Regulation not fit for purpose as costs soar, think tank finds

A new Regulatory Audit Office should be created to provide independent scrutiny of policy proposals and regulatory reform, and monitoring should be centralised under a senior government minister, with the same oversight of regulation that the chancellor has of fiscal policy.

Those were among proposals published last week in a report, The future of regulation, from centre-right think tank the Centre for Policy Studies (CPS).

The study, which looked across all regulated sectors, slammed the regulatory system as “not fit for purpose”. It conducted a line by line analysis of official impact assessments produced to accompany 3,528 pieces of legislation, and found the costs to business increased by £6bn a year between 2010 and 2019, which it pointed out was almost the equivalent of a 2p increase in corporation tax. 

It further argued this was likely to be “a colossal underestimate” given “regulatory impact assessments are generally produced by junior staff to justify decisions already taken. The figures they contain are often alarmingly woolly, or riddled with errors.”

Defra was praised as the only department to have produced a full audit of the regulations it has imposed.

The CPS welcomed the recently published Better Regulation Framework, but called for further actions: 

• A new Regulatory Audit Office should be created, to provide independent scrutiny of policy proposals – rather than departments and regulators being allowed to mark their own homework.

• Regulatory reform and monitoring should be centralised under a senior government minister, with the same oversight of regulation that the chancellor has of fiscal policy.

• The Government should establish a new regulatory budget to replace the one in, one/two/three out rules and the Business Impact Target.

• It should also carry out a comprehensive audit of the whole body of UK regulation. All regulation and associated analysis should be brought together in a sophisticated, machine-readable open platform.

• Any decision to regulate should be properly scrutinised and externally audited as part of the policymaking process, not as an afterthought.

• All regulations should be evaluated against clear success criteria after implementation, with their impact being re-examined five and ten years after being passed.