A report published today by the British Chambers of Commerce highlights the shortcomings of the UK's Regulatory Impact Assessment (RIA) system. The report entitled, The British Regulatory System, is co-authored by Tim Ambler, Senior Fellow, London Business School, and Professor Francis Chittenden, Manchester Business School.
The research shows that the Government's assessment system is failing the EU policy making process. In an analysis of 30 EU Directives adopted in 2005 and proposed in 2003, the report shows that the UK Government's impact assessments are too late to be effective. Rather than using the EU and UK Impact Assessments to influence Brussels from the very beginning, UK officials are producing assessments keyed to UK implementation or near to the UK transposition of a Directive. This is in breach of their own guidelines on Impact Assessment.
With the EU accounting for 71 per cent of the cumulative cost of new regulation to business since 1998, some £47 billion; it is vitally important that the UK’s Impact Assessment process is synchronised with the EU. At the moment they are totally disconnected at a substantial cost to UK business.
Some of the key findings were:
* More than a third of the Directives analysed (11) showed no evidence of consultation with UK stakeholders.
* For a further 9 there was no evidence of early stage consultation.
* Without any UK data with which to work the European Commission struggles to produce a rigorous analysis of costs and benefits to business. In an analysis of 55 out of the 85 EU IAs for the year to June 2007:
- Costs were only quantified in 12%.
- Benefits do not fare any better, quantified in 7%.
* The quality will not improve until the UK and other member states are actively engaged in the process.
Commenting on the findings in the report, Sally Low, Director of Policy & External Affairs at the British Chambers of Commerce, said:
"If we are to see a better regulatory environment for business then the Government must be engaging earlier in the EU’s policy making process. Our report highlights the fact that the Government is only focused on the UK end of EU legislation. There must be a clear linkage between events in Brussels and the UK’s own consultation and Impact Assessment process.
"Our Burdens Barometer figure is now nearly £66 billion – this is the cumulative cost of new regulation to business since 1998 – some £46,892 billion of this is EU sourced regulation. Without timely engagement and substantive consultation the prospects of the UK influencing EU policy to the benefit of British business is severely limited".
Francis Chittenden, Professor of Small Business Finance at Manchester Business School, added:
"Too few EU Impact Assessments include credible estimates of the costs of new regulations, in contravention of the Commission's own guidelines. This failure is frequently because there is no data on which to make estimates for the whole of the EU. Impact Assessment in the EU should add up the costs incurred by all 27 Member States. Without this data, the system has little meaning."
Tim Ambler, Senior Fellow at London Business School, added:
"The government makes the right noises but is still not really engaging in effective regulatory and non-regulatory means to achieve real improvements in UK commercial performance. Increased regulation of banks, via the FSA for example, gave us Northern Rock."