In the Economic Policy Review presented to Mr Cameron and Mr Osborne in opposition, we recommended 33 specific items of deregulation. We also recommended that a Minister be responsible for constructing regulatory budgets, with a view to cutting the total cost of regulations for business by £14 billion a year by the fifth year of a new government. To do so meant tackling some large areas of regulation like data protection and working time, and accepting that some of the dearest regulations were EU in origin which needed amendment or repeal. So how has the Coalition government got on?
They have appointed a Minister, and they do now keep and publish a score of the costs to business. Each new domestic regulation has to be costed, and the sponsor department has to explain how it will offset this cost. According to the Minister, the government has so far saved business £850 m a year on domestic rules. However, without knowing the costs of EU rules this is only part of the story. They require every department to remove at least one regulation for every new one introduced, which they have been doing. Quite a lot of those removed are on examination no longer effective or have been replaced by some other measure.
This £850 m saving rests heavily on one measure, the changes to indexing pensions rules which companies are using to cut pension cost. This large saving of around £3.5 bn has been substantially offset by a more recent requirement to automatically enrol employees in the new pension scheme, which is estimated to cost £2.8 bn extra each year. As Mr Prisk, the Minister, says “Excluding private pension reform, regulatory savings to business since 2011 are expected to be at least £160 m” (He actually writes -£16om but think he means positive savings of £160 m).
The government has ended the bulk of the Home Information packs which we proposed for abolition, but had to keep the energy part of it to comply with the EU. They have announced some changes to employment law. They are still consulting on how to make money laundering enforcement proportionate and sensible, where we recommended removing the need to make checks where the money was coming from an account in a UK, EU or US regulated bank. They have scrapped the Comprehensive Performance regime for local government and made changes to the Best Value regime as recommended.
As a result from January 2011 to the end of December 2012 the government has or will repeal 77 measures whilst introducing 40 new ones. The Business department and Defra (after DWP’s pension changes) have made the largest reductions in regulatory cost. The Climate Change Department, Transport, Health and Home Office have all increased the costs on business from their activities.