Firms: Cuts to red tape not enough

THE government’s latest attempts to cut red tape for businesses were last night slammed by industry leaders, who called them unambitious and lacking in political will.

The initiative, headed by Vince Cable, calls for the introduction of a “one in, one out” policy from 1 September, which means that for every new regulation Whitehall introduces, its cost to business is to be offset by the abolition of another regulation.

But business groups said the policy is a red herring because regulators will be able to count “the benefits to business” against the costs in order to calculate the net change in regulatory burden.

The Institute of Directors’ (IoD) Alexander Ehmann said: “The approach should be to identify pure costs to business alone, rather than encouraging the creation of a ‘regulatory offsetting’ industry in Whitehall where civil servants attempt to capture hypothetical business benefits.”

Ehmann also questioned the government’s willingness to make changes, adding: “Within the last few months the IoD has submitted 101 employment and health and safety suggestions to the government – where is the action on these proposals?”

The one-in, one-out system will be overseen by the Regulatory Policy Committee (RPC), which will scrutinise Whitehall’s decisions on what regulations will be scrapped to make up for the extra costs of new rules.

The RPC consists of five members, but only one, Mark Boleat, works in the private sector. Other members include a Trades Union Congress (TUC) official and the deputy chief executive of Consumer Focus, a consumers’ campaign group. The makeup of the committee has prompted suggestions that it will fail to challenge the government’s lowball figures for the costs of business of new regulation.

Stephen Robertson of the British Retail Consortium (BRC) said that in order to be effective, “the RPC needs to be more rigorous and independent than it has been in the past”.