Bad regulation has had a negative impact on business that has only been exceeded by the Coronavirus pandemic and employment taxes, a leading business group has claimed.
The Institute of Directors (IoD) has published data highlighting the detrimental effects of poorly designed legislation and has called for government to do a better job in shaping a more business-friendly regulatory framework.
In a recent IoD survey of over 600 directors, 40% stated that compliance with regulation was having a negative impact on their organisation, compared to 53% for the Coronavirus outbreak, 41% for employment taxes, 40% for UK economic conditions and 39% for skills shortages/employee skills gaps.
In a letter to business minister Kwasi Kwarteng, the body argued the government’s better regulation framework (BRF) “has yet to achieve its full potential”.
The letter, part of the IoD’s response to the BEIS consultation, ‘Reforming the framework for better regulation’, was signed by Dr Roger Barker, the IoD’s director of policy.
Scrutiny not tick boxes
He wrote: “Impact assessments of new regulatory initiatives are too often undertaken as compliance exercises, with limited impact on the policy development process.
“Furthermore, independent scrutiny of these assessments often takes place too late, and with limited visibility to external stakeholders.
“In order for business to play a meaningful role in building back better, it is essential for the government to do a better job in shaping a more business-friendly regulatory framework.
“New business regulation must be more critically scrutinised in order to ensure that it is effective, proportionate and free from unintended consequences.
“The process would be more robust if it incorporated a more central role for an independent scrutiny body, like the regulatory policy committee (RPC), at an earlier stage of the policy making process.
“Similarly, we would like to see the government’s own impact assessments of proposed regulatory changes always published at the consultation stage so that they can be taken into account before the legislation is introduced into Parliament.”
One in, two out hasn’t worked
The letter concluded with a plea to cut unnecessary red tape, noting that previous pledges to restrict new regulation has failed.
It said: “As well as assessing individual regulatory proposals, a broader view of the cumulative impact of regulation is also required. This broader perspective should be developed in the context of an overarching objective to reduce unnecessary regulatory burdens on business.
“The previously employed offsetting approach of ‘one in, two out’ has not been particularly effective in controlling the aggregate regulatory burden on business.
“It is not the number of regulations that matters to business, but rather their effectiveness and impact on business activity.”