Has the government saved businesses £1bn through less regulation?

21 October 2013

"Moves to end the so-called "gold plating" of EU regulations and the Government's own Red Tape Challenge... are estimated to have saved businesses some £1bn in reduced regulatory costs." Daily Telegraph, 12 October 2013

The Prime Minister last week pledged to crack down on EU "red tape" after a government-appointed taskforce highlighted a number of areas where businesses might save money if regulations were eased or removed.

According to the Daily Telegraph, steps have already been taken in this direction, with the burden on business now reduced by £1 billion since the election.

The claim seems to originate from the government itself, and it appears in the Department for Business, Innovation and Skills's (BIS) press release that accompanied the taskforce's report last week.

When we got in touch with the Department we were told that the individual figures making up the £1 billion were validated by the independent Regulatory Policy Committee (RPC). The RPC provides its evaluations of the financial impact that regulations have, and the government's Better Regulation Executive (BRE) publishes these in its 'statements of new regulation'. Six such statements have been published since the election, with the most recent covering regulatory changes due to take effect between between July and the end of the year.

While these statements offer a snapshot of the costs and savings businesses can expect from changes in that period alone, at least one government minister has put it on record that the total net annual saving to business from deregulation stood at £840 million in March this year.

We spoke to the RPC directly, and it told us that since the publication of the sixth statement of new regulation in July, the Committee has since "validated the impact of further measures, and it is this figure that the BIS press release refers to". This helps to explain why the £1 billion figure is slightly higher than the £840 million initially put forward by the government earlier this year.

The RPC also explained that this figure represents the total annual savings that businesses can expect to make as a result of all the regulatory changes introduced under the government's 'one-in, one-out' and 'one-in, two-out' methods, which state that every regulatory cost imposed upon businesses by government must at least be matched by savings in deregulation elsewhere.

The estimates of the savings made through these policies are actually drawn from the government's Impact Assessments, which the RPC checks, and if all's well, verifies. However, this doesn't always happen: the RPC states that while the government's figures had initially indicated that the total annual savings were estimated to be £1.35 billion, only £1 billion of that was verified by the Committee.

It's also worth noting that the 'one-in, one-out' system doesn't cover every charge that can be levied by government. For instance, charges associated with tax administration fall outside this remit.

So while the £1 billion estimate of savings to businesses through government deregulation might not be all encompassing, it does represent a well-sourced estimate for the impact of the 'one-in, one-out' system introduced by the Coalition.

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