The Deregulatory Agenda January 2012

“We need to tackle regulation with vigour, both to free businesses to compete and create jobs, and give people greater freedom and personal responsibility. Of course we need proper standards, for example in areas like fire safety and food safety. So where regulation is well-designed and proportionate, it should stay, but it is hard to believe that we need government regulations on issues such as ice-cream van musical jingles. Our starting point is that a regulation should go or its aim achieved in a different, non-government way, unless there is a clear and good justification for government being involved. All those unnecessary rules that place ridiculous burdens on our businesses and on society must go, once and for all.” Rt Hon David Cameron MP At the launch of ‘The Red Tape Challenge’ on 7 April 2011 With businesses large and small central to the UK’s economic future, the Government has reinforced its view that no unnecessary obstacles should stand in the way of private sector jobs and economic growth. Since the very early days of the Coalition, Ministers have been clear that they intend to pursue a radical deregulatory agenda which aims to significantly reduce the regulatory burden facing UK companies. The Prime Minister has been an enthusiastic champion of this approach. At the launch of the Government’s Red Tape Challenge in April 2011, he said, “I want us to be the first government in modern history to leave office having reduced the overall burden of regulation, rather than increasing it.” According to the Department for Business, Innovation and Skills (BIS), the lead government department for this agenda, the Government’s ultimate strategy is fourfold: to remove or simplify existing regulations that unnecessarily impede growth; reduce the overall volume of new regulation by introducing regulation only as a last resort; improve the quality of any remaining new regulation; and move to a less onerous and less bureaucratic enforcement regime where inspections are targeted and risk-based. Over the past eighteen months, Ministers have set out a number of policy mechanisms through which they hope to achieve these objectives. These include a commitment to the adoption of a ‘one-in, oneout’ approach to regulation, the inclusion of sunset clauses into all future regulations in order to ensure that legislation does not run on indefinitely, and a promise to end the culture of ‘tick-box’ regulation by targeting inspections on high-risk organisations.

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Government Policy Agenda since May 2010 One-in, One-out (OIOO) rule The OIOO rule requires the introduction of any new regulation to be matched by the removal of a regulation of equal value. The Regulatory Policy Committee (RPC) oversees the implementation of this agenda. The objective of the policy is to: • bear down on regulatory costs; • get rid of laws that are no longer needed; • bring about a culture change in the Government’s approach to regulation; and • deliver a positive outcome for business and civil society organisations. One-in, one-out is measured on the net cost to business flowing from regulations, not on the number of regulations. The identification of ins and outs happens in parallel across Government. Outs must involve a sufficient reduction in net cost to business to counter any new net cost to business created by the In. The Secretary of State for Business, Innovation and Skills, Vince Cable MP, announced in January 2011 that the Government would not agree to any new regulations unless the cost-benefit calculations were rated ‘fit for purpose’. Sunset Clauses for New Regulations Domestic legislation that imposes a regulatory burden on businesses or civil society organisations and which came into force on or after April 2011 is now required to include a sunset clause. This means that the regulation will expire automatically on a certain date unless positive action is taken to renew it. Sunset clauses should ordinarily take effect seven years after commencement unless some other time period is appropriate in a particular case. For new regulations implementing EU obligations, a ministerial duty to review every five years will apply. Ministers will be obliged by law to publish a report for Parliament setting out whether the regulation has been effective, and whether the costs and benefits have been as expected. Reviews should also include a comparison with how the UK’s main competitors have transposed EU obligations to see whether the UK can reduce burdens further on business and others. Red Tape Challenge On 7th April 2011, the Government announced the launch of the ‘Red Tape Challenge’ and website through which the public can provide feedback on regulations. The themes of the Red Tape Challenge campaign include Retail; Hospitality, Food and Drink; Road transportation; Fisheries, Marine Enterprises and Inland Waterways; Manufacturing; Utilities, Energy and Health & Safety. As part of the Challenge, members of the public and businesses have been invited to comment on which of the 21,000 regulations currently in force in the UK (11,000 of which have a direct bearing on business) they would like to see either retained, merged or scrapped. Ministers then have three months to work out which regulations they would like to keep and why. The onus of proof falls on departments to prove why the regulation needs to stay, or whether there is another way of achieving the same outcome.

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European Regulation The Government has announced that it is putting a stop to the over-interpretation of EU law and socalled ‘gold plating’ – where UK businesses are often put at a disadvantage – by introducing ‘copy-out’. This involves, according to BIS, a straight transposing of EU law into domestic law.

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The Government’s Record In September 2011, the Department for Business, Innovation and Skills (BIS) published a policy document ‘One-in, One-out: Second Statement of New Regulation.’ This reported on the Coalition’s record thus far in cutting the regulatory burden facing British businesses. In terms of the ‘One-in, One-out’ objective, the document stated that the Coalition had been successful in achieving its goal of maintaining a net zero, or better, cumulative cost for business from domestic regulation. Over the course of the year, it said, the Government had achieved the following: -

Increased the number of deregulatory measures threefold between the first and second halves of 2011; Ensured that any business burdens attributable to regulatory measures were more than offset by savings attributable to a much higher number of deregulatory measures; Seen 60% of government departments report a net reduction of regulatory costs to business throughout 2011; and Seen the RPC report a rise in the proportion of ‘fit for purpose’ opinions from 56% to 69% over the past year – a “noticeable improvement in the quality of departmental analysis.”

The Minister of State with responsibility for deregulation, Mark Prisk MP, told a Westminster Hall debate on 10 January 2012 that of the 157 regulations which had been in preparation in January 2011 (of which 119 would have imposed a cost on business), just 89 had been agreed by the Government (of which only 19 would have imposed a cost on business). In terms of the Red Tape Challenge, the ‘Second Statement of New Regulation’ claimed that, although early days, the Government had agreed to review, amend or abolish 160 regulations affecting the retail sector. Meanwhile, in December 2011, Sir Gus O’Donnell, Head of the Civil Service, wrote that of the 1,200 regulations considered as part of the Challenge, the Government had agreed to scrap or improve well over 50%. Mark Prisk MP told MPs in the January 2012 debate that the House of Commons had voted to remove 84 defunct regulations from the statute book. The BIS website also lists a number of other deregulatory measures that the Government has taken since May 2010, including: -

Scrapping proposals for individual regulations which would have cost business over £350 million a year, including not extending the right to request time to train to small companies; Promoting a better approach to existing and proposed EU measures, consistent with the UK’s growth agenda; Pushing the European Commission to deliver a culture change that bears down on the overall level of regulation emanating from Brussels; Announcing plans to implement the proposals from two separate reviews of health and safety (the Lord Young of Graffham and Professor Lofstedt reviews); Outlining plans to consult on removing Equality Act requirements for businesses to take reasonable steps to prevent harassment of their staff by third parties; Proposing to increase the qualifying period for employees to be able to bring a claim for unfair dismissal from one to two years; Announcing its intention to reduce the number of UK SMEs required to undertake an audit; and Improving guidance to business on compliance with regulation.

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Criticism of the Government’s performance, however, has come from a number of stakeholders. The British Chambers of Commerce, for example, has accused government departments of ignoring warnings about the detrimental impact of some regulations. In December 2011, it stated that of the 81 pieces of new regulation which the RPC had flagged as being either fundamentally flawed or containing errors over the course of the year, many were implemented by civil servants without any changes being made. It claimed that BIS, which leads on the Government’s deregulatory agenda, had the highest proportion of regulations in the whole of Whitehall which contained errors but were not amended.

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Government Deregulation Stakeholders 1. Better Regulation Policy Makers The primary responsibility for ensuring that each government department transforms its approach to help achieve the Coalition’s vision lies with policy-makers within that department. Across Whitehall, Better Regulation Ministers are leading the task of challenging policy-makers to meet the Government’s reducing regulation commitments. They are supported by Board Level Champions (BLCs), senior officials who champion the new approach within their departments. The BLCs are in turn supported by a network of working level contacts in Better Regulation Units (BRUs) within departments, who are resident experts on the new systems. They also champion the new approach and support their policy colleagues in making the changes needed. 2. Better Regulation Executive (BRE) The Better Regulation Executive (BRE) is part of BIS and leads the regulatory reform agenda across Government. The BRE is also tasked with developing advice and guidance on alternatives to regulation to support policy-makers in using non-regulatory approaches. It works with regulators, departments, Non-Departmental Public Bodies and Local Authorities to simplify their approaches, understand the business perspective and improve the perception of enforcement and regulation. The BRE works in collaboration with the Better Regulation Strategy Group (BRSG) which was set up at the beginning of 2010 and is chaired by Sir Don Curry. The BRSG acts in an advisory role to the BRE. Its membership consists of the following: Chair •

Sir Don Curry (Non-Executive Chair, BRE)

Members • • • • • • • • • • • • •

Katja Hall (Chief Policy Director, Confederation of British Industry) Robert Devereux (Permanent Secretary, Department for Transport) Julia Evans (Chief Executive, National Federation of Builders) Iain Ferguson (Chair, Wilton Park) Dame Deirdre Hutton (Chair, Civil Aviation Authority) Sir Philip Hampton (Chair, Board of the Royal Bank of Scotland Group plc) Scott Johnson (Partner, WF Watt Contracts) Lucy Neville-Rolfe (Executive Director, Corporate and Legal Affairs, Tesco) Tera Allas (Director General, Economics, Strategy and Better Regulation at BIS) Graham Turnock (Chief Executive, BRE) Sarah Veale (Head of Equality and Employment Rights Department, Trade Union Congress) Peter Schofield (Director, Enterprise and Growth Unit, HM Treasury) Gillian Guy (Chief Executive, Citizens Advice Bureau)

3. Reducing Regulation Committee The Reducing Regulation Committee (RRC) is a Cabinet sub-Committee which was established to ‘take strategic oversight of the delivery of the Government’s regulatory framework’. This includes scrutinising, challenging and approving all new regulatory proposals. The RRC aims to reduce the number of new and existing regulations and is therefore a significant part of the deregulatory agenda machinery. All regulatory proposals submitted for clearance to the RRC will be expected to be © Insight Public Affairs Ltd Insight Public Affairs, 52 Grosvenor Gardens, London, SW1W 0AU Web: www.insightpa.com, Email: [email protected], Tel: 020 7824 1850, Twitter: @IPAInsight

accompanied by the opinion about the impact assessment supporting the proposal. The RRC reports to the European Affairs Committee on its scrutiny of draft European legislation and proposals under negotiation. The RRC also enforces the One-In, One-Out (OIOO) agenda. Membership of the Reducing Regulation Committee is as follows: Chair •

Secretary of State for Business Innovation and Skills (The Rt Hon Dr Vincent Cable MP)

Members • • • • • • • • • • • • •

Minister for the Cabinet Office, Paymaster General (The Rt Hon Francis Maude MP) Secretary of State for Transport (The Rt Hon Justine Greening MP) Secretary of State for Environment, Food and Rural Affairs (The Rt Hon Caroline Spelman MP) Chief Secretary to the Treasury (The Rt Hon Danny Alexander MP) Minister of State, Cabinet Office (The Rt Hon Oliver Letwin MP) Minister of State, Europe (David Lidington MP) Minister of State for Business and Enterprise (Mark Prisk MP) Minister of State for Pensions (Steve Webb MP) Minister of State for Trade and Investment, FCO/BIS (Lord Green) Minister of State, Ministry of Justice (The Rt Hon Lord McNally) Minister of State, Home Office (Lord Henley) Parliamentary Under Secretary of State, Department for Communities and Local Government (Andrew Stunell OBE MP) Parliamentary Under Secretary of State, Department for Culture, Olympics, Media and Sport (John Penrose MP)

4. Regulatory Policy Committee The Regulatory Policy Committee (RPC) was established in 2009. It is tasked with providing ‘independent, wide-ranging, and real-time scrutiny’ of proposed regulatory measures put forward by Government and is chaired by Michael Gibbons OBE. The RPC is supported by a secretariat of civil servants. The RPC provides external scrutiny of the Impact Assessments of all new regulatory proposals prior to submission to the RRC. As such the RPC does not comment directly on the Government’s policies but rather attempts to provide the necessary background information in advance of new regulation. Given this role in advising Ministers on new regulations, it is often seen to take an opposing role to the deregulatory agenda. Crucially, however, it is tasked with the operation of the OIOO rules. Membership of the Committee is as follows: Chair •

Michael Gibbons OBE

Members • • •

Dr David Parker – Emeritus Economics Professor of Cranfield School of Management Dr Ian Peters – Chief Executive of the Institute of Internal Auditors Philip Cullum – Partner, Consumer and Demand-side Insight at Ofgem © Insight Public Affairs Ltd Insight Public Affairs, 52 Grosvenor Gardens, London, SW1W 0AU Web: www.insightpa.com, Email: [email protected], Tel: 020 7824 1850, Twitter: @IPAInsight

• •

Mark Boleat – Consultant on regulation and public policy Sarah Veale – Head of the Equality and Employment Rights Department at the TUC

5. BIS Civil Servants • Tera Allas – Director General for Economics, Strategy and Better Regulation (also sits on the BRSG) • Duncan Budd – Deputy Director, Better Regulation Tools and Frameworks • Julie Monk – Deputy Director, Regulatory Enforcement • Tony Pedrotti – Deputy Director, Regulatory Policy Committee Overall Structure

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