'Red tape' costs for businesses increase despite government promises

http://www.guardian.co.uk/business/2012/feb/29/red-tape-costs-businesses-government

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The business cost of government regulation has risen under the coalition government, despite high-profile promises to slash "red tape" and "bureaucracy".

Latest government figures show that the headline saving for businesses since the government began its cost-cutting drive is £3.3bn, but all of this can be accounted for by a single measure early last year to change the rate at which pensions must increase to a lower measure of inflation – something not widely considered to be a regulation.

Stripped away, almost two years of work on "deregulation" has increased annual costs to business by £18m, says the report by the Department for Business, Innovation and Skills.

The report also shows that three departments have driven the increase in costs: the Home Office and Government Equalities Office, the Department for Environment, Food and Rural Affairs, and the Department of Health. Between them the three departments have increased the cost of regulation to business by more than £100m a year.

Acknowledging the challenge, the business minister Mark Prisk said in a statement: "The system is starting to deliver results, capping the costs to business and then driving them down. But we know that changing the culture of regulation in Whitehall is a long-term job, and all of us in government have to, and will, continue to root out any red tape which poses more of a hindrance than a help to UK businesses."

Critics both fear the drive on deregulation is a cover for pulling back from important protections for people and the environment, and claim that ministers have repeatedly promised to make savings they do not know they can deliver.

Mark Littlewood, the director general of the Institute of Economic Affairs, said the deregulation drive was held back by the "one in, one out" rule, which was "almost encouraging a zero-sum game".

"£18m is almost in the margin of error but that does not constitute a massive success for deregulation," said Littlewood, a former head of media for the Liberal Democrats and now advising the government on its "red tape challenge".

"The nature of the way Whitehall works is you have got vast numbers of civil servants paid to find problems and devise regulatory solutions to those problems," he added. "In [former US Republican president] Ronald Reagan's words, they are shooting the alligators when they should be draining the swamp." A hypothetical example would be cutting whole areas like health and safety regulation surrounding using computers for all firms with turnover of less than £10m a year, said Littlewood.

The health department, whose estimated cost of regulations has risen by £21m a year, said the main drivers were new rules stopping tobacco being displayed in shops, a ban on people under 18 using commercial sunbeds, and stricter checks on doctors from overseas brought in following the death of a patient after he was given a fatal overdose by a German GP on his first shift as a locum in the UK.

"We know we need to reduce red tape and are about to review our regulations to make sure we do so. But if we can save lives or improve public health through improving regulation, then there will always be a strong argument for doing so, while minimising any impact on business and enterprise," said a spokesman for the DoH.