IoD: red tape costs UK business £80bn

Regulation costs British businesses more than six times as much as the Government estimates, the Institute of Directors (IoD) will say today, with the business group launching an appeal to the three main political parties to take the issue more seriously.

The IoD said it believed that the total cost of regulation has now reached £80bn, the equivalent of 5.7 per cent of the country's economic output. That contrasts with an official estimate of just £13bn, which the organisation said hugely underestimated how much time and expense companies were pouring into complying with regulation.

"£80bn is effectively being taken out of the UK economy each year due to regulatory paperwork," said Miles Templeman, the IoD's director general. "When the regulatory burden is so large that it typically occupies one employee in every private enterprise in the UK for nearly half a year, it's obvious we have a problem."

Mr Templeman said the IoD's research suggested that businesses were spending an average of 73 hours a month on regulation, the equivalent of "one member of staff working continuously on regulation for five-and-a-half months to complete a business's annual regulation administration".

The IoD said over-regulation had become a threat to the competitiveness of British business and called on the next government to announce a massive overhaul of Civil Service practice on regulation. It also called for ministers to reassess the way they calculated the cost of regulation – the organisation's own work is based on surveys of businesses rather than official statistics, which the IoD said had consistently under-represented the problem.

"This isn't a debate about diluting protections, because form-filling doesn't protect anyone – this is about getting a culture change in Whitehall," Mr Templeman added. "Officials are incentivised to produce legislation. Unless the next government changes the way civil servants are evaluated and rewarded, businesses will continue to face a large and ever-increasing burden of paperwork that hinders them from growing and, ultimately, from creating jobs."