One-in, One-out rule on new regulation is working, ministers insist

The government’s One-in, One-out rule – under which no new regulation should be brought in without other regulation being cut by a greater amount – has resulted in an overall reduction in the net cost to business and civil society organisations, ministers have claimed.

The second Statement of New Regulation published by the Department for Business, Innovation and Skills suggested that:

• Over the course of the year, the increase in business burdens had remained “at, or close to zero”
• The number of deregulatory measures had increased three-fold between the first and second halves of 2011
• Any increase in business burdens attributable to regulatory measures “has been more than offset by savings attributable to a much higher number of deregulatory measures”
• Nine Government departments (60%) had reported a reduction in regulatory costs to business during 2011
• Departments currently reporting a net increase in regulatory costs were committed to working to eliminate their deficits by the next statement
• The Regulatory Policy Committee had reported an increase in ‘fit for purpose’ opinions from 56% to 69% over the last year – “a noticeable improvement in the quality of departmental analysis”.

The government acknowledged that the bulk of the savings delivered over the reporting year were attributable to the change in private pensions indexation, which was given a value of £3.342bn.

The report also revealed that the introduction of a ban on tobacco vending machines would have a net regulatory cost to business of £85.9m including lost revenue and stock depreciations, but pointed out that this was a legacy measure adopted by the government in March 2011.

Among individual departments, the Department for Communities and Local Government introduced three measures reducing costs and two measures with a zero net cost. The overall reduction in annual regulatory cost to business delivered by the DCLG was £4.26m.

The report said that another flagship government initiative, the Red Tape Challenge, would see 160 regulations affecting the retail sector reviewed, amended or abolished. Further reviews are underway on the rules covering road transportation, manufacturing and hospitality, food and drink sectors. The results are set to be announced in the Autumn.

DBIS also insisted that the government was committed to ending the gold-plating of EU regulations. The report cited the introduction of ‘copy-out’ – a straight transcription of EU law into domestic law to stop over-interpretation – and the European Parliament’s agreement to set up an impact assessment unit as significant developments in this area.

Business minister Mark Prisk said: “During 2011 we have made real progress in cutting the costs of red tape for businesses. As well as the £3bn saving for employers from the new indexation of pensions, we have seen a capping of other regulatory costs, and a substantial rise in the numbers of deregulatory measures.

“This is an encouraging sign that the culture in Whitehall is beginning to change. People are beginning to realise that regulation must be the last resort, not the first option. There is much more to do – especially so that businesses really notice the difference – but this first year is very promising.”