Red Tape Challenge - useful tool or good spin?

Last week, with much fanfare, the government launched a new initiative designed to reduce the regulatory burden on businesses.

The Red Tape Challenge is a fundamental part of the coalition’s drive to cut regulation that it sees as damaging for business growth. But is the initiative really good for business, or is it spin? Or even worse, could it be dangerous?

What is the Red Tape Challenge?

The Red Tape Challenge is part of the government’s efforts to reduce business regulation. It is a website (or rather, a part of the Cabinet Office website) that gives business owners and the public the opportunity to comment on existing regulations.

Every few weeks, the government invites opinions on regulations relating to a certain industry or sector. Currently, for example, visitors can comment on regulation relating to the retail sector. Within that sector, the government invites users to comment on specific regulations. You can do this as an individual, or on behalf of a business.

The commenting process is very similar to that of a blog. You leave your name and your comment, and the responses are all published at the bottom of the page. In the next few weeks the government will be seeking opinions on regulations affecting hospitality, road transportation, fisheries, and manufacturing.

The government will attempt to cover 21,000 regulations during the challenge, but it has said that it will give priority to rules “that we know place the biggest burdens on businesses and society.” The exercise will run until 2013.

What happens next?

The government has said that it will consider the responses it receives, and act accordingly. It has previously said that, where businesses indicate a desire to see specific regulations removed, the onus will be on ministers to show why the rules should stay. Ministers will have to consider the responses to each sector’s regulation within three months and, at the end of this period, their decisions will be looked at by an ‘independent’ reviewer.

After this, there is no set timetable for action. The government has said that it will act as quickly as possible to remove regulations it agrees are unnecessary – but in reality, these processes are often time consuming.

Are there any disadvantages?

There are several very significant potential disadvantages to the Red Tape Challenge. Your viewpoint on these depends on your viewpoint on regulation, and on the motives of the government.

The first potential disadvantage is that this could all be one big marketing exercise for the government. It is certainly not inconceivable that the government will ignore the views it apparently seeks, and nothing much will change.

But, while this is certainly a possibility, it seems to be made less likely by what appears to be a genuine desire on the part of the government to see regulation cut. This is where the second potential disadvantage arises. Not all regulation is bad regulation. Previous governments (including previous Conservative governments) have worked hard to build regulations that protect the public, consumers, and other businesses. Sometimes, arguably, they have failed. But that certainly does not mean that every regulation should be scrapped.

The risk, therefore, is that good regulation gets the chop as a result of an over-zealous attempt to make life easier for businesses. At worst, this could make life riskier for consumers – and thereby reduce confidence in business.

But it is not just consumers that benefit from certain regulations. Some business groups are concerned that they could see useful so-called ‘red tape’ cut. The jewellery industry, for example, is worried that the exercise will result in the scrapping of hallmarking, despite strong industry support for the system.

The Red Tape Challenge could potentially, therefore, go one of three ways. It could result in a better, more efficient regulatory system for both businesses and consumers. It could result in a riskier environment for consumers. Or it could result in businesses losing valuable support. The devil will, of course, be in the detail. You can keep up with the government’s regulatory changes here.