Posted by

Dr Adam Marshall, Director of Policy and External Affairs

23 Apr 2013

Every business has a tale of how it has been hamstrung, caught out or disadvantaged by a regulatory requirement. And many of those companies say that the root cause of their problems is a regulation emanating from the paper factory that is Brussels.

Yet the impact of European regulation on British business isn’t quite so black and white. There are “good” European regulations, for example the ones that enabled a Single Market to come into being (at least for goods) some twenty years ago. And yes, there are the sorts of “bad” European regulations so regularly ridiculed in the British press, like rules governing the size and shape of fruit and vegetables.

At a business debate at Plymouth Chamber of Commerce last week, I tried to separate out the good, the bad, and the ugly. Business difficulties with EU regulation basically have three causes:

  1. Poorly conceived regulation. Brussels is, legitimately, at fault here. Things like the Ergonomics Directive, which would heap €4bn in costs on European SMEs, make good examples. There is no need for this regulation and the case has simply not been made for the Council and the European Parliament to legislate. So the BCC and others have campaigned, successfully, to prevent a bad decision from happening in Brussels.
  2. Poorly transposed regulation. Here, it’s Westminster and Whitehall that deserve the blame, not Brussels. Some EU regulations come out of the European institutions in a more or less acceptable form, only to be complicated and “gold-plated” by our own UK civil servants and MPs. A great example here is the Agency Workers Directive, which both the Labour government and the Coalition gold-plated to such an extent that it has become a major burden and difficulty for businesses.
  3. Clumsy regulatory enforcement. Here, it’s government agencies – and their inspectors – who should be the target of business ire. Often, businesses’ concerns about health and safety rules, or some sector-based regulations, are down more to the way that national government agencies choose to enforce them, rather than the actual rules themselves. As a result, “hyper-compliance” becomes commonplace, with businesses taking expensive defensive action because they fear a heavy-handed regulator knocking at the door.

No matter the mechanism, and no matter who bears ultimate responsibility, EU regulation can cost UK businesses time and money. So BCC – often working in partnership with other business organisations, with UK MEPs, and even with the UK government’s representatives in Brussels – lobbies continuously to try to prevent any of the three scenarios above from coming to pass. We try to stop poor regulation from reaching the European statute-book in the first place. We warn Whitehall, when implementing new rules, not to make them overly complex. And we shine a light on regulators who think ticking boxes is more important than achieving the right outcomes. Chamber members may not see all of our work on the “internal wiring” of regulation, but I can safely say that without it, the cost of doing business – and the impact on Britain’s competitiveness – would be far higher.