Regulation Facts

History | Facts

"Regulations are unnecessary and we’d be better off without them."

FACT: Some regulation will always be necessary to maintain a fair and civilised society. We cannot, for instance, do without regulations to protect people at work, consumers and the environment. But it is also important to strike the right balance so that regulations do not impose too heavy a burden on businesses or stifle growth

"Red tape introduced since 1997 has cost business over £30 billion."

FACT: The real costs of administering new regulations are a fraction of this figure. What has increased are the benefits that people enjoy, like decent wages, paid holidays or time off to attend to family matters, through measures such as the National Minimum Wage and Working Time Regulations. Some people have confused these benefits with the small proportion of costs to business of administering such measures.

FACT: From 1 April 2004 firms with turnovers of £58,000 or less will not have to register for or pay VAT - the highest threshold in Europe. This will keep 5,000 of the smallest firms out of the VAT system.

"UK businesses are uncompetitive because of over - regulation."

“The UK is more regulated than other countries”

FACT: Overall, British business is doing well. "Entrepreneurs face a better business and regulatory environment in the UK than in most Organisation of Economic Co-operation and Development countries"(OECD October 2002). The Economist Intelligent Unit – APAX- study of business regimes in 60 different countries – published in 2002 – assessed countries against a set of indicators including infrastructure, market potential, regulation, labour market and tax policies. It placed the Netherlands, Denmark and Britain in the top three places.

- OECD Economic Survey of the United Kingdom – (published Tuesday 20th January 2004): “Competitive pressures appear to be relatively strong in the UK, with economic and administrative regulations inhibiting competition and barriers to trade amongst the lowest in the OECD”.

- Another OECD review of EU countries shows UK has almost the lowest administration cost and fewer regulations for entrepreneurs than any other EU country; and that across Europe tax burdens on small businesses are lowest in the UK. (“Regulation,Productivity and Growth: OECD Evidence 13 Jan 2003)

- KPMG survey (19th February 2004): “The UK has the lowest cost structure among seven European countries” studied and out of 11 countries (UK, US, Australia, Canada, France, Germany, Iceland, Italy, Japan, Luxembourg, Netherlands) studied “ranked first in competitiveness in Europe and third overall”

- A survey by Growth Plus and Arthur Andersen of 9 EU countries and the USA puts the UK in top place, as the country that provided the most entrepreneur-friendly environment. (Study by Growth Plus and Arthur Anderson "Not Just Peanuts 2001, October 2001).

- OECD Report [Oct 2002]: “UK is at the forefront of regulatory reform”.

- CBI: “Britain is definitely the best place to do business compared with the rest of Europe.” – Digby Jones (Sunday Express – 12 Jan 2003)

- CBI: “We’ve low inflation, low interest rates, low unemployment and some sustainable growth. In fact we’re the most successful economy in Europe. What we’ve seen over the last year or so which I’m proud about in the UK actually is that we’re ahead of the curve, we’re ahead of Germany, we’re ahead of France in moving the economy to a skills’ based, knowledge based, value added quality innovative economy. - Digby Jones (17 Nov 2003).

FACT: The World Bank report “Doing Business in 2004: Understanding Regulation” named the UK amongst 10 countries - out of 130 countries - (others include Australia, Denmark and the US) with the least regulation.

FACT: The Organisation of Economic Co-operation and Development (OECD)Economic Survey of the United Kingdom (published Tuesday 20th January 2004) said that “Competitive pressures appear to be relatively strong in the UK, with economic and administrative regulations inhibiting competition and barriers to trade amongst the lowest in the OECD”.

" 4,000 new regulations on business are introduced each year."

FACT: This myth confuses the number of Statutory Instruments with the number of regulations on business. The number of Statutory Instruments introduced each year, which has ranged from 3,200 to just under 3,500 during the last decade. Over 95 per cent of SI’s have little or no substantial impact on business. Around 40 per cent have only a local or temporary effect – Road Traffic Orders, for example.

A better measure of burdens imposed by regulation is the number of Regulatory Impact Assessments produced by departments for proposals that would have a significant impact on business. These are published by Departments.

"The current Government regulates far more than previous administrations."

FACT: Since 1997 there has been no upward trend in the totals for Statutory Instruments or Acts of Parliament. Regulatory Impact Assessments (see above) tell the same story for numbers of regulations imposing a burden on business.

FACT: The Budget 2004 included a package of deregulatory reform measures, which will deliver significant benefits to business. For example, new regulatory proposals likely to impose a major new burden on business will require clearance from the Panel for Regulatory Accountability, chaired by the Prime Minister or the Chancellor; consulting on the implementation of phasing out payment via employers for Working Tax Credit

This package was welcomed by business:

• CBI: "Firms will also be encouraged by commitments to cut regulation" - Digby Jones. (17 March 2004)
• Federation of Small Businesses: “We are pleased that the Treasury is to look at removing the working tax credit from the payroll as it will result in significant cost savings for small businesses.” (17 March 2004)
• Institute of Directors (IoD): “The Budget contains many encouraging features, particularly by addressing bureaucracy”. (17 March 2004)

"The UK small business sector is facing ruin due to over - regulation."

FACT: More than one and a half million businesses have started up since 1997. There were an estimated 3.8 million business enterprises in the UK at the start of 2002, an increase of 51,000 (1.4 per cent) on the start of 2001. Overall there has been a net gain of 116,000 firms since this Government took office. Over 99 per cent of businesses are small or medium sized.

FACT: In the 1990s, you needed twenty-eight separate licences, certificates and registrations to start a business. Now the figure is one form for many sole traders; and 5 forms for private companies.

" The US economy is more successful than the UK’s because it is less regulated."

FACT: It is an over-simplification to say that the US is less regulated than the UK. Exemptions from federal legislation are often counteracted by state rules and by rules applying to employers with federal contracts. The Organisation of Economic Co-operation and Development (OECD) states that ‘contrary to popular belief, the United States does not appear to be, on the whole, less regulated than other OECD countries. It is however, often differently regulated than most other countries…’

"The amount, and rate, of European legislation is increasing year on year."

FACT: The most recent information on the Commission's legislative activity suggests that this is not true.   This information can be found in the Report from the Commission  "BETTER LAWMAKING 2003" (PDF) in Annex 1 (page 31).