IoD calls for £80bn red tape bonfire

The Institute of Directors says the cost of regulation is over six times the Government's estimate.

Last Updated: 07 Feb 2011

Using what it ominously calls a ‘new approach based on the experiences of real people running real businesses’, the IoD claims the government’s £13bn figure wildly undervalues the amount of time company directors and employees spend on form filling. If these people are to be believed – and ‘real’ people are always the most reliable kind – the number should be closer to £80bn: £79,888,896,000 to be precise. That’s 5.7% of the UK’s GDP. According to the Institute, this is evidence that the government needs a culture change, and to step out of the way.

IoD director general Miles Templeman said: 'When the regulatory burden is so large that it typically occupies one employee in every private enterprise in the UK for nearly half a year, it’s obvious we have a problem.' Presumably we also have one very bored employee.

The calculations are based on remuneration data and estimates of time spent ensuring compliance, registering at 13 hours a month for directors and 73 for a designated worker. As £29bn of the purported cost comes from directors’ own time, we wonder whether the IoD is claiming that companies would get rid of their Chief Regulatory Officers, or pay them less, if the burden were lower. Seems pretty unlikely to us.

Nonetheless, they have a point. The government might have stopped short of establishing a Department for Paperclips, but the number of new quangos formed since 1997 is in the hundreds, many of them tying companies up in elaborate new knots of red tape. Of course, the challenge lies in working out where the cost of regulatory compliance is unnecessary, and that’s much more easily said than done. People might take more notice if the IoD laid out some specifics. Proposals to simplify the tax regime for SMEs, perhaps.

Of course, deregulation is rather unfashionable these days, given the role that financial deregulation played in the crash. The former Department of Business, Enterprise and Regulatory Reform was even moved to rebrand itself, removing the ‘R’ word in favour of Department for Business Innovation and Skills. Although this is hardly an unusual occurrence, the department having had more names than Jason Bourne in recent years.

However, there is an opportunity here. Public spending cuts are on the way, whatever the colour of government we get after May 6. As Andrew Wileman notes in  in April’s issue of MT, The underlying need for many processes, departments, layers and quangos will need to be challenged. They certainly will.

So if sensible cuts can be found amongst those agencies whose role seems to consist of tying companies’ hands behind their backs, it would have the double benefit of cutting public spending and reducing the burden on our vital SME’s. What’s not to like about that?


In today's bulletin:

Inflation busts 3% as cost of transport soars
10.1% profit eruption as Tesco puts in seismic performance
Primark still looking sharp
IoD calls for £80bn red tape bonfire
MT Expert: How to stay grounded in a growth spurt

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