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Red tape needs ‘cutting’

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The coalition government has been urged to reduce the administrative burden placed on businesses by the need to comply with various regulations.

A study conducted by the British Chambers of Commerce (BCC) claimed that the cost to UK business of regulation compliance now stands at £88.3 billion.

The BCC’s latest ‘Burdens Barometer’, which uses the government’s own figures to highlight the cumulative cost to business of red tape introduced since 1998, calculated that compliance costs rose by £11 billion in 2009 after the UK adopted 40 new EU regulations.

The 2010 Barometer was compiled by experts from the Manchester and London Business Schools.

Despite 21 of the new rules reporting a recurring annual benefit for companies, the net result was still a new annual cost to business of over £11 billion.

Of the 40 new laws, the most costly include Euro 5 and 6 Light Duty Vehicle Emissions Standards, with a recurring cost to business of £1.48 billion, and the Community Infrastructure Levy, with a one-off cost to business of £457 million.

David Frost, the director general of the BCC, commented: “The Burdens Barometer highlights a clear problem for UK business. The cost of dealing and complying with new laws and regulations over the last 12 years has been far too high.

“During this critical time for the economy, we need businesses to be driving recovery and creating jobs. But the government must play its part by putting the brakes on the relentless flow of red tape.

“There needs to be an urgent and sweeping review of all regulations that incur costs for business and, importantly, a moratorium on new employment laws until at least 2014.”

Francis Chittenden, of the Manchester Business School, said: “Regulation is like taxation. It raises business costs and so reduces the amount of business activity conducted in the UK.”

Tim Ambler, from the London Business School, added: “Much of the problem stems from Whitehall wishing to add its own unique UK regulations to the already substantial flow from the EU.”

The survey said that the UK/EU regulatory burden split by cost is as follows:UK – £27,570 (31.2 per cent); EU – £60,766 (68.8 per cent).

About 30 per cent of policy proposals originated in the EU, although in the last two years this proportion has fallen to 20 per cent.