Cost of red tape on British business rises to £88.3 billion

Cost of red tape on British business rises to £88.3 billion

“Tuesday’s Queen’s speech is the perfect opportunity for the new government to prove its commitment to job creation and a better business environment”, according to the British Chambers of Commerce’s Director General, David Frost.

Mr Frost’s comments coincide with the release of the BCC’s latest ‘Burdens Barometer’, which uses the government’s own figures to highlight the cumulative cost to business of new red tape since 1998.

The 2010 Barometer, which is independently compiled by experts from the London and Manchester Business Schools, shows that the cost to business has risen to £88.3 billion. This is a jump of over £11 billion since last year.

40 additional regulations have been added to the Barometer since 2009. Despite 21 of these reporting a recurring annual benefit for companies, the net result is still a new, annual recurring cost to business of over £1 billion.

Of the 40 new laws in this year’s edition, the most costly include:

• Euro 5 and 6 Light Duty Vehicle Emissions Standards, with a recurring cost to business of £1.48 billion
• Community Infrastructure Levy with a one-off cost to business of £457 million

Commenting, David Frost, Director General of the British Chambers of Commerce, said:

“The Burdens Barometer highlights a clear problem for UK business. The cost of dealing and complying with new laws and regulations over the last 12 years has been far too high.

“During this critical time for the economy, we need businesses to be driving recovery and creating jobs. But, the government must play its part by putting the brakes on the relentless flow of red tape.

“Tuesday’s Queen’s speech is the perfect opportunity for the new government to prove its commitment to job creation and a better business environment by repealing regulations where it’s clear the costs outweigh the benefits to the economy and society.

“There needs to be an urgent and sweeping review of all regulations that incur costs for business, and importantly, a moratorium on new employment laws until at least 2014.”

Francis Chittenden from the Manchester Business School said: “Regulation is like taxation. It raises business costs and so reduces the amount of business activity conducted in the UK.”

Tim Ambler from the London Business School added: “Much of the problem stems from Whitehall wishing to add its own unique UK regulations to the already substantial flow from the EU.”

Ends

For further information please contact the BCC press office on 020 7654 5813 or 07825 746812

Media Contact:

Sam Turvey
Tel: 020 7654 5813
Email: s.turvey@britishchambers.org.uk

Notes to editors:

1. A full copy of the Burdens Barometer can be viewed here.

2. The UK/EU regulatory burden split by cost is as follows:

UK - £27,570 - 31.2%
EU - £60,766 - 68.8%
Total - £88,336 - 100%

3. The below table shows that about 30% of policy proposals originated in the EU, although in the last two years this proportion has fallen to 20%.

YEAR EU UK
2004 28.90% 71.10%
2005 33.23% 66.77%
2006 32.33% 67.67%
2007 32.34% 67.66%
2008 20.99% 79.01%
2009 20.00% 80.00%
Total 28.39% 71.61%

4. The figures in the table are compiled from the Impact Assessments (IAs) produced by government departments, and downloaded into the British Chambers of Commerce IA Database. All government departments are required to complete IAs, which evaluate the positive and negative effects of state interventions that have an impact on business. The figures show the government’s own estimates of the compliance costs of a series of regulations affecting business up to 1 July 2010. Half of all IAs claim that new regulations provide benefits to businesses, consumers or the environment. However, historically these benefits are only quantified in the minority of cases. As a result, it is difficult to calculate the total value of the benefits that it is claimed justify the costs.

5. As the Burdens Barometer was first created in 1998, to date it has only ever scrutinised the regulatory performance of Labour Governments.

6. Regulation features heavily in the BCC’s 90 day plan for business growth - http://bit.ly/aQRKYB

British Chambers of Commerce: 150 years of helping business | 1860-2010

The British Chambers of Commerce (BCC) is the national voice of local business.

The BCC sits at the heart of a powerful nationwide network of Accredited Chambers of Commerce, serving over 100,000 businesses across the UK, which employ over five million people. For more information visit: www.britishchambers.org.uk