Britain’s businesses are spending an extra £6bn a year under the Tories as they grapple with an onslaught of red tape, a Conservative-leaning think tank has warned.
Policies introduced by the Tories have added £35bn in expenses on businesses in today’s money, rising to £57bn when including pensions, according to the Centre for Policy Studies (CPS).
While the Government has claimed such increases have been accompanied by offsetting gains, the research estimated the net increase totalled £6bn a year. This is almost akin to a 2p rise in the corporation tax rate, the CPS said.
The think tank collected its findings by scrutinising 3,538 pieces of legislation passed between 2010 and 2019.
The report’s authors emphasised that the rise in the regulatory burden is likely far greater than £6bn given “significant errors” and “miscalculations” in the Government’s impact assessments.
Robert Colvile, director of the CPS, said: “We simply do not know what regulations successive governments have imposed, or what their impact on the economy is - and the picture gets more blurry with every new measure.
“We need to do far more to monitor both the stock and flow of regulation - and to make ill-considered rules both harder to pass and easier to remove.”
The report criticised the Government for failing to properly assess new regulatory costs, claiming figures put forward are “often alarmingly woolly, or riddled with errors”.
Such impact assessments are often produced by junior staff to justify decisions already taken, they said.
The report highlighted examples such as a tax on plastic bags at supermarkets being presented as ‘deregulatory’ and saving businesses £1bn across the parliament.
It comes after the boss of the International Monetary Fund, Kristalina Georgieva, on Thursday urged countries to slash red tape, saying it was “essential for growth”.
A day later, Kemi Badenoch, the Business Secretary, warned that the balance in many Western countries had “tipped too far in favour of the bureaucracy and against the individual consumer, entrepreneur and the innovator”.
Companies across different industries have complained about excessive reporting requirements or needlessly complex rules sucking resources away from other activities.
In the financial sector, the watchdog recently rowed back on its opposition to allowing asset managers to bundle fees for investment bank research with trading costs. It came after backlash from traders claiming the policy was putting pressure on smaller firms and making London less investable.
Meanwhile, British exporters have also been vocal in their criticism of the Government for financial losses from greater checks and levies when trading with the EU.
Conservative minister Andrea Leadsom hit back at such criticism earlier this year, claiming it was the “price you pay for sovereignty”.
The CPS also warned that thousands of EU rules were introduced into law without any costings.
The Government should create an independent regulatory audit office to avoid allowing departments to “mark their own homework”, the report recommended.
Much like the Chancellor has oversight of fiscal policy, it also encouraged the Government to give one senior minister responsibility for regulatory reform and monitoring.
Sir Jacob Rees-Mogg MP, a former business secretary, said: “Regulation must be taken as seriously as spending. Until it is, the burden on business will increase. This means that the economy will not grow, which will make us all poorer than necessary.”
A government source said: “It’s hard to argue with the findings of this Centre for Policy Studies report. Successive governments have been guilty of regulating as a first choice, rather than a last resort - as Kemi Badenoch noted in her speech to TheCityUK last week. But as of 1 January this year we have scrapped over 2,000 EU laws, with many more to come; and started a smarter regulation programme that will reduce the burden on businesses.”
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