- The Government’s ‘Regulation Action Plan’ contains many welcome ideas for cutting the burden of red tape
- But a new briefing by Robert Colvile, Centre for Policy Studies Director, argues that it is built around deeply flawed estimates for the costs of regulation
- The briefing shows that the Government has abandoned Keir Starmer’s promise to cut compliance costs by 25%
- Instead, it aims to save £5.6 billion on a narrower measure of ‘administrative cost’ – but even this is built on calculations that severely underestimate the burden on business
The Chancellor this week promised a ‘blitz on bureaucracy’, with a headline target to save business £5.6 billion a year by the end of the parliament. However, a new briefing by the Centre for Policy Studies argues that this is woefully unambitious, because it is built on deeply flawed calculations.
Keir Starmer originally promised to cut ‘compliance costs’ for business by 25% – a bold and welcome measure, given that 65% of businesses say the regulatory burden has increased in the last two years, and just 1-2% that it has decreased.
This target, however, was rapidly revised to cover only the ‘administrative costs’ of regulation – i.e. the narrow cost of implementing the regulation, rather than the wider impact on companies’ operations.
Even so, a rough estimate in the original Government documents suggested that these costs could amount to £70 billion, meaning a 25% reduction would save firms £17.5 billion. Now, however, the Government argues that they amount to just £22.4 billion, leading to the £5.6 billion savings target.
In a new briefing paper, Robert Colvile of the Centre for Policy Studies think tank argues that this is a very significant underestimate.
He points out that the calculation relies on a brute-force calculation that multiplies the hours firms say they have lost to regulation by the average national wage. However, official surveys show that compliance duties normally fall on directors and managers (46% of firms), or the owner or managing director of the company (40%), who are likely to be paid very much more than the average wage – so their lost time is that much more valuable.
Second, the survey on time spent complying with regulation has an upper boundary of ‘More than 50 days’ per month per firm. Large companies will have dozens if not hundreds of staff carrying out compliance functions, spending years or even decades of working time per month across the organisation.
The briefing argues that if the Government is serious about tackling regulation, it needs to fundamentally overhaul its targets – and commit to properly measuring the cost of all types of regulation across the whole economy.
In particular, it argues that the Government should urgently carry out a full and honest costing for the pending Employment Rights Bill, whose impact assessment was declared unfit for purpose by the regulatory watchdog.
Robert Colvile, briefing author and Director of the Centre for Policy Studies, said:
‘Many of the ideas the Government has brought forward for deregulating are good and welcome. But they are fatally undermined by a refusal to address, or even try to determine, the full scale of the problem.
‘Ministers are boasting about their commitment to cut regulatory costs when they do not even have credible data on the cost of regulation to business – and in the case of one of their flagship proposals, the Employment Rights Bill, are refusing to find out.’
ENDS
NOTES TO EDITORS
- For further information and media requests, please contact Melisa Tourt on 07399 251110 and [email protected]
- Robert Colvile is Director of the Centre for Policy Studies
- ‘Axing the Admin? Not Quite’ is available here
- Previous CPS research ‘The Future of Regulation’ is available here
- The Centre for Policy Studies is one of the oldest and most influential think tanks in Westminster. With a focus on taxation, economic growth, housing, immigration, and energy abundance, its goal is to develop policies that widen enterprise, ownership and opportunity
Date Added: Wednesday 22nd October 2025
