Cutting Red Tape: The Government's Deregulation Initiative

Management Services, March 1997 | Go to article overview

Cutting Red Tape: The Government's Deregulation Initiative


Following the 1996 series of Deregulation Seminars organised by the Cabinet Office and promoted by the Institute, we are featuring below a number of mini case studies involving organisations who have benefited from deregulation.

Deregulation is about making government regulations simpler and less burdensome for everybody. It is about abolishing out of date rules and making sure that new ones are introduced only when strictly necessary. By the end of 1996 over 1,000 regulations had been scrapped or simplified, and more are set to go. If you now go to the supermarket or the pub on a Sunday afternoon, you are already benefiting from deregulation. The deregulation campaign has swept away the old laws that made these activities illegal.

Deregulation is affecting everything from tax and VAT paperwork to restrictions on charities and nursing homes. Examples of the wide range of organisations benefiting from deregulation will be found in the case studies featured in this article.

Why deregulate?

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

So deregulation is urgently needed by Britain's businesses, particularly the smaller ones. By getting rid of unnecessary rules and paperwork, it helps cut costs and allows businesses to perform better.

What has deregulation achieved so far?

Here are just a few of the benefits that deregulation has so far secured for businesses, charities and individuals. Charities can benefit by 75 million a year thanks to freer investment rules, with further benefits still to come.

500,000 of the smallest companies no longer need to have their accounts audited.

The Health and Safety Commission is cutting its rulebook by 40 percent

Food hygiene law is now simpler, saving business 40 million a year.

Trademark protection is also simpler, saving companies 60 million in 1995 and 30 million in later years.

Lighter accounting rules have been introduced for small charities.

Abolition of unnecessary rules on aircraft specifications is saving purchasers 1 million per plane.

We can now shop on Sundays and in the evenings.

Pubs can stay open on Sunday afternoons, and families can take their children into suitable pubs with them.

Couples can many in new venues like stately homes and hotels.

Village halls can serve alcohol and host various types of entertainment under a single licence application

Bereaved relatives no longer need to apply for death certificates in the district where the death occurred.

Childminders can now look after six or fewer children without registering their homes as food businesses.

Is the deregulation campaign doing anything to cut the number of new regulations?

Deregulation means ensuring that new regulations are introduced only when strictly necessary. Government introduces about 3,500 regulations each year, only one in ten has any effect on business - and in many cases the effect is positively helpful.

Whenever a new regulation will affect business, the government must now assess its cost and publish the results. And ministers must personally certify that the cost is justified by the benefits. This is known as compliance cost assessment.

Because small businesses are most vulnerable to over-regulation, ministers must also carry out the `small business litmus test.'. This means that small businesses must be consulted on every new regulation to ensure that they will be able to cope.

Can the deregulation campaign help business keep track of these regulations? …

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