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Seeing red - May 2011

The ever-helpful Wikipedia defines red tape as “a term for excessive regulation or rigid conformity to formal rules that is considered redundant or bureaucratic and hinders or prevents action or decision making. It is usually applied to governments, corporations and other large organisations.”

The origins, as might be guessed, are historical, dating back to the time when large bundles of legal documents were bundled and bound together by red cloth tape, so “cutting through the red tape” meant literally that.

Henry VIII, who made serial marriage and gout equally infamous, besieged Pope Clement VII with around 80 petitions for the annulment of his marriage to Catherine of Aragon – each one bound in red tape.

But history aside, the impact of red tape and regulation to modern day business has long been a bone of contention of Chambers of Commerce who see it as frequently being unwieldy, unnecessary and unwelcome because of the high costs to business and its ability to hamper economic growth.

Every year the British Chambers of Commerce (BCC) publishes its Burdens Barometer which details the real costs to business of success years of regulation and its estimated impact in the coming years. Most recently it looked at the new employment laws due to be implemented over the next four years which are set to cost Scottish businesses an extra £1.57bn which will put a huge additional burden on companies that are still recovering from recession.

The Chamber network has also been lobbying for the UK Government to uphold its commitment to a “1-in, 1-out” policy on regulation pledged in the run up to last year’s General Election.

It’s encouraging news therefore that the Government announced at the conclusion of the recent BCC conference that it is issuing its Red Tape Challenge, described as a new initiative to tackle regulation.

Every few weeks, regulations affecting one specific sector or industry will be published and will be open to comment from members of the public. Ministers will then have three months to consider the comments and determine what they want to keep and why.

The process began with a request for feedback on the retail sector and it has published a more specific timetable outlining when it will consider other sectors. Throughout the process it will also publish general regulations that cut across all sectors – everything from equality to employment so that everyone running a business has opportunity for input.

The process will continue until April 2013 and full details are available at: www.redtapechallenge.cabinetoffice.gov.uk

The timetable set out to date is:

May 6 – Hospitality, food and drink

May 20 – Road transportation

June 2 – Fisheries, marine enterprises and internal waterways

June 16 – Manufacturing

June 23 – Healthy living and social care

July 7 – Media and creative services

July 21 – Utilities and energy

August 4 – Rail and merchant shipping

August 18 – Mining and quarrying

The promise is that unless departments can justify why they are needed, all burdensome regulations are out. They will be challenged by an independent reviewer and regulations that can’t be justified, will go.

Business will follow the process with interest – and a fair degree of expectation that the Government will stick to its commitment to fight back and cut red tape to free business and society from the burden of excessive regulation.

With 21,000 statutory rules and regulations in the UK, they’ll have plenty to choose from - so let’s hope that the promised commitment is not just a red herring.

Banking on Change

Also of interest to business is an announcement from the British Bankers’ Association about the launch of a new initiative designed to restructure the transparency of how banks make decisions related to business lending.

This will allow a right to appeal a decision if a formal application for a loan has been declined. As part of this Britain’s biggest banks have agreed a new set of principles setting out what you should expect when appealing.

If you have had a bad banking experience it could provide some of the answers – if not necessarily the solution.

More information is available at:

www.betterbusinessfinance.co.uk

Kate Yuill, Policy and Communications Manager