Memorandum submitted by the Institute
of Chartered Accountants in England and Wales (ICAEW)
INTRODUCTION
The Institute of Chartered Accountants in England
and Wales (ICAEW) welcomes the opportunity to submit evidence
in response to this Regulatory Reform Committee inquiry. As a
public interest body, the ICAEW is committed to working with Government
and regulators, as well as wider market participants, in order
to improve regulation and help restore economic confidence.
We were pleased to be able to contribute to
the Regulatory Reform Committee's inquiry into "Getting Results:
The Better Regulation Executive (BRE) and the Impact of the Regulatory
Reform Agenda" in 2008.
EXECUTIVE SUMMARY
— The majority of businesses questioned
in the ICAEW 2008 Global Enterprise survey believe
that the UK regulatory and taxation environment is not business
friendly. Members in the EU were only marginally more positive
regarding their regulatory and taxation business environment,
but a clear majority of those in the US and the Far East thought
their environment business friendly.
— The Global Enterprise survey measured
the annual cost to business of implementing new legislation in
2007-08 at an estimated £11.3 billion. ICAEW research
indicates that the burden of regulation falls disproportionately
on Small and Medium Sized Enterprises.
— The ICAEW believes the current UK regulatory
reform agenda has only achieved limited success, but that much
of the framework for an effective regulatory regime is already
in place.
— The ICAEW believes that the UK regulatory
framework would be improved by the following measures:
— The Better Regulation Executive (BRE)
should be responsible for signing off proposals (particularly
the Impact Assessment) for legislative changes before they get
into the legislative programme. Alternatively the role could be
carried out by the National Audit Office. If the role remains
with the BRE it should be moved to HM Treasury or back to the
Cabinet office to enhance its ability to challenge departments.
— The Impact Assessment system introduced
in April 2008 would benefit from further external input into
the assessment of the costs and benefits of proposals.
— The Government should proceed with the
introduction of regulatory budgets to help departments to focus
on priorities.
— In the current economic climate the ICAEW
supports calls from within Government for a moratorium on legislation
and legislative announcements, which have not yet been implemented
that will entail additional costs for business. As a minimum,
the ICAEW believes that there should be a moratorium on all Employment
law and Health and Safety changes until the economy is in recovery.
— Regulation can also have "unintended
consequences". ICAEW research has shown that regulation can
have potentially negative effects on economic efficiency, in particular
on entrepreneurship and competition, for example, by deterring
new entrants to a marketplace.
— The ICAEW believes it is critical that
the G20 continues, in partnership, to lead the regulatory
response to the financial crisis, taking all necessary steps to
tackle problems whilst refraining from taking competing national
or regional measures, which could undermine the long-term benefits
of globalisation.
— The ICAEW welcomes the BRE's and Department
for Business, Enterprise and Regulatory Reform (BERR) leadership
in the context of the European better regulation agenda, but would
encourage greater partnership and sharing of experience between
better regulation authorities in EU member states and with the
European Commission itself.
— The ICAEW recommends that the Government
accepts the recommendations of the Anderson Review and implements
the recommendations as soon as possible.
BACKGROUND
1. Successive Governments have sought to
address the regulatory burden on business. Early UK initiatives
included the Better Regulation Task Force (later Commission).
The Conservative Government had a "deregulation" agenda,
which became a "better regulation" agenda under the
1997 Labour Government. The current UK Government agenda
on regulation has been devised around the Hampton Review for HM
Treasury (Reducing administrative burdens: effective inspection
and enforcement, March 2005) and the Better Regulation Task
Force report to the Prime Minister also in March 2005 "Regulation—Less
is More: Reducing burdens, improving outcomes".
2. The "Less is More" report
advocated that the government should:
— Measure the administrative burden which
Government imposes on business.
— Commit to a target for reducing administrative
burdens.
— Set up the necessary organisational structure
to oversee the process of targeted administrative burden reduction.
3. The "Less is More" report
followed a feasibility study on introducing the system of targeted
administrative burden reduction adopted by the Netherlands. The
other major recommendation of the report was for the government
to introduce a "One in, One out" approach to manage
and reduce regulatory burdens. It argued that "If ministers
do want new laws they will need to prioritize and drop other proposals—thus
stemming the flow, or repeal existing laws—thus reducing
the stock".
4. The Hampton Review suggested that "Administrative
burdens are the costs that come from enforcement activities. If
regulators operate effectively, and use the best evidence or programme
their work, administrative burdens on compliant businesses can
be reduced while maintaining or even improving regulatory outcomes".
It recommended:
— Comprehensive risk assessment should
be the foundation of all regulators enforcement programmes.
— There should be no inspections without
a reason, and data requirements for less risky businesses should
be lower than for riskier businesses.
— Resources released from unnecessary inspections
should be redirected towards advice to improve compliance.
— There should be fewer, simpler forms.
— Data requirements including design of
forms, should be co-ordinated across regulators.
— When new regulations are being devised,
Departments should plan to ensure enforcement can be as efficient
as possible, and follows the principles of the report.
— Thirty-one national regulators should
be reduced to seven or more thematic bodies.
5. The UK Government accepted the recommendation
of the "Less is More" report and committed through
the Administrative Burdens Reduction Programme (the Programme)
to reduce the administrative burden imposed by regulations on
private and third sectors by 25% by 2010. At EU level, a similar
target (25% by 2012) was endorsed by the European Council in March
2007. The Better Regulation Executive (BRE) is responsible for
co-ordination of delivery of the Programme across departments
and regulators, as part of a broader agenda to reform and improve
the regulatory environment and to provide the best possible conditions
for business success. Progress in implementing the Programme is
examined in an annual report by the National Audit Office. The
Government also accepted the recommendations of the Hampton Review.
6. These two initiatives formed the basis
of the Government's current "Regulatory Reform Agenda"
which has four main components:
— Simplify and modernise existing regulation
(principally through administrative burdens reduction).
— Change attitudes and approaches to regulation
to become more risk based.
— Improve the design of new regulations
and how they are communicated.
— Work across Europe to improve the quality
of European regulation.
Is the current Regulatory Reform Agenda succeeding?
7. In the 2008 BRE report "Making
Your Life Simpler: Simplification Plans, A Summary",
Lord Mandelson, Secretary of State for the Department of Business,
Enterprise and Regulatory Reform (BERR) stated, "We are on
track to meet our target of achieving approximately £3.4 billion
of net annual savings for business by 2010".
8. However, evidence from the National Audit
Office (NAO) report "The Administrative Burdens Reduction
Programme", 2008 found "only two percent of
businesses stated it had become easier to comply with regulation
over the past 12 months, 30% stated it had become more difficult,
and 66% stated it had stayed about the same. One percent of businesses
stated that complying with regulation had become less time consuming
while 40% stated that it took longer and 57% stated it had stayed
about the same".
9. ICAEW research supports NAO report findings
that there has been little significant improvement in the burden
regulation places on business. The ICAEW annual Enterprise Survey,
now in its twelfth year, draws upon the expertise of our members
working at the heart of business. The 2008 report, includes
research from chartered accountants working in the EU, Far East
and the US, giving a global perspective.
10. The majority of businesses surveyed
by the ICAEW believe that the UK regulatory and taxation environment
is not business-friendly. Just over half (53%) of businesses in
the survey say that the regulatory and taxation environment in
the UK is not ("not very" or "not at all")
business-friendly. Fewer then half of businesses in the UK and
the rest of the EU consider the regulatory and taxation environment
under which they operate to be business-friendly. This contrasts
with two-thirds of US businesses and approaching 90% of those
in the Far East Countries.
These findings are drawn from the following
chart:
11. Businesses in the UK are more likely
than those in the EU, US and Far East to consider that their operation
and development are hindered by employment legislation, employment
tax, business tax changes, health & safety regulation, environment
law, planning regulations and Corporate Social Responsibility
reporting requirements. However, they are less likely than those
in the US to feel that they are hindered by corporate governance
requirements and financial reporting requirements. In contrast,
businesses in the Far East, consider their regulatory regime a
help to their operation and development rather than a hindrance.
12. Business owners complain about regulation,
because it involves the diversion of scarce resources away from
productive, profit-generating activities and towards the discovery,
understanding of, and compliance with regulations. In the 2008 Enterprise
survey 70% of the cost of implementing new legislation in the
UK in 2007-08 was borne by Micro businesses (those businesses
with nine or less employees).
13. Regulation can also have "unintended
consequences". A report "Regulation in the Marketplace:
an Economic Literature Review" by cebr, an Independent
Research Consultancy, for the ICAEW has shown that regulation
can have potentially negative effects on economic efficiency.
These negative effects arise through the impact of regulation
on entrepreneurship and competition in particular. A preponderance
of regulation that acts as a barrier to the free operation of
businesses, both in theory and in practice, leads to a reduction
of the number of firms entering the marketplace and a consequential
lessening of competitive pressures.
14. Therefore, although regulation is often
intended to correct market failures, it is important to realise
that there may be a trade-off between these goals and economic
efficiency. Hence, overbearing regulation can diminish competition
and hold back entrepreneurship. Therefore, the impact of new and
existing regulations on businesses—especially SMEs—needs
to be considered thoroughly.
15. The ICAEW believes that the depreciation
in the value of Sterling has afforded the UK an opportunity to
emerge from the current recession more quickly through a significant
boost in its exports and foreign currency earnings. However, if
UK businesses are placed at a competitive disadvantage through
burdensome regulations, that business opportunity will soon evaporate.
Departmental regulatory budgets
16. In August 2008 John Hutton, the
then BERR Secretary of State published proposals to improve the
regulatory regime through a system of regulatory budgets. The
document (Regulatory Budgets: A Consultation Document)
stated;
"As a government we have already made great
progress in improving our regulatory regime. The UK is recognised
as a world leader in better regulation and ranked by the World
Bank as one of the top places to do business internationally.
But we want to go further, which is why we are consulting on the
idea of introducing a system of regulatory budgets to make explicit
the costs and benefits of new regulations. Introducing Regulatory
Budgets would be a radical new development, a world first in the
management of regulation. We need to make sure that any system
would work for all those affected by regulation which is why we
are seeking views on key issues".
17. The regulatory budgets proposal is a
variant of the second proposal in the "Less is More"
report "One in, One out" system of "stemming the
flow, or repeal existing laws—thus reducing the stock".
The regulatory budgets consultation stated, "A regulatory
budget system will provide better prioritised regulation by government
departments; greater transparency on the impact of regulation
and better accounting of the opportunity costs of regulation;
better maximisation of the benefits of regulatory interventions
and minimisation of the costs; and greater scrutiny of regulatory
proposals."
18. The introduction of regulatory budgets
builds on the launch last year of a new template for Impact Assessments
and a commitment by the Government to publish the benefit-cost
ratio of regulation introduced from 2008. The foundations for
regulatory budgets are in place. In taking this natural next step,
the Government will be introducing additional transparency in
setting out its ambition for regulation and greater control over
the costs that will be introduced.
19. The ICAEW supports the introduction
of regulatory budgets, but believes exempting tax measures and
other exemptions (such as climate change) creates a "credibility
gap". The ICAEW recommends that there is independent, external
scrutiny of the regulatory budgets system to provide assurance
that the system delivers the intended benefits.
Effective Government Guidance on Regulation
20. The Anderson Review reported in January
2009 on improving government guidance on regulation in its
report The Good Guidance Guide: taking the uncertainty out
of regulation.
21. Its recommendations to Government sought
to improve certainty in government guidance in the following ways:
— Increasing certainty over outcome, by
providing access for SMEs to a tailored, insured advice helpline
and taking responsibility for the quality of its guidance.
— Making guidance more accessible, by expanding
the content of Business Open Advice Days and reviewing the brand
of its single guidance website.
— Making guidance clearer, by introducing
"quick-start" guides and moving to ensure that all guidance
complies with the Code of Practice on Guidance.
— Achieving consistent guidance across
government.
— Culture change and increasing communication
of improvements.
22. The ICAEW recommends that the Government
accepts the recommendations of the Anderson Review and implements
the recommendations as soon as possible.
RESPONSE TO
INQUIRY QUESTIONS
CURRENT DEVELOPMENTS
What are the implications of the recent economic
developments (for example, the economic downturn; credit crunch
and problems within the financial sector) for the design and delivery
of the regulatory reform agenda, including risk-based regulation?
23. The findings of this quarter's ICAEW
UK Business Confidence Monitor (BCM) show that businesses
are suffering, as the fall-out of the recent crisis in the global
financial system spreads. The survey indicates that the outlook
for business prospects for the next twelve months is negative.
Turnover and profits are all expected to contract, while budgets
for capital investments, R&D and staff training, as well as
headcount, are forecast to fall. Firms of all sizes suffered a
fall in confidence in the first quarter of 2009, with the largest
fall recorded among medium sized firms (those with 50-249 employees),
which experienced a 15.1 point drop in the Confidence Index
to—45.2.
24. Demand for products and services is
dropping and unemployment is increasing as consumers cope with
an accumulation of debt. Given this outlook many UK businesses
are struggling for survival. The credit crunch has made access
to finance increasingly difficult for business (and consumers)
and expensive both in terms of the recurring interest costs and
the one-off arrangement fees charged by finance providers. Many
businesses have cut capital expenditure, reduced their headcount,
and are reigning in discretionary marketing and other expenditure.
25. The ICAEW believes that the Government
should not be imposing a greater regulatory burden on business
at this particularly difficult time. More regulation on business
will increase costs, at a time when profits are contracting. Increased
regulation is a distraction at a time when the attention of the
business needs to be totally focussed on survival.
26. The ICAEW supports calls from within
Government for a moratorium on legislation and legislative announcements,
which have not yet been implemented that will entail additional
costs for business. As a minimum, the ICAEW believes that there
should be a moratorium on all Employment law and Health and Safety
changes until the economy is in recovery with an earliest date
for new legislation being April 2011.
27. Clearly the UK Government, along with
those in other EU Member States and other developed and developing
nations, needs to address the systemic failures which created
the credit crunch and its aftermath.
How does the Government balance the need for an
effective regulatory framework—providing the necessary benefits
and protections—with the commitment to improve the conditions
for business success?
28. The ICAEW believes that much of the
framework for effective regulatory conditions is already in place,
in particular, the move towards a risk-based approach, the co-ordination
by the BRE and the new Impact Assessment process. However these
need to be supplemented in a number of ways.
29. The BRE needs to have greater powers
and influence. It is significant that the Dutch approach to regulation
on which the "Less is More" report was
based includes an independent external watchdog—the Dutch
Advisory Board on Administrative Burdens (ACTAL). ACTAL's role
is to safeguard the adequate assessment of the administrative
burden for businesses (including the burden of subsidies) and
the administrative burden for citizens. Besides this assessing
role, ACTAL provides strategic advice to the Dutch cabinet concerning
red tape, in particular administrative burden and compliance costs.
ACTAL draws its strength and influence, in part, because it signs
off proposals before they get into the legislative programme.
The ICAEW believes the BRE should have the same role over UK legislation,
particularly over Impact Assessments. To give the BRE greater
authority to challenge departments the ICAEW believes that the
BRE should be moved either to HM Treasury or back to the Cabinet
Office.
30. The Impact Assessment system, introduced
in April 2008, has improved measurement, but the quality of assessment
is still very variable. It would benefit further with greater
external input into the assessment of the costs and benefits of
proposals. The KPMG report on the Administrative Burdens—HMRC
Measurement Project in March 2006 is a good example of
the value of bringing in outside experts to assist with this assessment.
The National Audit Office (NAO) has built up a body of expertise
in evaluating departmental simplification plans, and an alternative
to increasing the powers of the BRE might be for the NAO to be
given the role of preparing the assessment of costs and benefits
in each Impact Assessment.
31. The annual NAO report on the Administrative
Burdens Reduction Programme (also see 8) included the following
comments on claimed reductions in the administrative burdens:
"The reductions claimed were not calculated
on a consistent basis and were subject to only limited independent
validation. Departments used different approaches to estimating
the value of savings, including variations in: the detail of calculations
and the extent to which businesses were asked to verify them;
the treatment of common issues, such as the expected take-up of
revised requirements; and procedures to monitor and challenge
claimed savings."
32. An example highlighted in the ICAEW's
Budget 2009 submission is the temporary reduction in VAT
from 17.5% to 15%. At the time of the 2008 PBR HM Treasury
published an impact assessment that estimates total costs for
the temporary reduction of £300 million, based on businesses'
time using standard cost model data. The ICAEW remain concerned
that the burdens on businesses, especially small businesses and
retail businesses have been significantly underestimated.
33. Lastly, the ICAEW believes that the
introduction of regulatory budgets would help departments to focus
on priorities, (as intended in the Less is More report to the
Prime Minister, see 2), although the ICAEW recommends independent,
external scrutiny of any regulatory budget system. Sir William
Sargent, the current Executive Chair of the Better Regulation
Executive has stated that the Better Regulation Agenda requires
a culture change in the civil service. We believe that the proposal
to have a total budget approved by the Cabinet which covers all
regulation, including policy costs, has great merit. Whilst the
focus on administrative burdens is necessary, in isolation it
will not fully achieve its objectives. Consideration of policy
options and costs will significantly increase the likelihood of
successful reduction in administrative burdens.
How might a proportionate and targeted response
to improving the regulatory framework in the wake of the financial
crisis be made? What lessons are there for the wide regulatory
reform agenda?
34. The ICAEW's representation to the G20 will
highlight the need for a proportionate and targeted response to
improving the regulatory framework in the wake of the financial
crisis, which must be internationally co-ordinated in its response.
35. The ICAEW believes that it is critical
that the G20 continues, in partnership, to lead the way in
responding to the crisis, taking all necessary steps to tackle
problems whilst refraining from taking competing national or regional
measures which could undermine the long-term benefits of globalisation.
36. Auditing was developed to provide greater
confidence in reported financial information. However, auditors
have very limited responsibilities to provide information to banking
regulators and supervisors. Audit could now help play a role in
strengthening confidence in financial services.
37. The financial crisis has made clear
the need for reform of capital adequacy requirements. The ICAEW
believes that reforms to the capital requirements framework should
incorporate a greater sensitivity to risk and be able to address
market-wide stress scenarios as well as those at firm-level. Consideration
should be given to adding a systemic risk layer to the capital
requirements, increasing capital requirements for institutions
most exposed to systemic risk or financial contagion. This may
require new regulatory monitoring tools to be developed, working
with central banks given their responsibilities in respect of
financial stability.
38. The financial crisis has equally highlighted
weaknesses in the regulation of liquidity. The Basel II framework
focuses on prudential capital requirements: it does not deal with
liquidity management adequately. The ICAEW believes that action
to better deal with liquidity risk will be as important as reform
to the capital adequacy framework.
39. Liquidity risk has had insufficient
attention from regulators in recent years. Regulatory regimes
need to be updated to address the current and potential future
liquidity risks in the financial system. As international banks
often managing liquidity on a group-wide, international basis,
the regulatory tools need to be also international in nature.
Previous attempts to strengthen the regulation of liquidity management
have failed due to lack of international consensus.
40. The relationship between bank auditors
and regulators has been generally weakened in recent years. The
Basel II framework does not specifically require the involvement
of external auditors for supervisory purposes. In many jurisdictions,
auditor responsibilities are to audit the financial statements
which are addressed to shareholders. Responsibilities to bank
supervisors may be limited to whistle-blowing requirements.
41. The audit profession can contribute
to greater confidence in banks by providing objective, expert
opinions on the information reported by banks, so that those relying
on that information can be confident that it has been properly
prepared. There are various examples of financial information
not currently subject to audit, including bank capital ratios
published alongside the accounts, Basel II Pillar 3 disclosures
as well as certain bank regulatory returns.
42. In response to the ICAEW's oral evidence
session in front of the Treasury Select Committee on 28 January
2009 the Institute submitted additional written evidence
to the Committee on how the role of auditors might be extended
to enhance confidence in bank reporting.
43. In the UK, the Financial Services Authority
can request reports from skilled persons (such as auditors) on
regulated firms (including banks). This is a flexible regulatory
tool which can be used in a number of areas such as financial
information, fraud, internal controls or compliance with particular
regulations.
44. More general reports looking at bank
controls were used under the previous regime under the Bank of
England. The Bank used to routinely request auditors to conduct
specific work, often planned to happen at the same time as year
end audits. Auditors reported directly to the Bank on these reports.
Although the nature of the work might vary from year to year,
the fact that there was often consistency across banks as well
as the fact that it could be built into the year end audit planning
process for all bank audits, allowed greater efficiency. The existing
powers under the FSA "skilled persons" regime could
be used in a similar way to the previous Bank of England regime
to obtain intelligence, for example, on systemic risk.
How could the Government improve its capability
to regulate in a proportionate and effective manner?
See response to: How does the Government balance
the need for an effective regulatory framework.
Whether there is a coherent package of regulatory
measures for improving the conditions for business success; and
how regulatory reform initiatives fit into wider Government support.
45. The ICAEW's response to the BRE's consultation
on "Regulatory Budgets" in November 2008 advocates
that policy costs should be included in the consideration of the
cost of implementing new legislation/regulation.
46. The ICAEW believes that all regulations
which impose a cost (policy cost or administrative burden) must
be included in the budgets. This makes the inclusion of EU legislation
essential.
47. In setting the regulatory budgets the
Government's primary consideration should be the additional costs
to business in the context of the economic growth over the budget
period. Budgets should incentivise departments to constantly search
for cost reductions in order to pay for new regulatory costs.
48. The ICAEW believes that the budget period
should be three years. This facilitates alignment with the Comprehensive
Spending Review periods. It also gives departments a shorter focus
for complying with budgetary targets. Departments should publish
annual reports on the cumulative costs incurred with forecasts
for the remainder of the three year period.
49. The ICAEW supports the introduction
of regulatory budgets, but believes exempting tax measures and
other exemptions (such as climate change) creates a "credibility
gap". The ICAEW recommends that there is independent, external
scrutiny of the regulatory budgets system to provide assurance
that the system delivers the intended benefits.
DESIGN OF
THE NEW
REGULATIONS
Does Government understand businesses sufficiently
to design effective regulations? Is sufficient emphasis evidence
given to small businesses and enforcement issues?
50. ICAEW written evidence recommends that
the BRE be given authority to sign off all regulations (particularly
Impact Assessments) or alternatively for NAO to be given the role
of preparing the assessment of costs and benefits in each Impact
Assessment (see 29 & 30). If the role remains with the
BRE it should be moved to HM Treasury or back to the Cabinet office
to enhance its ability to challenge departments. A central, professional,
expert quasi independent team (like the Parliamentary Counsel
who draft all legislation) would avoid the problems of lack of
consistency and departments using different approaches to estimating
the value of savings outlined in the 2008 NAO report on the
Administrative Burdens Reduction Programme.
51. The ICAEW welcomes the BRE's and DBERR's
leadership in the context of the European better regulation agenda,
but would encourage greater partnership and sharing of experience
between better regulation authorities in EU Member States and
with the European Commission itself. Whilst, the EWP has committed
to take the better regulation message to Europe and to ensure
coordination between UK and EU simplification measures, we believe
that effective coordination in this regard will require careful
thought and considerable resource and innovation.
52. The ICAEW believes that the Government
should continue to maintain its strong commitment to engaging
in the EU simplification process. As noted above, the EU is committed
to reducing regulatory burdens on business by 25% by 2012. Over
the last four years, the European Commission has taken important
steps to implement the better regulation agenda. Work continues
to simplify legislation that is already on the books to ensure
that it is up to date and more accessible. The Commission has
already presented a number of legislative measures that will bring
about significant reductions in administrative burdens for business,
with more legislative initiatives expected. Impact Assessment
Guidelines have been reviewed and modernised.
53. The European Commission is also finishing
the process of identifying and measuring possible burdens and
is expected to present legislative proposals later this year.
The study looks at how Member States have implemented directives
and the extent to which there has been unnecessary "gold
plating", the process where Member States add further requirements
other than those stipulated by EU legislation when transporting
it into their own legislation. Preliminary results screened 42 EU
Acts and identified 356 associate EU information provisions.
The transposition of implementation of these EU obligations has
resulted in the adoption of more than 9,500 national obligations
across Member States. More than 700 of these went beyond
the required EU law.
54. Analysis varies as to the exact proportion
of the total regulatory burden on business accounted for by EU
directives introduced into UK law. However, the British Chambers
of Commerce 2007 Burdens Barometer, which compiles and totals
UK Government Impact Assessment cost figures, indicates that 71.1%
of the £66 billion UK regulatory burden is accounted
for by EU sourced legislation and regulations. "Gold plating"
exists as an additional burden on the UK business environment,
on top of the necessary enactment of directives. The ICAEW cautions
against "gold plating" and would argue that the implementation
of EU directives should not be seen as an opportunity for UK departments
to introduce policy without engaging in the proper policy development
process, including full economic analysis at the correct stages.
We would recommend that a system of greater transparency and scrutiny
be considered to highlight gold-plating where it exists.
Is there sufficient consideration of how regulations
will be implemented, including an appropriate focus on compliance
and enforcement issues?
55. Initiatives introduced by the Government,
as a result of the Hampton Review include reducing the number
of regulators, streamlining the regulatory process and improving
communication to businesses. The Review recommended that many
of the existing regulators merge, to reduce the total number to
just seven. This work is being carried out at the moment. The
relevant Government departments are planning and overseeing the
mergers. To enable streamlining of the regulatory process the
Regulatory Enforcement and Sanctions (RES) Act 2008 has been
introduced to help regulators focus time and resources on non-compliant
businesses, while reducing the amount of administration for those
that do comply. The RES Act 2008 gives statutory powers to
the Local Better Regulation Office, while the Retail Enforcement
Pilot is testing a new methodology for joined-up working between
regulators within local authorities. In addition the BRE is producing
a clear summary of new or updated regulations, to help businesses
quickly understand what regulations affect them, and what they
should do to comply.
56. The ICAEW believes that it is too early
to tell whether these initiatives will result in an improved focus
on compliance and enforcement issues. The ICAEW believes that
the BRE has improved communication to businesses on new regulations.
Implementation of the Anderson Review will help businesses to
gain confidence in the guidance issued by government and the national
and local regulators.
February 2009
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