by Laurie Anstis on August 5, 2010
Vince Cable today announced details of the government’s one-in, one-out plan for business regulation.
As from 1 September, any new regulation will have to be balanced by another regulation being abolished.
The government has chosen to implement this on the basis of the net cost to business of the regulation. It will not simply be a mathematical exercise of counting the number of regulations implemented and abolished. Instead, the government will look at balancing the cost of the regulations. A number of new low-cost regulations might be set off against the abolition of a single high-cost regulation.
The anticipated costs of any new regulation is detailed in the “regulatory impact assessment” which accompanies new regulations. These can be controversial. For example, the regulatory impact assessment for the proposal to abolish the default retirement age (Annex E here (pdf link)) identifies the only costs for business as being one-off costs of approximately £20m for familiarising themselves with the changes and another £20m for employers who do not already have one to introduce an appraisal system. There is no mention of the costs of tribunal claims being brought by employees who are over 65, which will undoubtably increase once the default retirement age is increased (although these may be included after consultation). In contrast, the benefits to employers are assessed at around £45m a year, including £5m a year savings from the abolition of the retirement procedures and £40m in “increased profit”. Overall, the abolition of the default retirement age is assessed as being a net benefit to employers, rather than increasing costs.
Similarly, the Equality Act 2006 has been assessed (page 6 here (pdf link)) as having a net benefit of anywhere between £65m and £675m over ten years.
The Agency Workers Regulations, which derive from European law, will not be caught by these new rules, which apply only to domestic law. The cost of the Agency Workers Regulations to business are assessed at £1.5 billion a year (page 28 here (pdf link)).
So of the most significant new employment regulations set to come into force in the next year or so, two are supposed to have a net benefit to business, and the third, which is assessed as costing £1.5 billion a year, is exempt from the new requirements. That might not be quite what business thought was being promised by the headline “one-in, one-out”.