House of Commons - Regulatory Reform

Select Committee on Regulatory Reform Minutes of Evidence

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 regime—which is expected to save over £50 million a year;

— enabling companies to send information to shareholders by e-mail rather than through the post—saving over £60 million a year; and

— streamlining the process for approving the labeling of over-the-counter medicines—saving 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 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 help—almost 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:

to improve the design of new regulations and how they are communicated

— ensuring no unnecessary new burdens are imposed on businesses;

to simplify and modernise existing regulations

— in many cases by reducing or removing burdens on business; and

to change attitudes and approaches to regulation to become more risk-based

— for example removing the need for many unnecessary inspections.

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 departments—Impact 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 purpose—rigorous cost : benefit analysis of policy-making.

4.13 In July 2006, the Government launched a public consultation: The Tools to Deliver Better Regulation—Revising 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:

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 regulation—including small and large businesses, and third sector organisations—can 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

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 year—1 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.

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

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;

— insurers;

— customers;

— consultants;

— trade bodies;

— lawyers and GPs; and

— 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

— 41 were duplicates.

4.65 Examples of ideas taken forward:

Ideas Taken Forward—Food Standards Agency

Streamlining food inspection reports/Scores on doors transparency

Outcome

Ideas Taken Forward—DCMS

Online Licensing Applications

Outcome

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.

— Risk assessment.

— Information and advice.

— Inspections.

— Data requirements.

— Compliance and enforcement actions.

— Accountability.

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;

— inspection programmes;

— 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 Protection—Operator & 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 regulators—the 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 regimes—Regulatory 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 sanctions—including 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 services—and sometimes, conflicting messages from different central government agencies can lead to confusion. This affects the business community as well—as 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 quality—where health impacts are estimated as up to £20bn annually;

2. Alcohol licensing—1 in 5 violent incidents take place around pubs;

3. Food hygiene—over 500,000 cases of food-borne diseases annually;

4. Improving health in the workplace—costs to employers of ill health in local authority enforced sectors of the economy are estimated as up to £600 million; and

5. Fair trading—where 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 authorities—giving 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 priorities—and 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 departments—BRE 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 resolution—with DTI (now BERR).

— Planning Review—with CLG.

— Flanagan Review of Policing—with 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 departments—please 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 concern—according 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)

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 areas—employment 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 studies—to 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 years—from 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 Act—taking 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 guidance—a 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".

Simon Topman, Chief Executive, Acme Whistles

8.9 Measures Simplifying Governance for Companies and Boards

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 Stephens—Planning Manager—JCDecaux

"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 Weldon—Planning Department—Complete Technical Services Ltd

Building Regulations—User 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 42—Employee 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.