Report 2: The Impact of Regulation on Economic Growth

Report uncovers a £143bn regulatory burden on businesses

New reports published by the Growth Commission lay bare the staggering true cost of Government regulation to businesses well in excess of the Government’s original assessment of £14.3bn.

According to the report, costs on businesses from regulations imposed since 2015, could have a negative regulatory impact of £143 billion or 6% of UK GDP.

The report also explores “not fit for purpose” regulatory impact assessments which currently lack thorough analysis, assessments on long-term impact on cost, competition and wider societal knock-on effects from legislative change. There are some absence of assessments which include the Government’s proposed ban on the sale of new petrol and diesel cars.

Other poor practices involve missed legal obligations to publish regulatory assessments before legislation is passed, circumventing parliamentary scrutiny which could have led to protecting businesses from additional regulatory costs.

The report also estimates that improvements to regulatory assessments and reporting could boost GDP by 5-10% which is backed up by comparable reforms in other western economies.

ENDS

COMMENTS
“Businesses have long complained that every pound of red tape costs has the same effect on our economic growth, productivity and export competitiveness as a pound taken through tax. But these two reports from the Growth Commission show what that means in practice, every year. The numbers are stark, and the costs to our economy and to hardworking families are huge. Politicians ought to control red tape costs as carefully as every other type of public spending. Just because the costs aren’t paid through taxation doesn’t make them free.”
John Penrose, MP

“These two papers outline evidence about the potential scale of gains and growth from regulatory reform. In the UK, we’ve focused on three published business impact assessments and their variables, to assess whether the analysis properly reflects the impact on the overall economy.. Both papers show that without proper regulatory assessments that take into account the impact of regulation on competition as well as business impacts, we are in danger of severely underestimating the true impact of poor regulation on the economy more widely.”
Shanker Singham, Co-Chairman of The Growth Commission

Notes for editors

• The Growth Commission: The Growth Commission investigates how low growth economies can be transformed into high-growth economies. We look at impacts on growth of various factors, including demographics, size of government, tax rates, market distortions, trade policy, competition policy, housing policy and other factors. The Growth Commission also analyses the impacts of policy changes, using a suite of models that help analyse the long-term impact of policy decisions on growth, first in the UK, and ultimately covering other nations.
  
  Press Contact
  Lucy Harris, lucy@growth-commission.com