The UK government does not interrogate legislation coming from EU as closely as it should and too often adopts a tick-box approach instead of applying a rigorous analysis of the likely effects of the regulations.
That was the conclusion of a new report, published by the British Chambers of Commerce (BCC), which compared the UK and EU regulatory systems.
In a review of 265 Impact Assessments (IAs), which measure the cost of regulation, the report’s authors, Tim Ambler, Francis Chittenden and Andrea Miccini from the London and Manchester Business Schools, argued that the UK and EU regulatory systems are “out of kilter”.
As a result, British firms are set at a disadvantage.
With the EU accounting for £61 billion worth of regulatory costs to business since 1998, the BCC said that it is vital for the UK’s impact assessment process to be synchronised with the EU’s.
Tim Ambler, Senior Research Fellow at the London Business School, said: “Much of the problem stems from Whitehall wishing to add its own unique UK regulations to the already substantial flow from the EU.”
The report recommended, therefore, that whenever a minister signs off a new UK-only regulation, in relation to an area with EU competence, they should explain why the regulation is needed in the UK but not in the rest of Europe.
David Frost, director general of the BCC, commented: “Regulation can harm productivity and citizens in the long-term if our laws are not properly scrutinised.
“Considering the fragile nature of our economic recovery, more needs to be done to immediately reduce the burden of red tape on business. Within its first 90 days in power, any new government should announce a moratorium on new employment laws.”
Francis Chittenden, Professor at the Manchester Business School, added: “Regulation is like taxation. It raises business costs and so reduces the amount of business activity conducted in the UK.”