Deregulation could release £50 billion

Halving existing business regulation could release a minimum of £50 billion per annum of value added into the UK economy, claims London Business School senior research fellow Tim Ambler and Francis Chittenden of Manchester Business School.


Halving existing business regulation could release a minimum of £50 billion per annum of value added into the UK economy, claims London Business School senior research fellow Tim Ambler and Francis Chittenden of Manchester Business School.

Halving existing business regulation could release a minimum of £50 billion per annum of value added into the UK economy, claims London Business School senior research fellow Tim Ambler and Francis Chittenden of Manchester Business School.

About half of the money released would, Ambler and Chittenden argue, accrue to government in higher taxes, meaning the benefits of deregulation could be shared roughly equally between the public and private sectors.

According to the two authors, the deterioration in UK productivity performance in the last ten years may be associated with the acceleration of regulation. The research goes on to suggest that both Conservative and Labour Governments have failed in trying to reduce red tape during the past 20 years.

Ambler and Chittenden maintain that deregulation – removing existing laws – has been approached with enthusiasm, but little measurable impact. Conversely, regulation – justifying new laws – moves from strength to strength.

For example, a 2001 Act produced just 27 deregulations in the ensuing four years while over 600 new regulations came in. The 2001 Act was broadly the same as the 1994 Act of the Conservative government, producing just 26 deregulations in the ensuing four years.

In a bid to change this, they suggest a different approach to deregulation – focusing on the current EU interest in deregulation, but also including acknowledging and utilising the powers of UK Statutory Instruments, and devolving power back to a cabinet minister holding responsibility for deregulation.

As for establishing a case for easing regulations, Ambler and Chittenden say it is simple: cutting red tape reduces the direct costs of compliance and administration and indirect costs of management and the diversion of attention from the marketplace to dealing with governance.

Ambler and Chittenden note that it is too soon to judge whether the Legislative and Regulatory Reform Act 2006, or attempts to reduce administrative burdens, will be effective, although there are some encouraging signs.

Marc Barber

Raven Connelly

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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