Fighting the paper trail

Posted on 9 Sep 2009 by The Manufacturer

EEF's Steve Radley says costly red tape must be cut in light of the recession

In recent years the Government has woken up to the need for better regulation. For some time we heard laudable statements about focusing attention where necessary but keeping burdens to a minimum. Then we started to see action. The Better Regulation Executive (BRE) had backing from the highest level to drive through change.

BRE tightened the screws on impact assessments, the process by which departments justify new regulations. They also set a 25% target for reducing the administrative burdens from existing regulations. Between 2005 and 2010 departments have been required to publish annual plans detailing how they will meet the targets.

As a result considerable energy was expended cutting back on the unnecessary and the inexcusable. Admittedly the targets were confined to administrative burdens — filling out forms and record keeping — and many of the forms cut were little-used, but it did bring about a change in approach across government.

Last year it looked like government was going to take the next big step when it proposed introducing a system of regulatory budgets, a move backed by the opposition. Each department would have been set a cap on the cost of new regulations that it introduced. If it wanted to introduce more regulations it would have to cut back on existing ones. It sounded too good to be true — and so it proved.

First everything went quiet. Then the announcement fell a long way short, with regulatory budgets off the agenda for the foreseeable future. It appears there was just too much opposition from a number of government departments and agencies.

But all is lost. The Government will publish a forward regulatory programme from summer 2009 and new simplification targets will be set for 2010- 2015. Importantly the new targets cover not only administrative costs such as form filling, but also the policy costs — the changes businesses have to make to the way they work. There will also be a sub-committee of the National Economic Council to scrutinise planned regulations, and with the likes of Lord Mandelson involved this carries weight, though disappointingly this group has not yet met. Similarly, there has been little progress in setting up the new Regulatory Advisory Committee that is tasked with improving the quality of government assessments looking at the impact of potential new regulations.

Europe can’t stop tinkering

But while some progress is being made in the UK, business will feel less optimistic about developments in Europe. Most business-focused legislation each year comes not from Westminster but from Brussels. There have been good European Union (EU) directives in the past, but we are increasingly seeing bad legislation emerging. The European Commission and Parliament have simply not got the better regulation message — they were put in place to legislate and that is what they will do. Worse still, some are saying that the problems that brought the credit crunch are proof-positive that better regulation is a failure. If regulation was too weak in the financial markets, it must be too weak everywhere.

Take health and safety. In the past there was some good legislation setting out an overall approach. But the European Commission is not willing to rest on these laurels and continues to produce draft directives dealing with ever-more esoteric subjects.

We had the Electromagnetic Fields Directive, setting out limits for restricting exposure to the fields around power cables and magnets. It was based upon an extremely flimsy impact assessment. The directive passed through the parliament and was due to come into force in 2008 — until it was pointed out to MEPs that it would effectively outlaw MRI scans and other medical procedures. Implementation was postponed to allow for a review, but it looks certain to return in a modified form. In the EU once a directive starts there is no mechanism to kill it off.

And now we have the Artificial Optical Radiations Directive, which deals with exposure to light and lasers, set to come into force in 2010.

EEF continues campaigning vociferously against these directives and others waiting in the wings. But there is just not an appreciation of the importance of better regulation, let alone any system to see it implemented.

We need a change of approach in both the European Commission and Parliament, with the focus shifting so that new regulation is seen as the last, not the first resort.

Steve Radley, chief economist at EEF, the manufacturer’s organisation.