridland, the CBI’s deputy director-general, commented: “The CBI is greatly disappointed by the government’s backtracking on introducing regulatory budgets. It was originally announced as part of the government’s enterprise strategy to help small businesses, and rightly so.

“Nothing has changed other than the government’s willingness to bite the bullet on the continuing tide of new regulation. Of course, the other better regulation initiatives announced are useful, but regulatory budgets would have changed the culture of regulation in Whitehall.”

Lee Hopley, head of economic policy at EEF, echoed the concerns: “Business will be disappointed that government shied away from the more radical option of regulatory budgets for managing new regulation. These proposals provide the framework to restrict the flow of unnecessary regulation.

“What we need now is an explicit commitment that this will take us down the road of regulatory budgets and a moratorium on any new regulation that will damage companies’ flexibility.”