Volume 15: Government and Public Administration
7. Reducing regulation
The Deregulation Initiative

7.1 A key government policy throughout the BSE period was the Deregulation Initiative. This sought to reduce the burden of legislative and regulatory requirements on industry and commerce (especially on small firms). The Deregulation Initiative was a constant element in policy-making, with a particularly high profile:

1. between 1985 and 1988, when a succession of White Papers set out the Government's objectives and detailed what was being done and how; and
2. after the General Election in April 1992, when it was given fresh impetus by the Prime Minister, Mr John Major, with the President of the Board of Trade, Mr Michael Heseltine, taking policy responsibility.

7.2 Deregulation had been a policy objective of the Government since 1979, and it took on a new urgency in 1983 with renewed scrutiny of the regulatory activities of central and local government. The result was a White Paper in 1985, promising that proposed new Regulations and their likely cost and impact on business would be scrutinised by the initiating Department or Agency, and that its conclusions would be checked by a 'central task force' of officials who would also take an overview of emerging regulatory proposals and the scope for rationalisation and simplification. Departments would have to prepare 'compliance cost assessments' (CCAs) of their regulatory proposals, and the task force would perform a regular audit function and conduct one-off reviews. ¹

7.3 This approach was developed over succeeding years. As the Deregulation Timeline (Annex 3) shows, it became more and more complex and time-consuming for Departments. Procedural guidelines appeared in 1986 from the task force, then known as the Enterprise and Deregulation Unit (EDU), ² together with a model CCA. The guidelines required Departments to set out the origin and purpose of proposed Regulations, the likely benefits, their impact on businesses of different kinds and sizes, whether there were alternative ways of achieving the desired end, how the Regulations would be enforced and what this would cost. ³ Further detailed guidance on preparing CCAs was issued in 1990, 1992 and 1996. From 1992, CCAs were required for all statistical surveys, all advice to Ministers in respect of Private Members' Bills affecting business, and all papers on regulatory proposals for the Cabinet, Cabinet Committees, and the Prime Minister's office ('No. 10'). ⁴ Most CCAs were published.

7.4 Risk assessment became a mandatory stage in the process of considering whether and how to regulate, as the Department of Trade and Industry (DTI), which inherited the EDU from the Department of Employment, became concerned that regulators were placing burdens on industry that could not be objectively justified in terms of the risks to be avoided. ⁵ Guidance on risk assessment in 1993 stressed 'proportionality' - ie, Regulations should be in proportion to the problem and the likely benefits. ⁶ By 1996, all such risk assessments had to be 'personally certified by the responsible Minister'. ⁷

7.5 There were two other preoccupations. Firstly, it was reiterated that the impact of Regulations proposed by the European Union needed to be kept under review:

Just how much of the regulatory burden on British business stems from Brussels? And how far does Whitehall embellish these regulations and enforce them with excessive zeal? ⁸

This was the subject of an interdepartmental scrutiny in 1992-93. By 1996, a checklist had been formulated that 'is now applied to ensure that EC requirements are not over-implemented'. ⁹ Secondly, the need for consultation with business was stressed and became an intrinsic part of the evolving procedural guidance, with the later refinement of a 'small business litmus test' (ie, a requirement that small businesses should be consulted separately 'on the impact of a proposed regulation'). ¹⁰

7.6 Within Whitehall, the Deregulation Initiative was bound together by specified reporting and monitoring requirements. Departments were required to set up their own Deregulation Units, each reporting to a nominated Minister, which would oversee regular 'forward looks' (early warning of proposed Regulations) and reviews, and report regularly to the EDU, which in turn reported to its own Minister.

7.7 This increasingly detailed approach, explicitly involving Ministers, was indicative of the importance attached to deregulation by the Government, particularly from 1992, when the Prime Minister told Mr Gummer that 'as I said in my Party Conference speech I am absolutely determined to reduce the burden of regulation on business', and that 'I am determined that we should have made major progress by the next Party Conference'. ¹¹ Two years later, the Government enacted legislation (the Deregulation and Contracting Out Act 1994) which provided it with an unusual and controversial 'fast track' power:

These sections [of the 1994 Act] provide a mechanism to change primary legislation for the purpose of removing or reducing burdens on business or others, provided that necessary protection is not removed. They allow a Minister to make an order to amend or repeal legislation passed before or in the same session as the Act which imposes a burden and in doing so to set up a new regulatory system which is less burdensome than the existing regime. ¹²