2. Submission from Department for
Business Enterprise and Regulatory Reform (BERR)
Question 45 (Mr Richard Bacon): on how much time
was spent on the procurement of consultants to undertake the measurement
of administrative burdens ... and a detailed breakdown of the
£17 million and where it went
CENTRAL ADMINISTRATIVE
BURDENS MEASUREMENT
EXERCISE
The Better Regulation Executive were tasked
with coordinating the procurement of consultants to undertake
the measurement of administrative burdens on behalf of Government.
After a competitive tendering exercise the contract was awarded
in September 2005 to PricewaterhouseCoopers (PwC) at a total cost
of £10.4 million. This cost was split between participating
Departments according to the number of regulations they were responsible
for. A major consideration in awarding the contract to PwC was
the quality and knowledge of both their workforce and DLA Piper,
their legal partner.
Between September 2005 and May 2006 PwC worked
with departments and DLA Piper, to produce a comprehensive list
of all administrative burdens—ie each requirement in law
for businesses and third sector organisations to provide information
to the state or a third party. Requirements which only affected
the public sector were outside the scope of the exercise. There
were around 1,400 regulations which were broken down into 20,000
separate obligations.
Next PwC identified businesses affected by these
obligations and interviewed staff to establish how long it took
them to comply with each requirement, as well as any other costs
involved. In more complex cases, PwC facilitated workshops of
those affected by the law with those implementing it to establish
the costs. There were around 8,500 interviews and more than 200
such workshops. For some minor requirements, PwC extrapolated
an estimate by looking at similar requirements. 90% of baseline
was measured with direct business involvement, with 77% of these
being small (1-9 staff) or medium (10-49 staff) in size.
At its peak over 700 PwC or DLA Piper staff
were working on the delivery of this programme.
Once measurements had been gathered, PwC multiplied
the costs of complying with each obligation by the number of business
affected by them (eg the number of times a form was submitted).
This information was then quality assured by PwC before being
submitted to Government for approval. Each of the 19 departments
received a report that provided an overview of its administrative
burden and how PwC had measured this.[5]
The Better Regulation Executive received a database containing
all of the data PwC had gathered during the programme, which has
now been developed into the central system used to record Government's
progress towards its administrative burden reductions targets.
The data set generated by the Admin Burdens Measurement Exercise
is the largest and most sophisticated of its type in the world.
Since the successful completion, many European countries and the
European Union itself have emulated our approach.
HMRC ADMINISTRATIVE
BURDENS MEASUREMENT
EXERCISE
HMRC appointed KPMG to do the work after a competitive
tendering exercise. The work cost £7.5 million and took place
between September 2005 and March 2006.
KPMG were able to quickly mobilise a large knowledgeable
workforce with the necessary tax and accountancy skills to do
the work quickly. They also partnered with a Danish company that
had done parallel exercises in Denmark, Sweden and other parts
of Europe.
The exercise produced a 2.5 million data point
model mapping UK legislation to the activities that businesses
actually have to do to comply. This gave the UK, for the first
time, a consistent model of the burdens imposed by tax legislation
on business and a clear understanding of what drives tax related
red tape. Not only this but KPMG went into detail in segmenting
businesses by size, whether they employed an accountant and whether
they file returns electronically or not.
Throughout the project HMRC worked closely with
the Better Regulation Executive using the same Standard Cost Model
as the rest of government and the Dutch.
28 March 2008
5 http://www.scmtraininq.berr.gov.uk/course/resources/pwc
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