Farewell red tape?

General changes following the Red Tape Challenge

During the course of the consultation, was there anything that surprised the joint BIS/Cabinet Office team or did anything unexpected get raised that you hadn’t thought of?

The government expected that lots of businesses and individuals would be interested in our generic themes, such as health and safety, environment and employment related law. But comments also revealed an unexpected strength of feeling around particular areas of regulation.

For example, lots of people, particularly musicians, felt very strongly that the regulation of live music under the Licensing Act 2003 was disproportionate and was crippling small-scale live music events. The government has now freed hundreds of live music events from entertainment licensing between the hours of 8am and 11pm, benefiting pubs, clubs and grassroots musicians.

How many suggestions per year (and overall) do you receive from businesses as part of the Red Tape Challenge?

Over 250,000 people have visited the Red Tape Challenge website in total, leaving over 30,000 comments or emails since the programme launched in April 2011.

What percentage of those suggestions are taken forward to investigation?

The Red Tape Challenge team worked with departments to examine every comment and email, directly categorising, organising, structuring, and looking for themes and common issues. Our approach was to treat every comment as potentially valid. In some cases, very short statements proved to be really worth investigating. Conversely, lots of comments on an issue might only count as one idea.

What percentage of those taken forward result in red tape being cut?

It is difficult be specific for the reasons mentioned above. However, of the more than 5,600 substantive regulations examined we will scrap or improve over 3,000 of them.

Comments from the public have led to 45 reforms that do not require a change to regulation—these are not included in the 3,000 figure. For example, the Environmental Agency’s rationalisation of guidance by over 80% will lead to expected savings of around £100m per year, without reducing environmental protections.

Impact on businesses

Do you think what you’ve done so far has been helpful and saved businesses money? Can you cite any good examples of this so far?

In total, Red Tape Challenge reforms will save businesses over £850m per year once all reforms are implemented. There will also be further savings which are not yet quantified, including to individuals and taxpayers, as well as businesses.

Over 800 reforms have been delivered and are already saving businesses £300m per year. This figure has been independently verified by the Regulatory Policy Committee.

Here are some examples of how we are achieving this:

• giving more businesses flexibility to decide whether their accounts should be audited—one part of this package alone, the new audit exemptions for subsidiaries, is estimated to save businesses over £60m per year
• new rules to enable ‘pioneer’ lane rental schemes, providing incentives for works on the busiest roads to be done at off-peak times and estimated to save business over £27m per year
• employment law reforms as part of a package that will save businesses £40m per year, including the introduction of fees for employment tribunals and introducing a 12-month pay cap on the compensatory award for unfair dismissal alongside the existing cap
• changes to collective redundancy rules mean that businesses can restructure more effectively, while ensuring that employees have access to good quality consultations, saving businesses £66m a year in administrative costs.

What is the feedback from businesses as a result of red tape being cut?

The government received some strong positive feedback from businesses.

Ascot Buildings said, ‘By reducing and improving regulation the focus from government has gone full circle and it is now supporting people to run a business’.

Pentreath Automotive Group is an early adopter of the new audit exemption for subsidiaries introduced as part of the Red Tape Challenge. They estimate this new exemption saved them £2,500 last year in audit fees for two subsidiaries.

Taylor Solicitors commented, ‘The government Equalities Office’s commitment to cutting red tape and educating SMEs was very positive. The leaflets they prepared or propose for SMEs are very useful and welcome to organisations who cannot afford HR managers or services of employment law specialists’.

Cornelius Group stated, ‘The balance between protecting the rights of employees and supporting an employer has improved through the employment law changes introduced’.

We also undertake research on business perceptions of regulation. The (most recent) 2012 survey saw the perception of the burden of regulation reduce from 62% of businesses feeling it was a burden in 2009 to 55% in 2012. This figure is still too high, but demonstrates a downward trend.

Are there any statistics to identify how this saves businesses both time and money?

We’re making it vastly easier and cheaper for businesses to meet environmental obligations—by March 2015 the Environmental Agency will reduce 100,000 pages of environmental guidance by over 80%, saving businesses around £100m per year. That’s enough paper to stack as high as three average houses. Putting guidance online, making it searchable and substantially reducing it will save businesses time and help them comply with their obligations.

UK offices could potentially save an estimated £30m a year by ending unnecessary electrical safety tests following new health and safety guidance on electrical appliances. If you laid end-to-end the potential number of labels used to show that tests had been done, which will be removed from office appliances not being tested annually, it would stretch from Portsmouth to Aberdeen.

In January the Prime Minister announced that the Environment Agency has introduced an electronic system to eliminate the need for the 23.5 million waste transfer notes produced each year. This is equivalent to 46,000 packets of A4 printing paper.

What is the most impressive efficiency brought to business as a result of the Red Tape Challenge?

Some efficiencies stand out because they bring large savings to business, others because they affect a wide range of businesses across all sectors, for example, changes we introduced to Employment Tribunals and health and safety regulation. Sometimes it’s not a change to the regulation that brings the efficiency, but the effect on businesses from reducing unnecessary paperwork, reducing time wasting or simply debunking a myth around what businesses have to do to comply with the law.

In April 2012 the government introduced clearer statutory guidance to reduce uncertainty about contaminated land. This will avoid costly and unnecessary remediation operations, potentially saving business an estimated £132m a year. In terms of the cost savings, this is one of our most significant efficiencies.

Other efficiencies are harder to quantify but have a significant impact on the people they affect, for example:

• scrapping unnecessary health and safety inspections for hundreds of thousands of low risk businesses
• amending the Equalities Act 2010 to ensure employers are no longer liable for the harassment of staff by a third-party, such as a supplier or customer
• exempting many live music events from licensing, helping community pubs and grass-roots musicians
• too many people think that you can’t use a ladder at work—new health and safety guidance published in January 2014 made it clear that you can, helping the 10 million people who work at height in this country

Are businesses in one industry benefiting more from the initiative than businesses in other industries?

All business sectors are benefiting from our cross-cutting themes, such as employment related law, health and safety, equalities, company and commercial law, environment, planning administration, pensions and insolvency.

We’ve also reviewed rules and regulations affecting a wide range of sectors: agriculture, general aviation, national savings and investments, healthy living and social care, civil society, aviation, legal services, sports and recreation, medicines, water and marine, housing and construction, energy, maritime, rail, children’s services, manufacturing, road transportation, hospitality, food and drink, retail, challenger businesses.

The theme by theme results are available on our website.

Sector-specific issues

Do you intend to simplify tax?

Tax administration was out of scope of the Red Tape Challenge but good progress has been made outside of the programme.

HMRC have done much to make ‘doing tax’ easier quicker and simpler—giving businesses greater confidence and certainty in their tax affairs, and freeing up their time so they can focus on running their business. It is on track to meet a stretching target of £250m savings to businesses by April 2015.

HMRC has already moved VAT and corporation tax online and brought in record-keeping apps to help businesses keep an easy record of expenditure—and are shortly rolling out a new digital tax account for businesses (a single account which brings into one place everything needed to deal with business tax affairs). The government is also modernising PAYE through digital real-time reporting.

What has been or is likely to be the most effective proposal to cut red tape in relation to environmental regulation?

We have already mentioned the new statutory guidance on contaminated land. In total, simpler and smarter environment regulations resulting from the Red Tape Challenge will save businesses millions over five years and protect the environment by being cheaper and easier for companies to follow.

There are a number of major reforms under this theme, but just to pick a few:

In January 2014 the Environment Agency launched a new electronic system to record the transfer of waste. This will free businesses from around 23.5 million paper waste transfer notes produced each year and is expected to save an estimated £8.7m per year for business.

Talking about waste transfer note reforms, Bernard Amos, CEO of Helistrat said: ‘The edoc system is a brilliant idea. We are moving towards paper-free ways of doing business and this makes perfect sense. It's quicker, easier to trace, will help prevent fraud and saves huge amounts of time. We work with well over a quarter of a million paper waste transfer notes and edoc will save our teams a great deal of time releasing them to focus on our core business.’

Construction companies no longer have to produce ineffective site waste management plans. This will save them an estimated £0.86m per year and allow them to focus their efforts where they are most needed to more efficiently manage their waste.

The full list of reforms under the environment theme is available online.

What has been or is likely to be the most effective proposal to cut red tape in relation to energy regulation?

Changes made under this theme included the extension of the UK Oil and Gas Portal to streamline and digitalise selected environmental application, permitting and reporting requirements relating to the oil and gas industry. These reforms are expected to save operators around £1.9m per annum over the coming years.

Oil and Gas UK commented, ‘It is early days, however the portal shows the potential to streamline applications which will make it quicker and easier for our members to submit permits’.

The changes also included new hearing rules relating to applications made by electricity licence holders for the grant of compulsory wayleaves rights on private land. These new rules deliver a more streamlined administrative and dispute resolution process for electricity companies and landowners. New charges have also been introduced so administrative costs are payable by electricity license holders rather than the taxpayer.

The full list of reforms under the Energy theme is available online.

Is the proposed ‘growth duty’ on non-economic regulators set out in the draft Deregulation Bill intended to be an overriding duty?

No, it is not intended to be an overriding duty. The ‘growth duty’ will compel the 50 or so non-economic regulators to have regard to growth and take account of the economic consequences of their actions. The duty responds to feedback from businesses that regulation can be a barrier to growth, and removes uncertainty for regulators as to whether they can respond to economic concerns.

Each day there are thousands of interactions between businesses and regulators—these interactions need to be consistently helpful, efficient and wherever possible conducive to business productivity and growth. The growth duty will provide clarity that growth is an important factor to be taken into account in the delivery of the essential protections that regulators provide

What’s next?

How much more red tape is there to be cut?

The Red Tape Challenge has looked at the stock of statutory rules and regulations that are active in the UK today. The programme has reviewed over 5,600 regulations since it started in April 2011, as well as forms, inspection regimes and guidance relating to these regulations where people told us these were a problem. The government has committed to scrap or improve over 3,000 of these. One of the real legacies of this work is that Whitehall now understands and manages its regulation much more seriously.

Implementation will remain a priority for all the rest of the Parliament. Some big reforms are still to come this year, including a way forward on housing standards rationalisation.

Through the Red Tape Challenge we have also identified further areas of work which we will now turn to. We have said we will now tackle overlapping rules and regulations for businesses in the healthcare sector (including opticians and dentists) and that we will do work to reduce farm inspections.

We also last year started a programme to find and tackle all the barriers to growth for ‘challenger businesses’—some deregulation will be part of this. We’ve had events with entrepreneurs to tackle barriers to growth for financial innovators, the space and satellite sector and the ‘sharing economy’ so far, and are now putting these topics through our ministerial ‘star chamber’ challenge process.

The ground-breaking one-in, one-out, now one-in, two-out rule sits alongside the Red Tape Challenge and was set up to stem the flow of new regulation. If the government wants to bring a new regulation it must find regulation of double the equivalent cost to business to scrap.

What progress has been made on the draft Deregulation Bill? What are the next steps?

The Deregulation Bill had its second reading in the House of Commons on Monday 3 February and is now going into Committee stage. It will be a carry-over Bill to 4th Session, so subject to the will of Parliament it should get Royal Assent later in 2014.

Finally—and slightly controversially—is there any chance of reducing red tape for individuals too?

Actually this is not controversial at all. While the majority of Red Tape Challenge reforms will reduce burdens for businesses, we have also introduced benefits for individuals and civil society.

We have listened to the feedback we received from respondents under the road transportation theme. An example: ‘The counterpart paper driving license should be scrapped. All the necessary information could be easily contained on the photocard licence. It acts merely as a bureaucratic block to people trying to do things.’

Motorists will save time and hassle with our move to ‘paperless driving’. From December 2013:

• motorists will only need to tell the DVLA once, instead of every year, when they declare their vehicle off the road
• government has scrapped the need for insurance checks when applying for a tax disk (allowing 600,000 drivers to be able renew their tax disk online), and
• government removed the address on drivers’ tacho cards to ease the administrative burden on professional drivers of having to complete and post an application for a change of address and then return the old card to DVLA once they receive the new one

And more is to come—by the end of 2014 we will abolish the paper counterpart to the driving licence, removing the inconvenience of safely storing and producing it, and to provide a secure online enquiry facility to allow drivers’ details to be checked by those with a legitimate need.

For more information on the Road Theme and the Civil Society theme visit the Red Tape Challenge website.

So that's it: the end of the interview. As for me, I'm always a bit sceptical when government departments quote what the cost savings of getting rid of certain measures are but, then again, maths (and therefore statistics) and I have never really got on. They could almost quote anything to be fair.

In any event, only time will tell whether this initiative will work. As life gets more complicated—just think of the technological advances in recent years—my experience is that laws eventually mushroom with such advances: whether they be local, national or European. Stopping the inevitable increase in legislation will not be an easy task.

On the other hand, there is the counter-argument that laws are needed to ensure that markets are regulated properly. In the long run, not all laws are bad from a business perspective.

So what do you think? Do let us know using the comments box below.

Interviewed by Kate Beaumont. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.