Fewer, Better, Simpler: The Government's Deregulation Initiative

Article excerpt

Regulation is a necessary part of any civilised society. We need a basic framework of sensible rules and laws to protect all of us, whether as consumers, as citizens - even as companies. But when regulation becomes simply red tape, we all suffer. Red tape isn't just a nuisance. It is quite literally a hidden tax. It puts a real cost on our economy - a cost in profits, jobs, investment and efficiency.

The Government's Deregulation Initiative aims to ensure that legislation is limited to what is really necessary:

Fewer regulations Better regulations Simpler regulations.

It is all part of the Government's strategy to improve the competitiveness of British business. Every extra burden placed on businesses, every unnecessary or petty restriction or new law added to their load, drives up their costs. The more it costs to produce goods or services, the more difficult it becomes to beat the competition, particularly in overseas markets.

Of course, good regulation can contribute to competitiveness in a number of ways. It can, for example, enhance market opportunities. Intellectual Property legislation enables people to exploit their innovations without fear of imitation. Or it can maintain confidence in markets. The Financial Services Act has created a framework which has enabled the City of London to maintain its position as a world leader in financial markets. Good regulation can also protect public safety and the environment which, in turn, can raise standards and may help create demand for new products such as catalytic converters for cars.

On the other hand, bad regulation reduces competitiveness. It is inflationary, adding to business costs and pushing up prices without a corresponding improvement in quality. It wastes public money in unnecessary administration and enforcement. Bad regulation stifles innovation by adding to the time taken for new products to reach the market, and it bears down disproportionately on small businesses, which are a major contributor to the UK economy.

The Deregulation Initiative seeks to improve competitiveness and encourage enterprise by reducing the burden of existing regulation and paperwork, and by minimising the burden of new regulation from both the UK and Europe. Considerable progress has already been achieved as described below.

Existing Regulation

To reduce the burden of existing legislation, we need fewer and simpler regulations. So far, the Deregulation Initiative has identified over 1,000 regulations for amendment or repeal, and over 500 of these had already been dealt with by the end of 1995. See the inset for examples of some recent successes.

The Deregulation and Contracting Out Act 1994 has also helped here. Unusually, it allows primary legislation to be repealed or amended through secondary legislation. To date twenty-one draft orders have been presented to Parliament under the Act. The first two, covering intertrack greyhound betting and flexible investment for building societies, recently became law. Many more are in the pipeline - including several which are already out to consultation. Examples include a proposal for paperless cheque clearance, and greater flexibility for the way national insurance contributions are applied to company directors.

Dialogue with business

If you want to understand the burdens which business faces, there is no substitute for listening to business itself. So throughout the Deregulation Initiative, Government has been advised by top businesspeople. At the outset, a team of businessmen was appointed under Lord Sainsbury. They made 800 recommendations, most of which have been accepted and implemented. More recently the Government has set up a Task Force from business and charities under Francis Maude.

The Task Force published its first report last September, making 52 proposals of which 46 were accepted by the Government in whole or in part. The report went on to identify some key priorities for the coming year, including the labour market, planning, the health sector and risk pricing. …