Select Committee on Regulatory Reform Minutes of Evidence

Supplementary memorandum submitted by the CBI

  As the UK's leading business organisation, the CBI speaks for some 240,000 businesses that together employ around a third of the private sector workforce, covering the full spectrum of business interests both by sector and by size.

  This evidence supplements CBI's original written evidence to the Committee's inquiry, and the oral evidence session on 1 April 2008. It responds to the questions raised at the oral evidence session on work on better regulation in the United States of America, and comparative evidence on burdens and growth.

What is the USA doing on better regulation?

  The US has the longest experience of Regulatory Impact Assessments of any country in the world, and continues to lead the field with its innovations. An overarching and thorough approach to the question of regulatory consultation and review can be traced back to 1946, and the passage of the Administrative Procedure Act. The APA covers both independent agencies (over 50 of them) and government departments; it sets out common standards and approaches to regulation.

  The APA was substantially amended under Presidents Reagan and Clinton, to increase the emphasis on "better" regulation, including more cost benefit analysis. In 1980, the Paperwork Reduction Act set up the Office of Information and Regulatory Affairs (OIRA) within the White House Office of Management and Budget (OMB). In 1993, President Clinton issued Executive Order 12866, which reinforced OIRA's mandate and its position at the heart of federal rule-making.

  Executive Order 12866 requires executive agencies to assess both the costs and benefits of regulation, and to consider both public and private sector alternatives. EO 12866 then requires OIRA to review these assessments, before draft rules are published. In its Draft 2007 Report to Congress, the OMB estimated that in the last year seven major rules were added to statute in the US that had gone through comprehensive RIAs. They estimated the benefits of these at $6.3-$44.8 billion and the costs at $3.7-$4.2 billion, highlighting the importance of the RIA process in evaluating proposed legislation.

  EO 12866 also gives OIRA the task of drawing up government-wide policies on statistics, information technology, privacy issues, and data quality. This horizontal approach complements the review of specific regulatory proposals. Because OIRA is located within the OMB, and therefore the White House, it reports directly to the President, rather than to policy-making departments. This helps to ensure independent oversight of the RIA process.

  One recent emphasis within OIRA's work has been on international regulatory policy, reflecting the economic reality that regulations implemented by one country only are less and less successful. There is now a High-Level Regulatory Dialogue between the US and the EU, for example, set up at the EU/US Summit of 2007. The Dialogue has recently published a draft paper on the impact of their respective RIA frameworks on trade and investment analysis. This is a welcome recognition of the need to think about the impact of one country's regulations outside its own borders. The paper can be downloaded from

Is there any evidence to suggest that increased regulatory burdens create barriers to growth?

  The CBI's London Business Survey in December 2007 stated that the two biggest threats to London's overall competitiveness over the next five years are underinvestment in infrastructure (67%) and the threat of increased regulation (42%).

  This is backed up in the results of the 2006 Small Business Surveyi as 44% of respondents without employees, and 60% of respondents with employees, said that regulations were obstacles to business success. Furthermore the reportii demonstrates that as businesses increase in employees so do the number who state regulations as an obstacle to business success—Micro (1-) 59%, Small (10-9) 66%, Medium (50-50) 68%.


i  DBERR's Annual Small Business Survey 2006

ii  Page 15 of the annex DBERR's Annual Small Business Survey 2006

May 2008

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