An important goal of the Better Regulation framework is to ensure transparency and accountability over the burdens that government regulatory decisions place on businesses and civil society organizations. It also supports good decision-making by helping ministers and parliament to balance the benefits of new regulation against the costs it imposes when considering new legislation or when considering legislation. different regulatory options to achieve a particular goal.
The government is currently required by law to measure the direct impacts of the new regulations on businesses (and civil society organizations) and to report annually on progress against the “impact on human resources target. business ”(BIT) – a commitment to reduce the regulatory burden over the life of Parliament. These figures are verified by the Regulatory Policy Committee (RPC).
The government has exempted certain categories of regulations, so they are not reflected in the BIT accounts and some of them are not subject to our independent review. Some of these exemptions have reasonable justifications – for example, it is often not proportionate to apply the process to very small ‘de minimis’ measures (those with an impact of less than £ 5million per year) and this exemption also significantly reduces the number of measures to be subject to the review of the CPR and, therefore, the resources required to produce and review impact assessments (IAs).
However, we are concerned that further exemptions likely mean that the framework is missing very significant trade costs – as the BIT is not a meaningful indicator of the overall burdens on businesses of new regulation.
What should be exempt?
Some exemptions had been in place since before the establishment of the BIT. For example, it excludes fiscal measures – the fundamental purpose of which is to impose financial burdens on people and businesses in order to generate income for the Exchequer.
But other specific exemptions merit further consideration:
Grenfell disaster building security measures
This exemption means that the costs and benefits of regulatory actions related to Grenfell are not subject to independent review and the associated commercial costs are not included in the BIT. While we understand that the government may not want to target the cost of Grenfell related measures, it would be desirable for the analysis underlying them to be independently reviewed and the impacts on business verified. (as is the case with other large “ineligible” measures).
Temporary measures (those in force for less than 12 months)
It is reasonable that measures, which are only introduced for a short period and are therefore likely to have relatively limited impacts, be excluded from the BIT. However, the use of this exclusion for emergency measures associated with the Covid pandemic means that the impact of some of the most severe and restrictive measures introduced by a government in peacetime (including the cessation of activities enterprises for extended periods) has not been quantified or reviewed.
Emergency civil exclusion applying to Covid measures in force for more than 12 months
When the Covid emergency measures were first introduced, it was reasonable to expect that they would be in effect for less than 12 months and, therefore, subject to the “temporary” exclusion described above. -above. However, a significant number have now been extended to be in effect for more than a year. The rules of the Better Regulation framework mean that IAs for these measures should have been (retrospectively) submitted to the CPP for review. The government has however decided to relax this requirement – see this written ministerial statement. We understand that this reduces the burden on public service resources, but, again, it means that measures that have very significant impacts on businesses and civil society organizations are not subject to independent review. , and are excluded from the BIT.
Why is this important?
The BIT has been touted as a tool for the government to transparently communicate to businesses and others their commitment to minimize regulatory burden – and to hold the government to account for that commitment. The use of derogations, in particular for measures having a very significant impact on businesses, means that this important objective has not been achieved.
The Better Regulation framework also requires ministries to produce impact assessments for new regulations (which are then assessed and scored by the CPP). This allows ministers and parliament to compare different policy options and choose the one that best meets their goals. Some of the exemptions mean that departments are not subject to the valuable discipline of subjecting IAs to independent review.
Why are we raising this now?
The government is currently considering how it wants the best regulatory system to work in the future and is considering reconsidering the approach used to monitor the impacts of regulation on business. If a new approach is to work as intended and continue to help minimize the burden introduced by the new regulation, it will be important to ensure that any deviations from the framework are reasonable and kept to a minimum.