Second supplementary memorandum submitted
by the Department for Business, Enterprise and Regulatory Reform
1. EXECUTIVE
SUMMARY
1.1 The UK's regulatory environment is recognised
as being among the best in the world. The 2008 World Bank Doing
Business Report puts the UK 6th out of 178 economies for "ease
of doing business".
1.2 In a global economy the UK must keep
focused on making sure the important protections society expects
are delivered in a way that maintains our national competitiveness
and the quality of our public services.
1.3 That is why the Government is driving
forward an ambitious programme of regulatory reform. The programme,
which is led by the Better Regulation Executive (BRE), is cross-governmental
in scope. 20 government departments and a range of national regulators
are engaged in delivering results.
1.4 In leading this programme, the BRE works
in partnership with departments and regulators to:
improve the design of new regulations
and how they are communicated;
simplify and modernise existing regulations;
and
change attitudes and approaches to
regulation to become more risk-based;
thus ensuring that government does not create
unnecessary burdens on business, and removes existing ones where
possible, whilst delivering key social and environment protections.
Key elements of the Regulatory Reform Programme
Improving the design of new regulations and how they
are communicated
1.5 The Government's strategy is to ensure
that new regulations are only introduced where:
regulation is demonstrated to have
clear advantages over non-regulatory approaches;
it is clear that the costs justify
the benefits; and
the regulations are consistent with
the Government's principles of good regulation: ie there should
be proportionality, accountability, consistency, transparency
and targeting.
1.6 New regulations need collective agreement
by Cabinet. The BRE works closely to support Departments in making
sure that new regulations meet these criteria.
1.7 To strengthen further the discipline
around the creation of new regulations, the Government:
has reformed the use of Impact Assessment
within policy making so that estimates of costs and benefits are
stronger and more transparent. From the end of April 2008 all
Impact Assessments for new regulations will be published in a
single place on the internet;
will begin to publish annually from
2008-09 a total benefit:cost ratio of new regulation;
has announced that it will consult
on a new system of regulatory budgets for Departments that would
set out the cost of new regulation that can be introduced within
a given period; and
is strengthening it's "think
small first" policy. It will examine whether small firms
can be fully exempted from new regulatory requirements or be subject
to a simplification of enforcement. When new legislation is laid
before Parliament, the Government will now include in the accompanying
memorandum an explanation of the approach adopted towards small
firms.
1.8 The Government is also making it easier
for businesses to comply with regulations by improving the quality
and timeliness of the guidance Departments provide.
Simplifying and modernising existing regulations
1.9 The Government's Regulatory Simplification
Programme is delivering benefits for business through identifying
the cost of existing regulations, working with business to identify
where practical changes to regulations can improve their everyday
operations, setting out public plans and progress reporting on
delivering regulatory reform, and ensuring that business is aware
of what has changed.
1.10 In 2005-06, acting on the recommendations
of the Better Regulation Task Force, central government departments
carried out an exercise to map and measure the administrative
costs of their regulations. Separate, parallel exercises were
conducted by HM Revenue and Customs and the Financial Services
Authority.
1.11 This exercise estimated the administrative
cost of regulations (excluding HMRC and the Financial Services
Authority) to be £13.4 billion. This is an indicative, rather
than a statistically robust estimate, but the business representatives
who were involved in the exercise agreed that the broad picture
was realistic. This was the first time that any UK government
had an overall picture of the landscape of regulation and an indication
of which regulations carry the largest costs.
1.12 Using this data, and in discussion
with business, central government departments have committed to
reducing administrative burdens by at least 25% between 2005 and
2010. Their Simplification Plans published in December 2007 show
concrete proposals that will deliver a net annual reduction of
26% (£3.5 billion) by 2010. As of December 2007 a net annual
reduction in administrative burdens of £800 million had already
been delivered. In addition Simplification Plans set out proposals
to make policy cost savings and reductions in public sector burdens
worth £3.4 billion annually by 2010.
1.13 This programme has created a focus
on simplification within Government Departments that has never
previously existed. But the measurement exercise and targets are
a means to an end: the delivery of practical regulatory reforms
that make doing business simpler. Examples of reforms that have
already been delivered through the programme include:
replacing 79 overlapping fire-safety
regimes with one simple risk-based regimewhich is expected
to save over £50 million a year;
enabling companies to send information
to shareholders by e-mail rather than through the postsaving
over £60 million a year; and
streamlining the process for approving
the labeling of over-the-counter medicinessaving over £100
million to date and winning and EU Red Tape Reduction Award.
Changing attitudes and approaches to regulation to
become more risk-based
1.14 The Government is also working with
departments and regulators (including Local Authorities) to improve
the working of the regulatory system as a whole.
1.15 This work is based on a review led
by Philip Hampton[15]
which found much that was good in the regulatory system and some
excellent, innovative practice. However, he found the system as
a whole was uncoordinated and good practice was not uniform. Overlaps
in regulators' activities meant there were too many forms, too
many duplicate information requests and too many multiple inspections
on business. Moreover, many inspection regimes were not risk-based,
so unnecessary inspections were often carried out on low-risk
premises, while higher-risk organisations, where inspection would
bring more value, were often not inspected.
1.16 In reforming the regulatory system
as a whole, the Government:
has introduced to Parliament the
Regulatory Enforcement and Sanctions (RES) Bill. The RES Bill
is part of the Government's commitment to implementing the Hampton
agenda and comprises four distinct but linked parts:
put Local Better Regulation Office
on statutory footing;
establish "Primary Authority
Principle";
modernise the penalties regimes available
to regulators (implementing the conclusions of the Macrory Review);
impose a duty on regulators who need
further legislative support to meet the simplification requirements
of Government's better regulation agenda.
is taking forward Philip Hampton's
recommendation to merge regulators and inspectorates to ensure
that inspections do not impose unnecessary costs from overlapping
inspections and enforcement. 21 of the 63 regulators covered by
the Hampton report have merged with an additional seven mergers
in the pipeline;
has created a statutory Compliance
Code, requiring regulators to design their policies around the
principles of supporting economic progress; sound risk assessment;
the effective provision of information and advice; sharing data
with other regulators to minimize the burdens on business; the
effective application of penalties; and transparent reporting
of the outcomes, costs and business perceptions of their activity;
has undertaken external reviews,
led jointly by the BRE and NAO, of performance against the principles
of effective inspection and enforcement of the Health and Safety
Executive, Food Standards Agency, Financial Services Authority,
Environment Agency and Office of Fair Trading. The reports of
these reviews: highlighting good practice and areas for improvement
were published on 20 March 2008;
has helped local authorities set
effective priorities for their regulatory service departments
by clarifying central government's national priorities for local
enforcement (which were identified by the Rogers' Review[16]),
to which local authorities are free to add their own local priorities;
has created a Local Better Regulation
Office to improve consistency of enforcement by different local
authorities, helping business who operate across local authority
boundaries; and
is leading a Retail Enforcement Pilot
to streamline local inspection of the retail sector by joining
up trading standards, health and safety, environmental health,
alcohol licensing and fire safety inspection activity. About 30
local authorities are participating in the pilot.
Public Sector
1.17 The Government is also focused on reducing
administrative burdens on public sector front-line workers such
as policemen, teachers and health workers. Reducing unnecessary
bureaucracy will free up resources to deliver better quality public
services. The Government's approach involves:
delivering a 30% net reduction in
the number of data requests made by central Government to the
front-line;
developing improved mechanisms for
understanding the concerns front-line workers have about bureaucracy
addressing; and
reducing the number of public service
inspectorates to reduce the potential for overlapping inspections.
1.18 The BRE also provides support to departments
on specific reviews of public sector bureaucracy. For example
it has provided policy support to Sir Ronnie Flanagan's recent
review of Policing.
Measuring success
1.19 Progress on the better regulation agenda
is measured through two Public Sector Agreement (PSA) indicators
and one of BERR's seven Departmental Strategic Objectives (DSOs).
Tangible results are also reflected in practical examples demonstrating
how the programme is making it easier to do business, run a third
sector organisation or operate on the public-sector front line.
2. INTRODUCTION
2.1 This memorandum is being submitted to
help the Regulatory Reform Committee with its inquiry into "Getting
results: The Better Regulation Executive and the Impact of the
Regulatory Reform agenda". It is structured on the lines
of the Committee's terms of reference, ie:
to assess the extent to which the
Better Regulation Executive (BRE) has developed a coherent strategy
for implementing regulatory reform;
whether the BRE works effectively
with other areas of Government to implement regulatory reform
initiatives;
whether the current approach to regulatory
reform is delivering genuine results; and
if the approach to measuring and
reporting on performance and outcomes is sufficiently robust.
3. THE GOVERNMENT'S
STRATEGY FOR
REGULATORY REFORM
3.1 Effective and well-focused regulation
plays a vital role in correcting market failures, promoting fairness
and increasing competition. Society expects Government to ensure
protection for the general public, consumers and employees consistent
with the best international standards, and these expectations
grow over time.
3.2 Inefficient regulation imposes costs
on the private, public and third sectors that are unnecessary
for achieving the desired policy outcomes. These unnecessary costs
are a waste of the nation's resources and affect our national
competitiveness and the quality of our public services.
3.3 There is a substantial and growing body
of economic evidence which underpins the need for better regulation.
3.4 The global economy is becoming more
competitive. Many formerly heavily regulated countries are now
simplifying and eliminating regulations. To remain competitive
it is clear that the UK must keep its regulatory burden as light
as possible.[17]
3.5 The Better Regulation Executive (BRE)
has secured cross-government agreement to make administration
of public services more transparent. Departments are also working
together to permanently reduce unnecessary bureaucracy for those
working in the public sector.
3.6 The gains from tackling the negative
effects of regulation are potentially significant.
3.7 Government recognises that better regulation
is an issue for consumers as well as business.[18]
This is because consumers ultimately pay the price if business
carries unnecessary cost burdens. Research has shown[19]
that information provided by business does not always help consumers
because the content is too long or complex. Simplifying the requirements
Government imposes on businesses can therefore also provide an
ultimate benefit to consumers.
3.8 There are several economic estimates
into the impact of reducing administrative burdens. The Better
Regulation Task Force estimated that reducing administrative burdens
by 25% by 2010 could increase UK GDP by 1%. Another study[20]
comes to similar conclusions, though other economists variously
believe the impact could be higher or lower. It is, however, generally
agreed that administrative burdens impose an opportunity cost
on business and that where they can be reduced without impacting
on regulatory outcomes, the economic effect is positive.
3.9 Research into the macroeconomic impacts
of regulation suggests that reform of regulation of product markets
is positively correlated with total factor productivity growth,
with the strongest impact from reforming administrative burdens.[21]
3.10 Other research found a strong negative
association between high levels of regulation and growth.[22]
This relationship is less strongly negative if the quality of
institutions improves.
3.11 Regulation can also act as a barrier
to growth by distorting the incentives for existing businesses,
for example through the introduction of costs which make expansion
uneconomic. 14% of small businesses surveyed stated that regulation
is the main obstacle to growth.[23]
3.12 An administrative burden can be particularly
significant for small and medium sized businesses. For example,
the average total spent on health and safety per employee in 2001-02
was £149 for small businesses, £166 for medium businesses
and £21 for large business.[24]
Time taken to comply can divert resources from more productive
uses such as small business development activity.[25]
Unlike larger firms, smaller enterprises are often run by owner-managers
who are involved in both the strategic and operational sides of
the business. There is evidence that these owner-managers spend
proportionately more time on regulatory issues.
3.13 Aware of the particular challenges
faced by small businesses, which underpin a substantial proportion
of the UK economy, recent Government philosophy has been "think
small first". BRE's revised Impact Assessment process, launched
in 2007, strengthened the use of the Small Firms Impact Test in
the development of new policy. The Enterprise Strategy's presumption
to exclude small businesses from new regulation, where it is possible
to do so, reinforces this thinking to build on the government's
agenda to help small businesses.
3.14 Businesses both large and small often
find the details of regulation complex and difficult to understand.
As a result many buy in helpalmost half of all businesses
require external advice about how to follow regulation, spending
at least £1.4 billion per year on such advice.[26]
Around three-quarters of small businesses say that the provision
of guidance, setting out in clear and simple language what their
business has to do to comply with a given regulation, is very
important.[27]
3.15 In 2004, the Government asked Sir Philip
Hampton to lead work on the time and costs of dealing with inspections
and enforcement officers which is also an important consideration
for business. The Hampton Report found that greater efficiencies
were possible to help smaller businesses with their paperwork
and form-filling. Hampton reported[28]
that national regulators carried out some 600,000 inspections
each year and send out 2.6 million forms a year also that local
authorities carry out 2.5 million inspections a year. Over 80%
of respondents believed moving to on-line forms would be efficient
and around 90% wanted on-line options to be extended.
3.16 Driven by evidence that better regulation
has the potential to deliver real benefits to the economy and
to society, the UK's regulatory reform agenda is therefore focusing
on making sure the Government regulates in a way that reduces
unnecessary burdens whilst maintaining essential protection.
3.17 The Better Regulation Executive (BRE)
leads this regulatory reform agenda across Government. Working
with and through others, our aims are:
3.18 BRE is working to deliver these aims
through:
reforming the processes by which
the UK Government and the European Union makes and reviews regulations,
and changing the culture within Government and the regulatory
community to increase the understanding that regulation comes
at a cost which needs to be identified and managed;
intervening in specific policy areas:
in particular working to support and challenge departments and
regulators as they develop and review policy to make sure that
it is effective and keeps regulatory costs to a minimum; and
putting a high emphasis on engaging
with businesses, third sector bodies and the public sector front
line to understand their issues in dealing with regulation and
to communicate the Government's agenda to them.
3.18 The Government has recently strengthened
its approach to regulatory reform as part of the Enterprise Strategy,
published at Budget 2008, which builds on success to-date in delivering
the regulatory reform agenda.
3.19 The Regulatory Reform programme is
being taken forward through a set of complementary workstreams,
delivered in partnership by the BRE and government departments
and local and national regulators.
3.20 The role of the BRE is to lead the
overall strategy to deliver regulatory reform, provide mechanisms,
tools and guidance which will allow the better regulation agenda
to be delivered and work across Government and with regulators
to embed the better regulation agenda.
3.21 Individual departments and regulatory
bodies are responsible for delivering individual parts of the
programme: for example:
developing and delivering simplification
programmes;
ensuring that their new regulations
are effective and as light-touch as possible and are based on
effective Impact Assessment;
leading internal programmes of culture
change; and
managing the rationalisation of inspectorates.
3.23 Government departments and a range
of national and local regulators including Health and Safety Executive,
Financial Services Authority, Food Standards Agency and the Environment
Agency and are currently driving and implementing the better regulation
agenda.
4. THE REGULATORY
REFORM DELIVERY
PROGRAMME
4.1 The Regulatory Reform programme is being
taken forward through a set of complementary workstreams, delivered
in partnership by the BRE and government departments and local
and national regulators.
4.2 The elements of the programme are summarised
in Annex A. The following sections provide more detail about the
workstreams of the programme and their rationale.
A. Working with departments to improve the
design of new regulations and how they are communicated
Influencing new regulations
4.3 The Government's strategy is to ensure
that new regulations are only introduced where:
regulation is demonstrated to have
clear advantages over non-regulatory approaches;
it is clear that the costs justify
the benefits; and
the regulations are consistent with
the Government's principles of good regulation: ie there should
be proportionality, accountability, consistency, transparency
and targeting.
4.4 A significant proportion of the BRE's
resources are focused on working with Departments to ensure that
new regulations meet these criteria. As part of the collective
agreement process, new regulations need to be approved by the
Cabinet's ED(PRA) sub-committee. Departments also have incentives
to keep new administrative burdens to a minimum as their administrative
burden targets are set on a net basis.
4.5 The Government's Enterprise Strategy,[29]
published on 12 March 2008, introduced a new approach to regulating
small firms in line with its "think small first" policy.
In the first instance it will examine whether small firms can
be fully exempted from new regulatory requirements or be subject
to simplification of enforcement.
4.6 The Enterprise Strategy also set out
a response to the Better Regulation Task force report "Less
is More", published in 2005 which recommended that Government
should develop a methodology for assessing the total costs of
regulation, and consider introducing full regulatory budgets,
acknowledging in its report that such a move would be difficult
and take time, as well as setting an international precedent.
4.7 Since then, the Government has been
laying the foundations for implementing the Task Force's recommendations.
It has reformed the Impact Assessment process, so that estimates
of costs and benefits are stronger and more transparent, and the
implementation of the administrative burden reduction programme
has provided evidence that the discipline required for regulatory
budgets could work.
4.8 The Government will therefore consult
later this year on the introduction of a practicable system of
regulatory budgets for Departments that would set out the total
cost of new regulation that can be introduced within a given period,
while ensuring it is able to meet its commitments on key cross-Government
policy priorities such as climate change and national security
through cost-effective action.
4.9 BRE is working with departments and
regulators to develop a detailed methodology for a system of regulatory
budgets which can closely control all regulatory costs while at
the same time maintaining the independence of regulators and competition
authorities.
Increasing transparency
4.10 The cumulative costs of complying with
and adapting to new regulations can be very real for business
and the third sector as well as for front line public sector workers
and citizens, even if for each individual piece of regulation
a good case can be made in terms of the benefits obtained, and
policy objectives secured, relative to the costs involved.
4.11 The Government has therefore announced
that:
from April 2008 all new Impact Assessments
will be published in one place on the internet; and
from 2008-09 it will publish annually
a total benefit : cost ratio of new regulation based on final
Impact Assessments.
New tools for departmentsImpact Assessment
4.12 While the uptake of the Regulatory
Impact Assessment (RIA) process was encouraging and increasing
year on year, the quality of the quantification of costs and particularly
benefits remained weak. The Government, therefore, felt that there
was insufficient implementation of its fundamental purposerigorous
cost : benefit analysis of policy-making.
4.13 In July 2006, the Government launched
a public consultation: The Tools to Deliver Better RegulationRevising
the Regulatory Impact Assessment: A Consultation. The objectives
of improving the Impact Assessment process were to:
embed Impact Assessments at the heart
of policy-making;
improve the quality of the economic
and other analysis that underpins policy-making; and
increase the transparency of the
analysis underpinning policy options.
4.14 The new Impact Assessment process has
enhanced the role of economists and other analysts in departments.
The BRE has provided guidance and training for departments on
the new approach. Since May 2007, departments have been using
the new approach for all policy development, and the new approach
will be the foundation for both the published cost-benefit ratio,
and the development of proposals on regulatory budgets.
Guidance and the communication of regulatory changes
4.15 There is strong evidence that the current
poor perception of regulation is significantly influenced by the
poor quality and timeliness of much Government guidance on regulation
and Government communication around changes to regulations:
65% of businesses seek external advice
on regulation.[30]
78% of businesses said that "provision
of guidance that sets out in clear and simple language what your
business has to do to comply with a given regulation" was
very important.[31]
Businesses spend at least £1.4
billion a year on regulation advice.[32]
4.16 The NAO 2007 Survey of Business Perceptions
of Regulation shows 78% of businesses said that "provision
of guidance that sets out in clear and simple language what your
business has to do to comply with a given regulation" was
very important.
4.17 Moreover, small businesses and third
sector bodies want certainty when following guidance on regulation
that if they act as described they can be confident that they
have complied with the law. The lack of certainty felt by small
businesses is contributed to by the variety of types of guidance
in existence, such as statutory codes of practice, non statutory
codes, best practice guidance, minimum standards guidance and
so on.
4.18 The regulatory reform delivery programme
is addressing these concerns through consulting on a Code of Practice
on Good Guidance on Regulations, January 2008.[33]
The Government consults businesses and third sector organisations
affected by regulation or interested in guidance on how to follow
regulations. Non-Departmental Public Bodies and others that work
with regulation are also invited to comment on a draft Code of
Practice which sets out the golden rules of good guidance that
those who have to follow regulationincluding small and
large businesses, and third sector organisationscan expect
guidance to follow. Following this Code of Practice will make
a real difference to the experience of regulation on the ground.
4.19 The government is committed to improving
the quality of guidance on regulation. Good guidance to legislation
is important because:
good guidance is important for compliance.
Regulation is designed to change behaviour and it can only be
successful if those affected understand what is required. Few
businesses or third sector organisations will read the complex
language of a piece of legislation so guidance is often the main
route to compliance for most businesses; and
good guidance reduces the burden
of regulation. If businesses are unsure about how to follow a
regulation they may pay for external advice or over-comply.[34]
Clear, easy to follow guidance reduces these costs.
4.20 Departments are also actively improving
the guidance they are providing in specific policy areas, for
example:
BERR has launched the Employment
Law Guidance Programme to reduce the amount it costs business
to comply with employment law by improving the quality of the
existing guidance including the development of online-tools, making
the channels more consistent and streamlined, and raising awareness
among employers; and
HSE is providing example risk assessments
for small businesses to help them understand what a proportionate
risk assessment looks like.
4.21 To address the concerns business has
raised over the reliance which can be placed on guidance the Government
has asked Sarah Anderson CBE to lead an independent review into
the best way to deliver clarity and certainty in guidance. The
review, which will report in late Autumn 2008, will examine the
types, origins, status and reliability of Government guidance
for small businesses on how to comply with legal requirements.
It will explore the potential to give small businesses greater
certainty that when they have followed guidance that they have
complied with the requirements of the law. It will also examine
the impact of legal disclaimers in Government guidance on small
business confidence when following regulations, and identify ways
of making improvements. The review will cover guidance in all
areas of policy, but will focus initially on employment law.
4.22 The Government is also improving the
communication around regulatory changes. To help business manage
the introduction of new regulations number of major Departments
have, since 2007, been bringing in new regulations only on two
dates a year1 October and 6 April. However, despite "common
commencement dates", until now there has been no single point
from which businesses could get joined-up information on the regulatory
changes affecting them. The Government has launched an internet
and "plain English guide" of all new regulations that
bear on business and is available at www.businesslink.gov.uk/ccds.
It offers a snapshot of regulations expected to come into force
on common commencement dates (CCD).
Reviewing the Government's Code of Practice on Consultation
4.23 Effective consultation is key both
to ensuring that policies are as well-designed as possible to
deliver the desired outcome while keeping costs to a minimum and
to ensuring buy-in to new regulations by ensuring that business
and other who will have to comply feel listened to.
4.24 Nonetheless, 68% of businesses disagree
with the statement "Government consults well with business
before any new regulation, or change to existing regulation, is
introduced".[35]
4.25 The Government is therefore reviewing
its approach to consultation to improve the effectiveness of how
it consults when new policies are being developed.
4.26 The Code of Practice on Consultation
sets out the basic minimum principles for conducting effective
Government consultations. It aims to standardise consultation
practice across Government and to set a benchmark for best practice,
so that all respondents would know what to expect from a national,
public Government consultation.
4.27 It is centred around six key consultation
criteria which are as follows:
Consult widely throughout the process,
allowing a minimum of 12 weeks for written consultation at least
once during the development of the policy.
Be clear about what the proposals
are, who may be affected, what questions are being asked and the
timescale for responses.
Ensure that the consultation is clear,
concise and widely accessible.
Give feedback regarding the responses
received and how the consultation process influenced the policy.
Monitor the Department's effectiveness
at consultation, including through the use of a designated Consultation
Co-ordinator.
Ensure consultation follows better
regulation best practice, including carrying out an Impact Assessment
if appropriate.
The flow of regulation from Europe
4.28 The flow of legislation is heavily
dependent on the flow of legislation originating in the EU, particularly
in the areas such as employment law and environmental legislation.
4.29 The UK is working for a further deepening
of the better regulation programme in Europe. This includes promoting
more consistent use of Impact Assessment by all of the EU's institutions
as they make policy. It also involves making the case for a more
consistent set of transposition deadlines for Directives and coming-into-force
dates for Regulations so that there are fewer dates when legislative
change occurs, consistent with the "Common Commencement Dates"
adopted for national legislation.
Risk and Regulation Advisory Council (RRAC)
4.30 One of the key challenges to managing
the flow of regulation is the prevailing culture in which Ministers
and civil servants are under relentless pressure from sections
of the media and pressure groups to make instant policy responses
to issues involving public risk that are often poorly understood.
The Government has established the Risk and Regulation Advisory
Council: a new advisory group, charged by the Prime Minister with:
working with Ministers and senior
civil servants to develop a better understanding of public risk,
and how best to respond to it, through a series of workshops which
consider both good and poor practice; and
working with external stakeholders
to help foster a more considered approach to public risk and policy
making.
B. Working with departments and regulators
to simplify and modernise existing regulations
Regulatory Simplification
4.31 The key work directed towards this
aim is the Government's Regulatory Simplification Programme.[36]
4.32 A central element of this is the Administrative
Burdens Reduction Programme is based on the recommendations of
the Better Regulation Task Force which examined the approach being
taken to regulatory reform in the Netherlands.
"There is a clear rationale for reducing
the administrative burden that regulations impose on business.
[administrative burden] can hamper business, channelling resources
away from more efficient uses and act as a constraint on innovation,
productivity and growth".[37]
4.33 Government departments in the United
Kingdom measured the administrative cost of their regulations
in 2005 and 2006. The Government's Administrative Burden Measurement
Exercise found the total administrative costs of regulation on
all businesses to be £13.4 billion in 2005.[38]
This was the first time that Government had been able to look
at the landscape of regulation and see which regulations were
the major drivers of business cost.
4.34 In 2006, each Department covered in
the Better Regulation Commission exercise committed to a net target
for reducing its Administrative Burdens over the period 2005-10.
Departments have committed to achieving at least 25% reductions
(the Cabinet Office has committed to achieving 35%).
4.35 By December 2007, departments collectively
had identified simplification programmes delivering 26%[39]
administrative burden reduction, had started to make progress
in delivering the specific simplifications, and reported having
reduced annual administrative burdens by £800 million net
(£1.3 billion gross) towards the target of £3.5 billion.[40]
HMRC and the Financial Services Authority have independent administrative
burden reduction programmes.
4.36 Alongside the administrative burden
reductions, Departments are finding opportunities to simplify
other aspects of regulation for the public, private and third
sectors. In December 2007 they had identified policy cost savings
and reductions in public sector burdens worth a further £3.4
billion a year by 2010.
4.37 The rationale for the Simplification
Programme is strong:
every pound spent by business, or
the public and third sectors on administering regulations is a
pound that is not available for more productive uses such as seeking
new markets and growing the business or delivering front-line
services; also
Focus Groups facilitated by MORI
for the BRE found a high level of buy-in to the rationale for
many regulations, but frustration around the complexity of policy
design, implementation and consistency of enforcement.[41]
4.38 A continuing challenge for the future
is in ensuring that departments' simplification programmes not
only deliver the Government's targets but are relevant to business,
and that the regulatory improvements are effectively communicated
to business so that they can see the benefits and take advantage
of them. The BRE is working with departments to improve the effectiveness
of Government communication with about better regulation.
In-depth studies of specific policy areas
4.39 To support the overall simplification
programme, the BRE works in partnership with departments on in-depth
studies of specific policy areas to identify the scope for improving
regulatory outcomes and achieving further simplification.
4.40 The focus for these studies has been
the key areas of cost identified by the Administrative Burdens
measurement exercise, and policy areas which business and others
have identified as particularly difficult to work with.
4.41 Employment Law and Dispute Resolution:
In 2007 the CBI reported[42]
45% of employers believed the statutory dispute resolution process
in the employment tribunal system was ineffective and 50% reported
a rise in weak and vexatious claims in the 12 months prior to
the report. Fifty-five percent said the tribunal system had become
too adversarial, while a further 19% believe it damaged rather
than helps employee relations.
4.42 The CBI argued that changes to the
employment tribunal system and the statutory dispute resolution
procedures were necessary to restore employer confidence in the
system. The TUC's view was that, whilst elements of the existing
guidance and disciplinary procedures were good and should be maintained,
many aspects of the dispute resolution process could be repealed.
Therefore securing improvements to the employment tribunals and
dispute resolution systems became key objectives for stakeholders.
4.43 As a result the Gibbons Review was
commissioned by Government and published alongside the Budget
in March 2007. It recommended repeal of the 2004 statutory procedures;
their replacement by alternative and non-statutory measures to
encourage early settlement of disputes; and measures to enhance
the effectiveness and consistency of the tribunal services.
4.44 The study of the arrangements for employee
dispute resolution was also the basis for the reforms in the Employment
Bill, currently before Parliament, contains dispute resolution
provisions which will reduce Administrative Burdens on business.
4.45 The statutory dispute resolution procedures
will be replaced by a new non-regulatory system; a package of
measures to encourage early/informal resolution of employment
disputes possibly with increased support for the involvement of
ACAS.
Guidance for business on dispute resolution
was also improved and is now available at www.berr.gov.uk/employment/Resolving_disputes/index.html
4.46 The Consumer Law Review: This
review is being carried out to look at ways to simplify existing
legislation and further embed risk-based approaches to enforcement,
while maintaining the necessary protections. Consumer Law regulations
have over 100 different pieces of legislation, with upwards of
£1bn in administrative costs alone.
4.47 The Review will report in Spring 2008:
examine the scope for simplification
of existing legislation and enhancing flexibility and future-proofing
while maintaining necessary protections;
explore avenues to simplify and rationalise
enforcement, allowing greater targeting of action on higher-risk
sectors or business; and
investigate the options for improving
consumer empowerment and redress including pursuing the joint
Better Regulation Executive/National Consumer Council work on
the efficacy of consumer information as a tool to drive desired
consumer outcomes.
4.48 Health and Safety Review: Many
small employers have limited resources, find it difficult to work
out what broad health and safety duties mean for their workplace
and are unsure of when to take advice and from whom.
4.49 BRE, with support from the Health and
Safety Executive and the Health and Safety Commission have initiated
a review looking into how health and safety systems can be revamped,
how the health and safety regime affects small employers and employers
whose overall risk is relatively low.
4.50 The review will look at how Government
can make it easier for smaller employers and low risk businesses
to follow health and safety laws and prevent their workers getting
ill or injured. It will also examine how to improve public confidence
in the health and safety system.
4.51 The review is due to be completed mid
May 2008. The report will draw on the evidence given by interested
parties[43]
The broad objectives of this review are to:
explore from the perspective of low
risk businesses (especially SMEs) how the health and safety regulatory
regime cumulatively impacts on them including what costs and burdens
it places on them;
investigate how the health and safety
regulatory regime deals with new and emerging risks, especially
health risks; and
assess the relative importance of
key drivers of the main costs/burdens and in the light of this
make recommendations of priority areas for action to minimise
burdens without compromising Health and Safety.
4.52 As part of the review, the BRE is looking
at the roles of:
employees and their representatives;
health and safety/environmental health
inspectors.
4.53 Planning Applications: A faster and
more responsive system The review aims to weed out bureaucratic
hurdles and create a more efficient planning service for the public
and business.
4.54 Reform to the planning system is already
underway to give applicants a greater say in a faster decision
making process for large infrastructure projects. This review
will look at the next challenge of improving the planning application
process from start to finish to make it even more user friendly.
4.55 Local authorities have significantly
improved their speed at handling applications, with 75% meeting
their performance targets, up from 25% in 2001. However, there
are still slow and cumbersome parts of the process that the Government
wants to tackle, from unnecessary paperwork to delays after permission
has been granted.
4.56 Many of the measures in the Planning
White Paper and Planning Bill are also set to address these concerns,
for instance the Major Infrastructure project is intended to reduce
the costs of the planning system and significantly reduce timescale
for major infrastructure approval. Changes to the appeal process
and allowing of minor amendments will reduce delays. In addition
a number of other measures are designed to reduce burdens on local
authority planning Departments and thus increase resources to
speed up the process.
4.57 In the case of planning permission
it is evident that Government also recognises that better regulation
is also an issue for consumers as well as business.[44]
Simplifying the requirements Government imposes on businesses
can, therefore, also provide an ultimate benefit to consumers.
Listening to businesses and public sector workers
4.58 To complement the regular contact that
departments have with business, the third sector and the public-sector
front line, the BRE has an active visits programme of its own.
In addition to regular contact with the major representative bodies
such as Institute of Directors, Confederation of British Industry,
Federation of Small Businesses and British Chambers of Commerce,
BRE staff have made frequent visits over the past twelve months
to individual businesses to discuss the impact of regulation.
4.59 Recent visits by BRE staff cover a
broad range of organisations for example a large cigarette manufacturer
based in the Midlands, a London NHS hospital; a small Council
Environmental Health team in the Midlands; medium sized inner
city girls school and a small leisure industry company based in
the North West.
4.60 In addition, the better regulation
website (www.betterregulation.gov.uk) provides a further channel
for businesses, third sector and public sector workers and the
public to suggest ideas for simplifying regulation. All suggestions
and departmental responses are published. This openness provides
the basis for scrutiny of departments' responses. In January 2008,
there were over 300,000 hits on the suggestions website.
4.61 Ongoing engagement with business remains
critical. In MORI's research for the NAO, 67% of businesses disagreed
with the statement "Government understands business well
enough to regulate".
4.62 The website is monitored and maintained
by the BRE with the Better Regulation Units in each department
tasked with answering questions which relate to their own policy
areas or regulation remit.
4.63 325 ideas were submitted between May
2007 and February 2008, of these DfT, HMRC and Home Office have
received almost half of the ideas submitted.
4.64 This consists of:
63 ideas have been taken forward
(for further consideration, consultation, review etc);
141 have not been able to be taken
forward (policy officials have considered the proposal but it
has not been feasible to progress);
29 have been rejected (ideas are
rejected if they are not simplification ideas or fall outside
of the better regulation arena);
51 are currently being considered
by departments; and
4.65 Examples of ideas taken forward:
Ideas Taken ForwardFood Standards Agency
Streamlining food inspection reports/Scores
on doors transparencyStandardising food inspection
reports and contents of the inspection report to be posted on
the appropriate "scores on doors" page of a local authority
or national web site.
Outcome: Idea could be assessed during
the evaluation of the Score on the Doors pilot that the Food Standards
Agency is currently undertaking to inform their recommendation
on the scheme in 2008.
Online Licensing ApplicationsWhilst
on line licensing applications are accepted by Westminster City
Council, the Licensing Act 2003 says that applications must also
be submitted by paper. Amend the Licensing Act to remove the requirement
for the submission of a duplicate paper application if it is completed
online.
Outcome: Following discussion the proposer
of the simplification idea who is from Westminster Council will
be taking forward a voluntary approach to accepting only online
applications without having to resort to a change in the regulations.
DCMS will provide support to this pilot when it is ready to launch,
but will also consider this change among others to the application
process involved in the Licensing Act 2003.
Driving Regulatory Reform at European Level
4.66 Following the example set by the Government's
own simplification programme, the European Commission, with strong
support from the UK and a small number of other member states,
persuaded the European Council of the case for using the Standard
Cost Model to measure and subsequently reduce red tape stemming
from European legislation. This culminated in the Heads of all
twenty-seven Member States signing up to a target to reduce EU
administrative burdens by 25% by 2012 at the Spring Council meeting
in March 2007.
4.67 New EU draft legislation has been subject
to an Impact Assessment process since 2003. So far, 284 Impact
Assessments have been completed by the European Commission. Examples
of proposals that have been rejected on the basis of cost/benefit
analysis include an EU witness protection law and a new law on
voting rights for share holders.
4.68 In November 2006 European Commission
President Barroso set up an Impact Assessment Board staffed by
senior Commission officials acting in a personal capacity who
scrutinise Impact Assessments and challenge their authors to improve
them when they do not meet with the Commission's own guidelines.
Since its establishment, the Board has scrutinised over 100 Impact
Assessments and provided detailed comments and recommendations
on each. Initial signs are that this system is helping to improve
the quality of Impact Assessments, although the coverage needs
to be more comprehensive.
4.69 This approach of measuring the cost
of Administrative Burdens, settings targets to reduce them, developing
programmes to deliver the target reductions and ensuring successful
delivery is now being taken forward by a number of countries:
8 countries have done full measurement
of Administrative Burdens (Sweden, UK, Netherlands, Norway, Germany,
Denmark, Czech Republic and Austria);
France expects to have completed
its full measurement by the end of March 2008; and
9 other EU member states have done
partial measurements (Belgium, Estonia, France, Italy, Portugal,
Latvia, Poland, Slovenia and Spain).
4.70 The Commission has also introduced
a rolling simplification programme to simplify and modernise existing
European legislation. They have already proposed or adopted 92
simplification measures and will present 45 new measures this
year.
4.71 Examples of Commission simplification
proposals include legislation governing food additives which will
make legislation easier to understand and interpret for food manufacturers
and enforcers, leading to reductions in administrative and compliance
costs. Also proposals to rationalise current standards for organic
production of agricultural products which will minimise impacts
on those selling pre-packaged produce at wholesale and retail
level, reduce impact of private organic standards on access to
the market and streamline procedures for importing from third
countries.
4.72 In 2005, the Chancellor of the Exchequer
asked Lord Davidson QC to work with departments to conduct a full
audit of all areas where gold plating of European regulation has
led to additional burdens and to address and simplify these areas,
where possible. Lord Davidson was also requested to produce rigorous
enforcement guidelines prohibiting future inappropriate gold plating
of European legislation.
4.73 In November 2006 CBI, Lord Davidson
reported to the Government with conclusions to the review on Implementation
of EU legislation and also put forward a series of recommendations
to address specific areas where over-implementation had been identified.
4.74 The review found no evidence of systematic
or extensive over implementation of EU sourced legislation. In
2006 the Government accepted the review's recommendations on ten
areas of legislation, including consumer sales, financial services,
food hygiene training, transport and waste, where simplification
could be undertaken.
4.75 The 2007 Simplification Plans show
how departments are delivering the recommendations. Further generic
recommendations to spread best practice in the implementation
of European legislation across departments and regulators were
incorporated to guidance for officials in September 2007.
Legislative Reform Orders
4.76 The 2006 Legislative and Regulatory
Reform Act provided a new route of Legislative Reform Orders (LRO)
to fast-track measures to reduce regulatory burdens through Parliament.
4.77 Legislative Reform Orders are just
one way of delivering simplification. They are relevant when burdens
are imposed by primary legislation and when there is no other
convenient Bill in which to enact the necessary changes. As the
many examples in Simplification Plans demonstrate simplifications
can be achieved through other means, for example by changing secondary
legislation, making straightforward administrative changes (eg
by reducing the numbers of forms required), or by producing better
guidance to explain legislative requirements. So while Legislative
Reform Orders are an important tool for better regulation, their
level of use is not a meaningful indicator of the level of simplification
being achieved.
4.78 The first Legislative Reform Order
has been passed into law and there are a further 29 which have
been considered or are progressing.
C. Working with regulators (including local
authorities) and departments to change attitudes and approaches
to regulation to become more risk-based
4.79 The Better Regulation Task Force[45]
concluded that the approach of measuring administrative burdens
should also be applied by regulatory bodies and in the public
sector, where there is considerable scope to reduce burdens.
4.80 The enforcement and inspection of regulations
affects businesses at least as much as the policy of the regulation
itself. Efficient enforcement can support compliance across the
whole range of businesses, delivering targeted, effective interventions
without unreasonable administrative cost to business. Inflexible
or inefficient enforcement increases administrative burdens needlessly,
and thereby reduces the benefits that regulations can bring.[46]
4.81 The Government is also working with
departments and regulators (including Local Authorities) to improve
the working of the regulatory system as a whole.
4.82 This work is based on a review led
by Philip Hampton which found much that was good in the regulatory
system and some excellent, innovative practice. However, he found
the system as a whole was uncoordinated and good practice was
not uniform. Overlaps in regulators' activities meant there were
too many forms, too many duplicate information requests and too
many multiple inspections on business. Moreover, many inspection
regimes were not risk-based, so unnecessary inspections were often
carried out on low-risk premises, while higher-risk organisations,
where inspection would bring more value were often not inspected.
4.83 The Review proposed entrenching the
principle of risk assessment throughout the regulatory system,
so that the burden of enforcement fell most on highest-risk businesses
and least on those with the best records of compliance.
4.84 The Review estimated, based on regulators'
past experience, that comprehensive risk assessment in a streamlined
structure could:
reduce the need for inspections by
up to a third, which means around one million fewer inspections;
reduce the number of forms regulators
send out by perhaps 25%; and
set out principles of effective inspection
and enforcement.
4.85 Hampton's report established a principles
of effective inspection and enforcement:
regulators, and the regulatory system
as a whole, should use comprehensive risk assessment to concentrate
resources on the areas that need them most;
regulators should be accountable
for the efficiency and effectiveness of their activities, while
remaining independent in the decisions they take;
all regulations should be written
so that they are easily understood, easily implemented, and easily
enforced, and all interested parties should be consulted when
they are being drafted;
no inspection should take place without
a reason;
businesses should not have to give
unnecessary information, nor give the same piece of information
twice;
the few businesses that persistently
break regulations should be identified quickly, and face proportionate
and meaningful sanctions;
regulators should provide authoritative,
accessible advice easily and cheaply;
when new policies are being developed,
explicit consideration should be given to how they can be enforced
using existing systems and data to minimise the administrative
burden imposed;
regulators should be of the right
size and scope, and no new regulator should be created where an
existing one can do the work; and
regulators should recognise that
a key element of their activity will be to allow, or even encourage,
economic progress and only to intervene when there is a clear
case for protection.
Mergers of national regulators and inspectorates
covering both private public sectors
4.86 The Hampton Review in 2005, identified
the need to merge regulators and inspectorates to ensure inspections
do not impose overlapping administrative burdens and costs relating
to overlapping inspections/enforcement.
4.87 21 of the 63 regulators covered by
the report have merged, with an additional seven mergers in the
pipeline. Eleven regulators have disbanded or have lost their
inspection functions. This represents a significant simplification
in the central regulatory structure.
4.88 Examples of mergers of national regulators
include the Wine Standards Board has merged with the Food Standards
Agency; the Health and Safety Commission and Health and Safety
Executive have merged using the Legislative Reform Order mechanism
and the Egg Marketing Inspectorate has merged with the Animal
Health.
Regulators Compliance Code
4.89 The Regulators Compliance Code[47]
is designed to support culture change among national and local
regulators by promoting a risk-based approach to regulatory inspection
and enforcement, encouraging the use of flexible enforcement tools
and incentives to improve regulatory compliance, and facilitating
joined-up and consistent approaches to enforcement activities.
4.90 Business reports that regulatory inspections
are a burden: 61% of businesses say it is a burden preparing for
inspections.[48]
4.91 Section 22 of the Legislative and Regulatory
Reform Act 2006 (LRRA) requires regulators to have regard to the
Code in determining the general policies and principles by which
they carry out their regulatory functions. The Code covers the
following areas:
Supporting economic progress.
Information and advice.
Compliance and enforcement actions.
EXTRACT FROM
COMPLIANCE CODE
Risk Assessment
Hampton Principle: Regulators, and the regulatory
system as a whole, should use comprehensive risk assessment to
concentrate resources in the areas that need them most.
Risk assessment involves the identification
and measurement of capacity to harm and, if such capacity exists,
an evaluation of the likelihood of the occurrence of the harm.
By basing their regulatory work on an assessment of the risks
to regulatory outcomes, regulators and able to target their resources
where they will be most effective and where risk is highest. As
such, in order to carry out comprehensive and effective risk assessment,
regulators must have regard to the following provisions when determining
general policies or principles or when setting standards or giving
general guidance about the exercise of regulatory functions.
4.1 Regulators should ensure that the allocation
of their regulatory efforts and resources is targeted where they
would be most effective by assessing the risks to their regulatory
outcomes. They should also ensure that risk assessment precedes
and informs all aspects of their approaches to regulatory activity,
including:
data collection and other information
requirements;
advice and support programmes; and
enforcement and sanctions.
4.2 Risk assessment should be based on all
available relevant and good-quality data8. It should include explicit
consideration of the combined effect of:
the potential impact of non-compliance
on regulatory outcomes; and
the likelihood of non-compliance.
4.3 In evaluating the likelihood of non-compliance,
regulators should give consideration to all relevant factors,
including:
Past compliance records and potential
future risks;
The existence of good systems for
managing risks, in particular within regulated entities or sites;
Evidence of recognised external accreditation;
and
Management competence and willingness
to comply.
4.4 Regulators should consult and involve
regulated entities and other interested parties in designing their
risk methodologies, and publish details of their methodologies.
4.5 Regulators should regularly review and,
where appropriate, improve their risk methodologies. In doing
so, they should take into account feedback and other information
from regulated entities and other interested parties.
8 An example of
risk methodology, which the Hampton review recommended as "best
practice" (see Hampton report, at page 32) is the Environmental
ProtectionOperator & Pollution Risk Appraisal scheme
(EP OPRA).
4.92 The Code was approved by Parliament
on 27 November 2007 and will come into force on 6 April 2008.
4.93 The Government is confident that the
Code will help deliver a risk-based approach to the exercise of
regulatory activity. High-performing, compliant businesses will
bear less of a burden, with regulators focusing their efforts
on rogue and higher-risk businesses.
4.94 In addition, the Regulatory Enforcement
Sanctions Bill requires regulators to have regard to the Regulators'
Compliance Code, (which comes into force on 6th April 2008), when
determining any general policy or principles for gaining compliance
with regulations and in setting standards or giving guidance in
respect of this (including to other regulators).
4.95 Regulators should keep under review
their regulatory activities and interventions with a view to considering
the extent to which it would be appropriate to remove or reduce
the regulatory burdens they impose.
4.96 Regulators that are subject to the
new duty would be required to:
review the burdens they impose in
fulfilling their obligations, identifying any that are unnecessary;
act to remove any burdens which they
have identified as unnecessary, subject to it being proportionate
and practicable to do so; and
report on action taken.
Hampton Reviews of national regulators
4.97 The Government is interested in real
change being felt by businesses. And so, Hampton and the BRE reviewed
whether regulators have reformed in such a way that business and
others they regulate genuinely feel that the Hampton principles
are being delivered.
4.98 In collaboration with the National
Audit Office (NAO), the BRE began in August 2007 a process of
external review of regulatory performance. This assessment process,
known as Hampton Implementation Reviews, is similar in process
to the Cabinet Office Capability Reviews of Government departments.
Regulators are reviewed against a framework developed by the BRE
and the National Audit Office (NAO) that assesses how they are
performing in line with Hampton principles and the Macrory recommendations
on enforcement.
4.99 So far, the reviews have covered the
five major national regulatorsthe Health and Safety Executive,
Food Standards Agency, Financial Services Authority, Environment
Agency and the Office of Fair Trading. Regulators. The BRE will
undertake further reviews of national regulators, using a similar
process, from April 2008.
4.100 The reports of the reviews of the
five major regulators were published on 20 March.[49]
They demonstrate where the Hampton principles are being followed
and where there is room for improvement.
Reforming penalty regimesRegulatory Enforcement
and Sanctions Bill
4.101 The Hampton Review recommended that
the BRE should undertake a comprehensive review of regulators'
penalty regimes. The review, led by Prof Richard Macrory at UCL
recommended that regulators should have access to a flexible set
of modern, fit for purpose sanctionsincluding administrative
penalties to complement existing criminal sanctions. The review
concludes that regulators should only gain these new penalties
once they are compliant with the principles in the Hampton review.
4.102 BRE is now working to implement the
core areas of the Macrory recommendations and the establishment
of a Local Better Regulation Office (LBRO) as part of the Regulatory
Enforcement and Sanctions (RES) Bill currently before Parliament.
Subject to parliamentary approval, the Bill will:
put Local Better Regulation Office
on statutory footing with functions such as issuing guidance and
supporting best practice by local authorities;
establish "Primary Authority
Principle";
modernise the penalties regimes available
to regulators (implementing the conclusions of the Macrory Review);
and
introduce power to allow Ministers
to impose a duty on regulators who need further legislative support
to meet the simplification requirements of Government's better
regulation agenda.
4.103 The RES Bill provides regulators with
a varied set of sanctions to deal with persistently non-compliant
businesses as an alternative to criminal prosecution (Macrory
powers). This will reduce costs to both regulators and businesses.
Giving Local Authority regulatory services greater
clarity
4.104 Local authorities (LAs) are responsible
for enforcing a huge range of legislation. Local authority regulatory
services (environmental health, trading standards and licensing
services) enforce over 60 policy areas from Sunday trading to
air quality. The Hampton review estimates that over 80% of inspections
are carried out by local authorities (rather than national regulators).
4.105 Local authorities have called for
central Government to be clear about its enforcement priorities.
A lack of effective central and local co-ordination was identified
by the Hampton review as hindering the effectiveness of local
enforcement. Local authorities have often been unclear about what
central Government wants them to focus on in regulatory servicesand
sometimes, conflicting messages from different central government
agencies can lead to confusion. This affects the business community
as wellas it leads to inconsistencies in enforcement between
authorities.
4.106 The Government therefore asked Peter
Rogers (until recently, Chief Executive of Westminster City Council)
to lead to a review to formulate a small number of national enforcement
priorities for local authority regulatory services.
4.107 The Rogers Review gathered evidence
from Government departments, local authorities, businesses and
citizens to establish a set of national enforcement priorities
for all local authorities' regulatory functions.
4.108 He also encouraged local authorities
to similarly consider local priorities. This means that for the
first time local authorities have clarity about what central Government's
main priorities are for local regulatory services, thus local
authorities are better able to focus resources and plan their
intervention strategies.
4.109 The key national priorities recommended
by the Rogers Review focus on areas where the risks are greatest:
1. Air qualitywhere health impacts
are estimated as up to £20bn annually;
2. Alcohol licensing1 in 5 violent
incidents take place around pubs;
3. Food hygieneover 500,000 cases
of food-borne diseases annually;
4. Improving health in the workplacecosts
to employers of ill health in local authority enforced sectors
of the economy are estimated as up to £600 million; and
5. Fair tradingwhere it is estimated
that scams alone can cost up to £3 billion.
4.110 The Review also recommended an additional,
time-limited enforcement priority of "animal and public health,
animal movements and identification".
4.111 The national enforcement priorities
are now reflected in the new performance framework for local authoritiesgiving
greater prominence to the work of regulatory services departments
than before. A number of local authorities are already using the
new national priorities as an integral part of their business
planning.
Raising the quality and consistency of local enforcement
4.112 The Hampton review sets a challenging
vision for reform in local authorities. While a number of local
authority regulatory services are already living the Hampton principles,
best practice from these authorities is not always disseminated
effectively. LACoRs (Local Authority Coordinators of Regulatory
Services), and the professional institutes play an important role
in this regard.
4.113 However, the Government believes that
there is more that can be done to support improvements in the
quality of local regulatory services. The Government's vision
is that regulatory services should be at the heart of an authority's
strategy to deliver economic and social goals.
4.114 The Local Better Regulation Office
(LBRO) was set up in shadow form from 1 September 2007, to improve
the quality of local regulatory services. Subject to Parliamentary
approval, LBRO will have powers to issue statutory guidance for
local authorities. It will also be responsible for refreshing
the national enforcement priorities mentioned above.
4.115 A particular issue which arises in
local enforcement is around consistency. Businesses often operate
nationally with operations crossing local authority boundaries.
They often need advice from local authority regulatory services
on what the law requires, and whether a particular investment
decision would be compliant with the law. At the moment there
are no arrangements that satisfactorily give business the certainty
it needs. The Government believes that this needs to be addressed
and so the Regulatory Enforcement and Sanctions Bill sets up a
new statutory primary authority scheme. Subject to parliamentary
approval, the LBRO will be responsible for this new scheme.
4.116 In summary, LBRO will:
Improve the co-ordination and consistency
of regulatory functions and enforcement through the Primary Authority
Principle and providing an arbitration service in the event of
disagreement between enforcing and Primary authorities.
Issue guidance to local authorities
in respect of regulatory services and in particular on how to
run Primary Authority scheme.
Review and revise the Rogers Review
list of national priorities for local authority regulatory services.
Provide advice to Ministers on key
issues affecting local authority enforcement and resulting burdens.
Encourage best practice and innovative
approaches to the provision of local authority regulatory services,
including through the use of programme budget.
4.117 LBRO are currently planning to use
the lessons learned from the Retail Enforcement Pilot to drive
real culture change where it's needed and improve the quality
and effectiveness of LA inspection and enforcement regimes.
4.118 This will reduce costs to both regulators
and businesses.
Retail Enforcement Pilot (REP)
4.119 One of the key sectors that local
authority regulatory services impact on is the retail sector.
However, the structure of local authority regulatory services
is such that a retail premises can find that it is regulated separately
by trading standards, environmental health and licensing departments
and also by the local Fire Authority.
4.120 The Retail Enforcement Pilot set up
in March 2005 tests a new, joined up approach to enforcement in
the retail sector. The basic principle of the pilot is for different
inspection agencies to agree which will act as lead inspector
for a particular premise, based on risk assessment. The lead agency
carries out their normal routine inspection of that business and
also collects key information on behalf of other relevant agencies,
who agree not to undertake routine visits to the business unless
the information fed back to them indicates a genuine cause for
concern. For example, a Trading Standards officer may ask questions
about the temperature at which food is stored or the accessibility
of fire exits.
4.121 The pilot was initially rolled out
in Bexley and Warwickshire, where it led to a reduction in inspection
numbers. By the summer, it will be operational in around 30 authorities.
There are already valuable lessons emerging which the new LBRO
can take forward.
Better Regulation Indicator in the new set of national
performance indicators for local government
4.122 Measuring progress in local authorities
is essential. The Government has committed to having 198 national
indicators for local authorities. This indicator set reflects
the new national enforcement prioritiesand also includes
a new National Indicator on the satisfaction of businesses with
local authority regulatory services. Under the new National Indicator,
local authorities will survey businesses who have dealt with local
authority regulatory services: trading standards, environmental
health and licensing. They will ask businesses whether they feel
they have been treated fairly and whether the contact was helpful.
4.123 Each local authority will report annually
on the survey returns as part of the new local performance framework.
This reporting will help inform decisions on the appropriate action
required to improve local authority performance on regulatory
services and business satisfaction.
Detail in individual Departments Simplification Plans,
Dec 2007.
(available at http://www.berr.gov.uk/files/file45019.pdf).
5. PUBLIC SECTOR
5.1 In the public sector internal control
processes play an important role in accountability for the use
of public funds and in delivering improvements to services. These
controls can include, amongst other things, regulation, guidance,
inspection, targets and budget controls.
5.2 Public sector front-line workers often
complain that time spent on unnecessary bureaucracy gets in the
way of delivery outcomes. The Government's aim is to improve the
situation and build on existing good practice.
5.3 Government targets and performance management
systems have been important in delivering change which benefits
the public. For example, targets to reduce waiting times have
saved people time which would otherwise have been spent waiting
in pain and uncertainty for surgery. Rigorous Ofsted inspections
have highlighted schools doing well and those that need to raise
their game.
5.4 So targets and inspections have a critical
role to play. But as we move into the next phase of public sector
reform, it makes sense to look to see what unnecessary bureaucracy
there might be and what more we can do to empower the front-line
to respond to the wishes of the public. This is already happening.
For example, the Department for Communities and Local Government
has pledged to cut 800 Local Government targets to 200. Ofsted
has reduced the length of its inspections from one week to two
days. The Department of Health has already reduced the amount
of data it collects by 28% and set up a dedicated team to review
all information requirements. However, this progress is not widely
recognised and is not always felt on the ground.
5.5 The strategy document "Cutting
Bureaucracy for our Public Services" aims to address complaints
from front-line workers that too much of their time is spent on
unnecessary paperwork and bureaucracy as well as ensure that regulation
and inspection embodies better regulation principles.
5.6 The key elements of the strategy, published
in June 2007 are:
A 30% net reduction in the number
of data requests made by central Government to the front-line.
A voice for front-line workers.
A reduction in the stock of unnecessary
bureaucracy in the areas the front-line cares most about.
Success that is understood and mirrored
through the delivery chain.
5.7 This programme will provide a step change
in the approach to better regulation in the public services. Freeing
up time that is currently spent on unnecessary bureaucracy will
mean more time for NHS nurses and doctors to care for patients,
police officers to deal with crime, local authorities to improve
local communities and teachers to teach children.
5.8 The front-line complains that it has
to spend too long collecting information to provide to central
Government. To tackle this issue each department has compiled
a list of the data it requires public sector organisations to
provide. This means that for the first time central Government
has a complete picture of the information it is asking the front-line
to provide, better enabling the control and improvement of information
requests. In particular these lists of data requirements can be
reviewed for continuing relevance, and for any overlaps that could
be eliminated. The list of each department's data requirements
has been published along with its 2007 Simplification Plan. Front-line
workers can review these lists and put forward their own ideas
for simplifying the data requests that they receive. After verification
by external stakeholder groups a total of around 900 data burdens
have been identified and departments are now seeking to reduce
this number by 30.
5.9 Departments have also been working with
front-line bodies to identify those bureaucratic burdens that
are felt to be most irritating. These may not be the most costly
measures, but they are those that the front-line has indicated
should be addressed to remove or rectify unnecessary burdens.
The major irritants that have been identified are listed in departmental
Simplification Plans, along with early proposals for how they
will be mitigated. The Better Regulation website has been updated
so that any front-line worker can put forward suggestions for
simplifying bureaucracy directly to the department responsible.
5.10 The Government is also introducing
legislation to reduce the number of public service inspectorates,
and is committed to reducing inspectorate expenditure by around
a third during 2008 as overall inspectorate activity is reformed,
rationalised and ultimately reduced. Departments have worked together
to develop a clear responsibility on the inspectorates to consult
each other, and manage the cumulative burden of multiple inspections
which fall upon bodies in their areas of responsibility. This
responsibility is set out in the gatekeeper provisions which are
being included in the new legislation establishing establishing
inspectorates.
Flanagan Review of Policing
5.11 Over the last decade, policing in England
and Wales has seen major increases in both funding and performance.
In 10 years central spending on policing has risen by nearly £5
billion (an increase of 39% in real terms). This extra funding
has resulted in a 25% growth in the overall police workforce and
a 10% increase in the number of police officers, which now stands
around 140, 000.[50]
5.12 Sir Ronnie Flanagan reports that it
is vital, given the range of tasks the police service now carries
out, that opportunities are found to reduce the needless drain
of unnecessary bureaucracy and free up space so that officers
and staff can concentrate on the important parts of their jobs.
The Flanagan Review report addresses both the systemic drivers
of unnecessary bureaucracy and brings forward concrete recommendations
to reduce it in ways equivalent to more than 3,000 additional
officers.[51]
5.13 The BRE has actively supported the
Flanagan Review including providing full-time policy official
support to Sir Ronnie Flanagan's review team. The Flanagan Review
of Policing report explicitly acknowledges the role of the BRE
in conducting the review.
the report calls for a new model
of policing, in which police forces focus their resources in sharply
targeted ways likely to have the biggest impact;
it also calls for better management
of resources, less paperwork, and greater use of technology to
free up valuable police time;
recommends the Police should also
work to reduce unnecessary bureaucracy, while strengthening relationships
with other agencies;
the report estimates that 5 million
to 7 million hours of police time each year could be re-focused
on the front lines if the recommended changes are made; and
the BRE continues to actively support
the implementation of the review's recommendations.
6. THE RELATIONSHIP
BETWEEN BRE AND
OTHER AREAS
OF GOVERNMENT
IN IMPLEMENTING
REGULATORY REFORM
6.1 Regulatory Reform is a cross-Government
goal. The BRE leads the overall strategy and provides support
and challenge to departments. Individual departments are responsible
for delivering individual parts of the programme and for the quality
of their own regulation and how it is enforced.
6.2 The BRE engages and influences the government
departments and regulators it works with at multiple levels.
6.3 Each government department has a Better
Regulation Minister. Better Regulation Ministers champion the
regulatory reform agenda within their own departments and meet
from time-to-time collectively with the BERR Ministers to discuss
strategic issues relating to regulatory reform.
6.4 Each Department also has a civil servant
Board Level Champion who acts as a champion for the agenda at
the most senior level within each Department. The BRE works closely
with Board Level Champions to help them lead and drive through
the implementation of better regulation in their departments.
Board Level Champions and BRE Senior Management meet quarterly
for collaborative discussions on the better regulation agenda
focused on ensuring an effective cross-departmental strategic
approach. There are also frequent informal discussions between
Board Level Champions to share good practice and identify opportunities
to develop the agenda further.
6.5 At working level there are teams within
each department who typically provide an internal challenge function
on Impact Assessment, co-ordinate Simplification Plans and provide
training or other analytical support functions. These are referred
to as Better Regulation Units (BRUs). To facilitate dissemination
of best practice BRE arranges formal cross-department BRU meetings
on a quarterly basis.
6.6 The BRE has a system of dedicated account
managers to maintain close liaison with each department. These
relationships are key to BRE understanding and influencing departmental
activity on better regulation. This close working relationship
allows BRE to pro-actively challenge, support and encourage departments.
As well as looking at how departments are reducing burdens on
business, the public and third sectors, account managers now seek
out opportunities to embed better regulation within departments,
building on departmental priorities. For example, making links
between reducing burdens on business and cross departmental public
service agreement targets on employment. And in relation to the
health agenda, to help to achieve outcomes desired by patients,
practitioners and the public.
6.7 BRE account managers maintain regular
contacts and ensure collaboration. They work to encourage a coherent
strategy for implementing better regulation in each department
whilst challenging and support government departments to achieve
outcomes in a number of areas set out below.
Policy development
6.8 BRE account managers work with BRUs
and policy officials in departments to support their work on policy
development, providing input on the application of better regulation
principles to new policies and supporting the use of Impact Assessments
to analyse the regulatory costs and benefits to business, the
public sector and third sector. The BRE mainly focuses on those
policies with the most significant regulatory costs. All new regulations
with significant costs to business need the approval of the Cabinet's
ED(PRA) Committee.
6.9 In line with the principle that departments
are responsible for the quality of the own regulation, the BRE
has moved away from routinely scrutinising all Impact Assessments,
and BRUs have correspondingly gained experience and expertise.
There has been a marked increase in access to analytical resource
in BRUs, for example DWP now has dedicated analytical support
to provide advice on admin costs.
6.10 This has enabled BRE to have a greater
involvement with early policy formulation in key areas [such as
planning reform or consumer law]. An indication of a department
which has successfully embedded Better Regulation principles into
its policy making are that it only regulates where necessary;
effective measures are being taken to reduce stock of policy burden
and radical methods of reduction are being investigated.
6.11 BRE account managers also challenge
on whether a department seeks to influence Europe to regulate
more effectively.
Simplification
6.12 BRE account managers and BRUs work
closely together on department's Simplification Plans. The BRE
role is focused on monitoring the delivery of the commitments
made by departmentsBRE account managers give regular feedback
to departments on their progress to achieving their Administrative
Burden reduction target.
Joint working on in-depth reviews
6.13 As explained in Section 4, the BRE
actively supports in-depth reviews of key areas of regulation,
providing expertise to review teams. Examples have included:
Employment law and dispute resolutionwith
DTI (now BERR).
Planning Reviewwith CLG.
Flanagan Review of Policingwith
Home Office.
Stakeholder Perceptions
6.14 Account managers check on how the departments'
stakeholders perceive its regulatory performance. Account managers
verify progress by meeting with departments' stakeholders to ascertain
their perceptions of the department's progress towards embodying
better regulation principles departments receive regular feedback
on the BRE's view on how stakeholders are involved and account
managers make suggestions for possible improvements. Where best
practice is encountered, this is disseminated. For example, most
departments have now established stakeholder groups that look
at better regulation issues.
Culture
6.15 Embedding better regulation into a
departments culture is a key to the BRE approach. The aim being
to increase the capability of the department to operate at "business
as usual" level with embedded better regulation principles.
Departments receive regular feedback on the BRE's findings and
suggestions on possible improvements. Where best practice is encountered,
this is shared.
6.16 A typical dialogue between a BRE account
manager and their department on the issue of culture would include:
do policies reflect better regulation principles? Is there a high
level of understanding of the better regulation agenda within
the department and at all levels? Do the department's key players
/ regulators have clear responsibilities for delivering Better
Regulation? Are the right skills and capacity in place? Is the
level of resource dedicated to the better regulation agenda appropriate?
6.17 Account managers also support and challenge
Departments in their implementation of the Hampton agenda on inspection
and enforcement and in the burdens they place on the public sector
front-line.
6.18 BRE has developed guidance and tools
for departmentsplease see Annex B.
Working across Departmental boundaries
6.19 The BRE is also well-placed to work
across departmental boundaries, identifying and helping to resolve
conflicts between regulations from different government departments.
[Can we give a specific example]. This meets a particular business
concernaccording to the 2007 NAO/MORI survey, only 25%
of businesses feel that different parts of Government take a joined-up
approach to regulation.
7. MEASUREMENT
AND REPORTING
OF PERFORMANCE
AND OUTCOMES
Public Sector Agreement (PSA) and Departmental Strategic
Objective (DSO) reporting
7.1 BRE's corporate performance is measured
through two Public Sector Agreement (PSA) indicators and one of
BERR's seven Departmental Strategic Objectives (DSOs), as described
below:
PSA 6 Indicator 5: Total benefit/cost ratio
of new regulations.
An annual benefit/cost indicator is to be published
from 2008-09 based on published final Impact Assessments (IAs)
from government departments in the spending review period.
PSA 6 Indicator 6: Percentage by which administrative
burdens are reduced across government (excl HMRC)
This indicator covers delivery commitments to
reduce Administrative Burdens for the private and third sectors.
By 2010, against the May 2005 baseline (£13.4 billion)[52]
at least 25% net reduction is to be delivered for 19 departments
covered by the Administrative Burdens measurement exercise (35%
target for Cabinet Office).
Department Strategic Objectives for the BRE
The current performance management framework
across Government requires departments to develop a set of Departmental
Strategic Objectives (DSOs) which set out a picture of what the
department as a whole aims to achieve over the next three years
and provides an overarching framework for performance management
and progress reporting. The DSOs are no less important than PSAs
and, like the PSAs, the DSOs will last for the period of the CSR
until 2011.
BRE's performance is measured using BERR's DSO
2, this is described in the table below:
DSO | Performance Indicator
|
DSO 2: Ensure that all government Departments and agencies deliver better regulation for the private, public and third sectors
| Administrative Burdens reduction across 19 government departments, consisting of a 25% net reduction for the majority of departments by 2010. Includes BERR's own target to deliver 25% reduction in measured Administrative Burdens by 2010
Proportion of businesses (and voluntary sector organisations) who believe that "most regulation is fair and proportionate" in five policy areasemployment law, tax law, health and safety, planning law and company law
|
| Flow of regulation: benefit/cost ratio of regulations coming forward over time
|
| Performance of local authority regulatory services as measured by the national indicator
|
| Overall UK performance in the World Bank "Doing business" survey and OECD surveys of the policy environment
|
| Proportion of bureaucracy which the public sector front line believes to be unnecessary. Includes 30% cross-government target to reduce burdens on front line public sector staff
|
| Reduction in data stream requirements from central government to the public sector front line by 2010
|
Improving performance through transparency of reporting
| |
7.2 The Government is committed to assuring that the
methodologies in place to assess Administrative Burden reductions
and to underpin Impact Assessments are robust. External stakeholders,
including business organisations such as the CBI, the Government
Economic Service and Whitehall departments and regulators were
involved in developing the methodologies.
7.3 The Government places high importance on the transparency
of reporting costs and benefits of regulation, enabling public
third-party scrutiny. This is a strong incentive for departments
to make sure their reported numbers are robust.
7.4 Administrative Burden reductions are reported in
departments Simplification Plans, published in December each year.
Impact Assessments are made public and available for inspection
on websites. Ministers are required to sign-off reported Administrative
Burden reductions and Impact Assessments before they are put into
the public domain. The BRE guidance provided on Ministerial sign-off
is that internal departmental processes should include a requirement
that all Impact Assessments include a contribution from the Chief
Economist (Analyst) that summarises the key findings of the Impact
Assessment and confirms their validity. This provides a high level
of assurance.
Capturing the outcomes of the Better Regulation Programme
7.5 BRE works with departments and regulators to assess
the ongoing outputs and outcomes of the Better Regulation Programme.
Positive examples of improvements to the regulatory environment
are captured in case studiesto demonstrate that the programme
is having a positive impact and to help disseminate best practice
across the programme.
External scrutiny
7.6 The Better Regulation Programme is subject to regular
independent scrutiny. In particular the NAO reports annually on
"Delivering High Quality Impact Assessments", and on
"The Delivery of the Administrative Burdens Reduction Programme".
The Government welcomes the NAO reviews of its work and incorporates
NAO recommendations when planning next steps for the Better Regulation
Programme. For example, BRE's work, over the last twelve months,
to improve the quality and consistency of Impact Assessments was
underpinned by recommendations made in the NAO's 2006-07 report
on the Evaluation of Regulatory Impact Assessment.
8. RESULTS OF
THE CURRENT
APPROACH TO
REGULATORY REFORM
8.1 Much of the Government's work on the better regulation
agenda has been involved with reviewing, consulting on and strengthening
processes to build the foundations for improved regulation across
government and regulators, as outlined in chapter 4. The process
improvements and tools which have been delivered are leading to
tangible, real world change in the UK's regulatory environment.
8.2 The Government's approach to Better Regulation, led
by the Better Regulation Executive since 2005, has resulted in
the UK's regulatory environment now being recognised as amongst
the best in the world. The 2008 World Bank Doing Business report
puts the UK 6th out of 178 economies in terms of "ease of
doing business". The UK is ranked second amongst G7 members
and second among European Member States.[53]
8.3 In addition the proportion of English SMEs citing
regulation as the main barrier to success has fallen in recent
yearsfrom 21% in 2002 to 14% in 2006[54]
and the OECD says the UK has the lowest barriers to entrepreneurship
of all OECD countries.[55]
8.4 In December 2007, 19 government departments published
Simplification Plans,[56]
setting out measures to reduce Administrative Burdens, policy
savings and regulatory irritants (over 280 measures have already
been delivered). Across Government, net savings in annual Administrative
Burdens of £3.5 billion by 2010 have been identified (this
is 26% of the May 2005 baseline of £13.4 billion).[57]
Of this, over £800 million of net annual administrative burden
savings have already been delivered.
8.5 More detail on the Simplification programme can be
found in "Delivering Simplification Plans: A Summary"
(December 2007)[58] and
in individual Departments' plans.
8.6 The real test of the Government's better regulation
agenda is the extent to which it delivers meaningful changes that
are noticed by businesses, the voluntary sector and front line
public sector workers. Examples of recent practical delivery of
regulatory improvements include:
8.7 Measures Delivering A Modern Approach To Health And
Safety
Sensible Risk Management- Risk Assessments (HSE)
Health and safety has been identified one of the largest
administrative burden for UK businesses.
Small businesses often find it difficult to work out what
health and safety rules mean for their workplace, and are unsure
where to go for advice on developing a health and safety plan.
Employers can now find all of the guidance they need on how
to complete a health and safety risk assessment in one place at
www.hse.gov.uk/risk. The site tells them what the key risks are
for their industry, what practical measures they need to have
in place, and has examples on what "good enough" looks
like for their industry.
Convenience stores, estate agencies, dry cleaners, and hairdressing
salons are among the 18 sector-specific businesses that can now
benefit from access to example risk assessments published on the
Health and Safety Executive (HSE) website. Lower risk businesses
should need to spend significantly less time completing their
assessments as a result. Savings of £29 million have been
achieved annually as part of an expected total £200 million
savings by 2010.
"HSE's example risk assessment for office cleaning is
clear, simple to follow and focused on significant risks. It also
shows that it needn't cost a lot of time and money to do a good
risk assessment and to act on its findings".
Service industry manager, West Midlands
"I have taken a look at the [example] risk assessment and
... I am happy that I did. Before reading [it] I was unsure of
what exactly needs to be covered in the risk assessment for my
business and was finding it difficult to get to grips with it.
However, since reading it I have now completed my risk assessment
and it took a fraction of the time I had spent on researching
the topic".
Convenience store owner, Birmingham, September 2007
Reducing the number of forms (HSE)
Many of HSE's forms which were outdated and unnecessary,
and duplicated information already gathered from businesses have
been removed: 54% in all. Abolishing these has reduced the potential
for confusion and error as well as £250,000 annual administrative
savings to date. By 2009, a further nine forms will have been
removed under the Factories Act and Office, Shops and Railway
Premises Acttaking total annual savings to around £20
million.
Making it easier to report workplace incidents (RIDDOR)
Businesses can now report accidents and incidents by phone
through the Incident Contact Centre. For the average business,
this has reduced the time taken to record and report incidents
from around 2.5 hours to 30 minutes. £16.5million annual
savings delivered.
8.8 Measures Making Life Easier For Employers
Online tool launched to help employers issue a written statement
of employment particulars (BERR)
1.2 million employers can now access a new, online tool to
set out terms and conditions for new starters more quickly and
easily. Costs have been reduced from an average £158 to £40,
based on a 75% reduction in time taken to produce this written
statement. £16 million annual savings delivered as part of
£160 million annual savings anticipated by 2010 as employer
take-up increases.
Improve pension regulations to make payments by employers less
prescriptive (DWP)
Pension scheme trustees now have greater flexibility about
when reports are made to the Pensions Regulator. As a result fewer
reports are now filed resulting in benefits for both pension scheme
trustees and the regulator with net administrative savings of
£8 million annually.
Simplified member-nominated trustee/director requirements (DWP)
Removed the prescriptive processes and timetables for member
nominated trustees in the UK's 66,000 occupational pension schemes
delivering total annual administrative savings of £16 million.
Simplification of PAYE process (HMRC)
For the one million employers who don't operate payroll software,
the process of calculating weekly or monthly PAYE contributions
is notoriously difficult. It's a process that's time consuming
and susceptible to errors, with employers often having to redo
calculations, or in some cases submitting incorrect returns.
The new P11 calculator solves this problem. It is a free
tool for employers which vastly simplifies the task of calculating
payroll deductions, and greatly reduces the risk of errors.
Employers can quickly and accurately calculate tax and national
insurance due to each employee on pay day. At the end of the financial
year the calculator automatically adds up all deductions, so employers
can complete end of year returns accurately and with confidence.
"What an excellent tool. The experience of completing
the P11 is now totally painless ..."
This is fantastic ... it will save me so much money in extra
accountancy costs
"After struggling for 20 plus years with the complex
manual wage system, I can't believe how simple it is now to do
my staff wages".
"... it really is a time saving gem ..."
Feedback to HMRC from small business owners
Employment Law documentation (BERR)
Employers are asked to produce a number of statements each
year in order to comply with employment legislation. This means
submitting paperwork in areas as broad as employment contracts,
employee tax details and redundancies.
In the past, employers have had to find information from
multiple sources, often with little guidancea system one
business owner has described as "detective work".
A new approach now allows all documentation to be submitted
on line at www.businesslink.gov.uk. The site gives answers to
the most frequently asked questions, offers templates for every
statement and has programmes that guide employers through statutory
processes, for example, the often stressful task of how to end
employment or manage a redundancy.
"When I need to know something about employment law,
I need to know I've got it right. With this tool I can look at
the website and have it confirmed very quickly.
It's made it much easier to find information that's too often
been hidden or impossible to find. The result is that it allows
you to manage your business with confidence.
By and large this is a serious addressing of the issues employers
face and I would recommend it to any business owner".
Fewer Annual General Meetings for private companies (BERR)
500-750,000 private companies no longer need to hold an annual
general meeting (AGM), as part of wider changes to company decision-making
processes. £45 million annual savings delivered. Around 60,000
private companies also no longer need to appoint a company secretary,
saving each of them £50-£100 each a year.
Company Law has been substantially rewritten to make it easier
for the UK's one million companies to understand, and more flexible
for them to manage, especially for small businesses.
The changes have removed a number of outdated and often archaic
rules such as the need to hold an AGM and the need for paper-based
communication with shareholders.
At a time when communications with shareholders are a key
part of a company's communications, the ability to communicate
electronically is a major step forward. Quoted companies can now
communicate decisions with shareholders by email. A PWC exercise
estimates this could save larger companies up to £400,000
for a single mail out.
The new Companies Act also brings together measures from
many separate pieces of legislation in to a single place and introduces
easier and cheaper forms of decision-making for companies.
By simplifying company law and making it easier to understand,
companies over time should be easier to manage and businesses.
"Companies have been able to communicate with shareholders
electronically for a number of years; the wider powers in the
new Companies Act allow companies to focus on developing state
of the art electronic communication which are easier for shareholders
to use whilst saving cost in terms of printing and paper".
David Jackson, Company Secretary, BP
Statutory Statement of Codification of Directors' General Duties
(BERR)
More than one million companies will benefit from savings
due to Company Act 2006 measures including the codification of
Directors' General duties. Total delivered annual administrative
savings of £30 million.
8.10 Measures Easing the Planning Process for Business
Electronic Planning Applications (CLG)
Inconsistencies and over-regulation in the planning system
have long been an irritant for business. As a result changes have
been introduced to provide a faster, more efficient planning system
with less red tape.
One example is that planning applications can now be submitted
electronically, using a single national application form. This
makes the process for obtaining planning consents simpler and
more consistent across all local authority areas, and gives businesses
greater certainty for planning and fewer administration costs.
Greater consistency is also being achieved through access
to better information and clearer criteria on what is needed for
applications.
"This practice continues to deliver considerable efficiency
gains in terms of faster planning decisions, lower operating costs
and higher staff time savings|The Portal also provides a cost-effective
management tool to monitor [consultant] performance"
Martin StephensPlanning ManagerJCDecaux
"Before using the Planning Portal, preparing and submitting
a planning application, with all the drawings and attachments,
took a full working day. Using the Planning Portal we can now
do the job in less than an hour.
Rita WeldonPlanning DepartmentComplete Technical
Services Ltd
Building RegulationsUser Centred Guidance (Communities)
A programme of improvement to online guidance has made regulations
more user-friendly delivering administrative savings to the general
public, developers, professionals and Local Authorities of £9
million annually.
Consolidation of fire safety regimes (Communities)
One simple risk-based fire safety regime has replaced 79
overlapping regimes. Greater clarity about employers' responsibilities
is expected to reduce "downtime" costs associated with
false fire alarms. Abolished requirement to apply for Fire Certificate.
Annual administrative savings of £53 million.
8.11 Measures Simplifying Tax
Form 42Employee share schemes (HMRC)
An improved HMRC risk assessment has removed the need for
90% of new companies to complete this form reporting their first
issue of shares to employees. This will save some 300,000 companies
up to £200 per form.
Working Tax Credit payments no longer go through employers (HMRC)
The responsibility for paying tax credits to employees has
been transferred from employers to HMRC, removing the burdens
from 300,000 employers, including by removing various obligations
to retain records or supply information to third parties.
Simplified Pensions Tax regime (HMRC)
HMRC replaced numerous existing rules with a new single simplified
pensions tax regime in April 2006. This regime is expected to
significantly reduce the administrative burden on business, including
by removing various obligations to retain records or supply information
to third parties, even though the new form adds to the burden
of HMRC's forms and returns.
8.12 Measures Reducing red tape for Business
Revamping Energy Licensing (OFGEM)
Britain's electricity and gas licensing system has fallen
behind in the move to a competitive, customer-focussed market.
As a result energy suppliers have been forced to deal with costly
and burdensome licensing requirements, which hampered their ability
to respond to the needs of customers.
The Office of Gas and Electricity Markets has tackled this
problem through a major revamp of licensing for Britain's electricity
and gas suppliers. Changes have included the removal of half of
the licensing requirements for businesses, simplification of existing
rules and greater protection to consumers.
The number of licensing conditions suppliers have to negotiate
has been dramatically reduced from 350 to 175, saving businesses
considerable time, hassle and uncertainty.
"The output has been a wholly restructured Plain English
supply licence for the gas and electricity industry that nevertheless
continues to give robust legal effect to regulatory policy objectives.
The whole project has been an object lesson in how to rationalise,
simplify, and clarify the presentation of an important regulatory
instrument without any sacrifice of essential legal principles,
and with close attention to the Better regulation agenda".
"Ofgem's SLR was an exemplary project which other utility
regulators would do well to emulate. Both the process and the
output were fully consistent with better regulation principles.
The process enabled a wide range of representative parties in
the energy sector to address and resolve a diverse and sometimes
complex range of commercial, technical, and consumer policy issues
...
Roger Barnard, Head of Regulatory Law, EDF
Consolidating Weights and Measures Acts (DIUS)
Government has consolidated five sets of regulations into
one, creating a simpler regime with greater freedom for measuring
equipment in a number of sectors; primarily food. A more flexible
approach saves business £119 million per year as a result.
Certification of Electrical Installations (CLG)
1.2 million instances of electrical work a year are now certified
by "competent persons", rather than having to go through
building control inspection, saving around £110 in each instance
with £65 million annual savings delivered so far.
Car Tax brought online (DfT)
Applying for licences online or by telephone, saves time,
effort and queuing. Department for Transport analysts predict
an administrative saving to business of £14 million per year
with potential additional savings of £20 million for private
motorists.
Simplifying the process for Medicine labelling (DH)
Over-the-counter medicines are crucial to patient care in
the UK, with over 860 million packs purchased every year to treat
common illnesses without visiting a GP.
But the rules governing the approval of labels for these
medicines has been overly burdensome, often delaying the time
it takes to reach consumers and increasing the cost to business.
A new "self-certification" scheme has removed these
unnecessary steps, allowing medicines to be approved automatically,
where they contain ingredients whose risks and benefits are well
recognised.
Better Regulation of Over the Counter Medicines not only
speeds up the time it takes to get medicines to market, it frees
up regulators to concentrate on the safety of newer, more complex
medicines. The scheme has been expanded over the last year, with
savings to the sector estimated at £100 million to date.
This measure received the EU Red Tape Reduction Award in
2007, winning over 22 other initiatives from member states and
was a finalist in the better regulation category at the National
Business Awards 2007.
"We utilised BROMI to take around 10 weeks out of the
artwork approval process for some new pack sizes of a Hay Fever
product. This allowed us to launch these new packs in June, during
the hay fever season ... had we launched the product in September
the value to us of the 10 weeks sales would have been significantly
less)".
Nicholas Smalley, Galpharm
"Rules governing these changes can cost individual companies
like us thousands of pounds ... such efficiencies must be good
news for business and consumers".
Liz Bamford of Glaxo-Smith-Kline Consumer Healthcare
Streamlining Environmental Permitting
The Government Permitting Programme is delivering significant
outcomes by streamlining and simplifying the operation of environmental
permitting and compliance systems, and the processes of obtaining,
varying and transferring permits.
It also replaced over 40 Statutory Instruments with a single
set of regulations one-third of the length. The first stage of
the approach, simplification of Waste Management Licensing and
Pollution Prevention Control, came into force on 6 April.
It is estimated that the EPP will produce administrative
savings to business over the next three years as follows: 2008-09
£1.6 million saving; 2009-10 £8.9 million saving; and
2010-11 £8.9 million.
Further work is being carried out to explore extending this
common approach by simplifying further permitting regimes. These
could include water discharge consenting, groundwater authorisation,
water abstraction, radioactive substances regulation, some waste
carriers and brokers, as well as implementing parts of the Mining
Waste and Batteries Directives.
15
Chairman of Sainbury's plc. Back
16
National Enforcement Priorities for Local Authority Regulatory
Services, Peter Rogers March 2007. Back
17
In 1997 the OECD reported that "regulatory costs are the
least controlled and least accountable amongst government costs.
Many governments have no idea how much of their national wealth
they are spending through regulation". Back
18
Better Regulation: The Consumer Contribution, Philip Cullum and
Alan Terry, National Consumer Council 2007. Back
19
Warning: too much information can harm, Better Regulation Executive
and National Consumer Council 2007. Back
20
For example Gelauff & Lejour (2006) using the WorldScan macroeconomic
model and the impact of a 25% reduction of the administrative
burden in Holland from 2002. Back
21
Nicoletti, G & Scarpetta, S "Regulation, Productivity
and Growth: OECD Evidence", (2003) OECD Economics Department
Working Paper 347. Back
22
Loayza, N V, Oviedo, A M & Serven, L (2005) "Regulation
and Macroeconomic Performance", World Bank Policy Research
Working Paper No 3469. Back
23
Annual Small Business Survey 2006. Back
24
"Costs of compliance with health and safety regulations in
SMEs", Research report 174, prepared by Entex UK Ltd for
the Health and Safety Executive 2003. Back
25
How Businesses Use Their Time, Barclays Bank plc (2003). Back
26
Regulation and Business Advice, BERR, 2007. Back
27
Survey of Business' Perceptions of Regulation National Audit Office
2007. Back
28
Reducing Administrative Burdens: effective inspection and enforcement,
Philip Hampton, March 2005. Back
29
Enterprise: unlocking the UK's talent, BERR & HM Treasury
March 2008. Back
30
Annual Survey of Small Businesses' Opinions, 2006-07. Back
31
Regulation and Business Advice: A report by the Better Regulation
Executive. Better Regulation Executive, London, 2007. Back
32
Regulation and Business Advice Report. Back
33
Consultation Document : A Code of Practice on Guidance on Good
Regulation, BERR, January 2008 available at http://www.berr.gov.uk/files/file44379.pdf. Back
34
Regulation and Business Advice: A report by the Better Regulation
Executive. Better Regulation Executive, London, 2007. Back
35
NAO/Ipsos MORI survey of 2,000 businesses, 2007. Back
36
Delivering Simplification Plans, A summary, BERR, 2007. Back
37
Better Regulation Task Force, Regulation-Less is more, Reducing
Burdens, Improving Outcomes March 2005. Back
38
Delivering Simplification Plans, A summary, BERR, 2007. This figure
excludes estimates of administrative burdens by HMRC and the Financial
Services Authority. Back
39
Simplification Plans identify measures which plan delivery of
26% administrative burden reduction, 1% over target of 25% to
be achieved by 2010. Back
40
Delivering Simplication Plans-A Summary, HM Government, Dec 2007. Back
41
IPSOS MORI research for the BRE http://www.berr.gov.uk/bre/reviewing-regulation/consulting-customers/page44088.html Back
42
CBI/Pertemps Employment Trends Survey 2005. Back
43
Improving Outcomes from Health and Safety: A Call for Evidence,
BERR, Nov 200. Back
44
Better Regulation: The Consumer Contribution, Philip Cullum and
Alan Terry, National Consumer Council 2007. Back
45
Regulation: Less is More, Reducing Burdens Improving Outcomes,
Better Regulation Task Force, March 2005. Back
46
Reducing Administrative Burdens: effective inspection and enforcement'
Philip Hampton, 2005. Back
47
Regulators Compliance Code: Statutory Code of Practice for Regulators,
BERR, December 2007 Back
48
NAO: The Delivery of Administrative Burdens Reduction Programme,
2007. Back
49
The reports can be found at http://www.berr.gov.uk/bre/inspection-enforcement/implementing-principles/reviewing-regulators/page44054.html. Back
50
The Review of Policing, Sir Ronnie Flanagan 2007. Back
51
IPSOS MORI research for the BRE http://www.berr.gov.uk/bre/reviewing-regulation/consulting-customers/page44088.html Back
52
Delivering Simplification Plans, A summary, BERR, 2007. This figure
excludes estimates of administrative burdens by HMRC and the Financial
Services Authority. Back
53
Doing Business 2008, World Bank 2007
The World Bank's Doing Business Survey 2008 benchmarks
the regulatory cost of doing business in 178 economies. It analyses
regulations affecting 10 stages of a businesses' life, including:
- starting a business;
- dealing with licences;
- employing workers;
- registering property;
- getting credit;
- protecting investors;
- paying taxes;
- trading across borders;
- enforcing contracts; and
- closing a business.
Back
54
Annual Small Business Survey 2006, BERR 2008. Back
55
Product Market Regulation in OECD Countries: 1998 to 2003, OECD
2005. Back
56
http://bre.berr.gov.uk/regulation/reform/simplifying/plans.asp Back
57
Delivering Simplification Plans, A summary, BERR, 2007. This figure
excludes estimates of administrative burdens by HMRC and the Financial
Services Authority. Back
58
http://www.berr.gov.uk/files/file44365.pdf Back
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