Thursday, 5th February 2009

Mats Persson, Research Director at Open Europe, summarises  the group's latest piece of research, 'Out of Control',  which measures a decade of EU regulation and exposes exactly how much EU regulations are costing Britain.

This is Mats Persson's summary. To read the full report, please click HERE

Over at Open Europe we’ve spent a tense six months trying to do what many told us was impossible – to track down and analyse more than 2,000 Government Impact Assessments in order to get a picture of the cost and flow of regulations.

Because while fiscal policy is subject to continuous scrutiny and media attention – with daily and lively debate over tax rates – regulatory policy remains shrouded in mystery.  As a report by the OECD once said:

“Regulatory costs are the least controlled and least accountable amongst government costs. Many governments have no idea how much of their national wealth they are spending through regulation.”

Ten years ago, Tony Blair’s government introduced a system of analysing costs and benefits for all the most significant pieces of legislation, recognising the clear need to get a grip on the flow of regulation.

And in 2005, the government introduced its ‘Regulatory Reform Agenda’, hoping to bring down the cost of red-tape affecting businesses.

But our research, which uses the government’s own figures for the cost of legislation, reveals that instead of decreasing, both the flow of regulations and their cost impact have in fact skyrocketed.  Since the launch of the reform agenda in 2005, the annual cost of regulation in this country has gone from £16.5 billion to £28.7 billion – an enormous increase of 74%.

Counted cumulatively, regulations introduced in the last ten years have cost the UK economy £148.2 billion – the equivalent of 10% of GDP, and enough to abolish income tax for a year, or cut the national debt by 24%.

This is in contradiction to the government’s claim last month that the administrative cost of regulation is coming down.

Likewise, similar efforts at EU level have failed.  Our study finds that a staggering 72% of the total cost of regulation in the UK stems from EU legislation.  In other words, EU regulations introduced in the past ten years have cost the UK economy almost £107 billion.

The cost of EU legislation has gone up year-on-year over the past decade. In 2008 alone, EU legislation dating from 1998 cost the UK economy £18.5 billion – up from £12.2 billion in 2005.

If the current flow of regulation continues, by 2018, the cost of EU legislation introduced since 1998 will have risen to more than £356 billion.  This is around £14,300 per British household. For the same amount, the UK government could pay off almost 60% of the national debt, or abolish income tax for two years and still leave the Treasury with a surplus.

Back to Leading Articles