By Claire West

The Forum of Private Business welcomed the Government’s announcement that a ‘one-in, one-out’ regulatory system will be introduced on 1 September 2010 in order to stem the growing burden of red tape on small firms.

The new system is part of a package of measures the Government hopes will create a culture of ‘regulation as a last resort’. It will be overseen by a strengthened Regulatory Policy Committee tasked with scrutinising proposed regulations and the implementation of EU legislation in advance of policies being formed.

The Government has agreed a set of ‘principles of regulation’ for departments to follow when they are considering new laws impacting upon businesses and social enterprises.

The Forum warned that, for the committee to be truly effective in implementing the new system, it must be able to enforce these principles and influence regulatory practice within government departments.

Jane Bennett, Head of Campaigns for the FSB, said: “It is good to see the Government pushing ahead with its commitment to improving the regulatory landscape... the concept of introducing regulations only as they are needed is absolutely necessary given the existing burden on small businesses, but it will require a change in behaviour for many government departments.”

Bennett argued that the independent Regulatory Policy Committee needed to be a fully-fledged watchdog. She said:
"[The RPC] must influence departmental practice if it is to bridge the gap between over-regulation, which is what we have now, and lighter-touch intervention".

"That means being able to enforce these principles of regulation, which are as yet undefined. As with many of the coalition’s new policies, the follow-through is what will be important".

Last year, the Forum's ‘Cost of Compliance' survey revealed that 81% of businesses surveyed believe the existing regulatory framework is not robust, unrealistic and unfair.

It found that red tape costs smaller employers £9.3 billion per year in internal costs, mainly the time spent on administration, and found they spend an average of 37 hours per month complying with the law.

According to the Forum's research, the amount spent by smaller businesses on employment law — at £2.4 billion — is the highest out of all seven different types of legislation categorized. This surpasses the £2.1bn per year spent on health and safety administration and £1.8bn on tax.

The new ‘one-in, one out’ rule will initially apply only to legislation affecting businesses and the third sector, but according to a statement from the Department for Business, Innovation and Skills (BIS) it could be expanded in due course.

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