Is it the People’s Front of Judea, the Judean People’s Front or the Judean Popular People’s Front? The medley of initiatives the government has launched to tackle red tape has left directors feeling as confused as the separatists in Monty Python’s Life of Brian.

For instance, what’s the difference between the Better Regulation Commission (BRC) and its predecessor, the Better Regulation Task Force (BRTF)? Where does the Better Regulation Executive (BRE) fit in and which has the biggest teeth—the BRC or the BRE? And what about the Companies Act 2006 (previously known as the Company Law Reform Bill)? What can small and medium-sized enterprises (SMEs) expect from this, the biggest shake-up of company law in 20 years, when it comes into force in October 2008?

By simultaneously trying to protect its citizens and minimise business red tape, the government finds itself between a rock and a hard place. But the feeling remains that its perceived addiction to regulation punishes good, responsible directors and only serves to take them away from the task of generating money for the UK economy.

Ahead of a financial services summit in October 2006, Chancellor Gordon Brown promised to help companies in the City by cutting regulatory red tape by a quarter. A number of emails posted in response on The Daily Telegraph’s website spoke volumes: “laughable”; “a barefaced lie”; “as likely as Gordon going on Stars in Their Eyes as Judy Garland”.

The reaction is understandable, but perhaps unfair. As James Walsh, head of European and regulatory affairs at the IoD points out: “The government has launched an aggressive raft of initiatives on better regulation, the vast majority of which are very welcome.”

Meanwhile, measures in the Companies Act have, to a large extent, been designed with small (private) businesses in mind. According to the Department of Trade and Industry (DTI), this “Think Small First” approach “will remove substantive unnecessary regulation” and hopefully make the law much more accessible and comprehensible. Clearer law, better guidance, an improved Companies House website and specific legislative changes—all for the benefit of SMEs—it sounds wonderful.

It is comparatively easy to do business in this country… but we are not in shape. I have given William Sargent a strengthened remit to challenge departments on regulation With the creation of the BRE in May 2005 to minimise bureaucracy for businesses, Tony Blair sent out a positive message to directors. He later told delegates at the CBI annual conference: “It is comparatively easy to do business in this country… but we are not in shape. I have given William Sargent a strengthened remit to challenge departments on regulation.”

Given the importance of the task, why did the BRE’s executive chair keep his head down for so long? Sargent explains: “In 2005, simplification of regulation was moved right to the top of the list of priorities. I kept a low profile for a while because I didn’t want to keep saying ‘we’re going to...’ all the time. I didn’t want to talk about it until it was done.

The reason he’s stuck his head over the parapet now is because the BRE has set in motion what it calls “a sea change of regulation”. All 19 government departments are to publish annual simplification plans that will remove unnecessary requirements and reduce the amount of paperwork and administration costs that government regulations place on businesses. It has totted up which regulations impose the highest administrative costs on firms and is asking each department to reduce them by 25 per cent.
“This isn’t just a one off,” claims Sargent. “Ministers or civil servants will be taking a portion of the year and saying, ‘let’s look at what’s already on the [regulatory] books. What can we do? If we didn’t crack that bit last year, let’s crack it this year’.” The intention, it seems, is that if there’s something that can be simplified or removed, the BRE will do it.

Sargent says the UK’s better regulation initiative is setting a precedent for the rest of Europe: “The Dutch have tried a little bit, in terms of administration. But the G7 countries are saying, ‘we’ll see how you get along’. There’s a queue behind us—we’re very much at the forefront of deregulation and simplification.”

The Health and Safety Executive (HSE) was the first to publish its simplification plan, outlining initiatives that would reduce the paperwork costs to business associated with complying with health and safety laws. The total annual administrative cost of health and safety legislation is just over £2bn. Businesses will see a saving of £508m if the HSE reaches its target of a 25 per cent reduction. Sargent claims the savings across all 19 departments will eventually amount to billions of pounds.

But when will directors notice the difference? Walsh is concerned about the pace of progress. “The government has to appreciate that businesses will not be satisfied simply by the sight of a plan or initiative published in Whitehall,” he says. “Businesses are looking for practical reduction of time spent with inspectors and the time they have to spend filling in forms or reading up the guidance on the latest regulations.”

Michael Snyder, senior partner at accountancy firm, Kingston Smith and policy chairman of the City of London agrees: “Robust regulatory impact assessment; the cost/benefit analysis; making sure that if you put in one regulation, another has to go out are all good things. But there’s some way to go in terms of getting the machinery to respond.”

Sargent admits that some measures may take 18 months to implement. And he acknowledges that some departments have been slower to get on board than others—“we set pretty ambitious targets and had all sorts of problems”. But he insists that other measures will impact immediately. “The HSE has changed its approach to risk assessment [by launching simpler, shorter risk principles]. It’s not waiting six months to do it, it’s doing that now,” he says.

That’s an indication of the culture change he is hoping to establish. He says: “I’m there to facilitate and to cajole; to make sure things are delivered to a substantial standard. More importantly, [the 19 plans] add up to a change in mindset.”

Directors who run their business along best practice guidelines, yet still face scrutiny from an army of bureaucrats, may find this hard to believe.
Marcia Roberts, chief executive of the Recruitment and Employment Confederation, suggests that there may be support at the top for better regulation, but it hasn’t filtered down yet. “A lot of red tape comes, not necessarily from regulation, but the way that government conducts its business,” she says. Red tape is “the top barrier to business” among REC members she claims, adding: “The policy lines are going in the right direction, they’re making the right noises in terms of what they want to achieve, but so often we see government policy that’s not applied well.”

The IR spends too much time chasing cheques that have been paid, sends rude intrusive letters and makes hassling calls Peter Massey, founder director of Budd, a customer management firm, singles out the Inland Revenue for criticism and would certainly like to see regulatory bodies and government inspectorates adopt a more business-friendly approach. “My subjective observation is that the IR spends too much time chasing cheques that have been paid, sends rude intrusive letters and makes hassling calls. We already need accountants to handle all the rules we may fall foul of, then we get this on top,” he says.

Snyder agrees that the IR could “do its job without being so aggressive”. When you get down to the people on the ground, he says, “they’re a little less balanced, proportionate and risk-based”.

We’d all like to believe that a wholesale culture change is taking place in Whitehall, but as Walsh points out: “Making a success of better regulation doesn’t just mean chipping away at awkward rules  one by one. We’ve got to persuade inspectors and civil servants to give a light touch to responsible, consistently compliant businesses but, at the same time, come down hard on the rogue traders.”

Sargent is sympathetic. He understands why directors are hacked off when their business is turned upside down by inspectors, despite a good track record. “If I run my business well, I expect to be left alone,” he says. But again, he insists that the tide is turning, and that the people at the top will give leadership and guidance right down to the ground level. “The regulators are beginning to restructure themselves. They’ll be all over the businesses that are poor, but as soon as you perform well, they’ll leave you alone,” he says.

Sargent wants to see directors taking more responsibility for the environment in which they trade and not “sitting in silence”. The BRE promises to assess and respond to business complaints of over-regulation within 90 days of receiving them. “I don’t want to hear, ‘it’s all too complicated’. That doesn’t help,” says Sargent. “I want businesses to go onto our portal and say, ‘I’ve just had to do this, it’s daft, it should be done like this’. It allows us to go to a department and say, ‘have you guys actually realised that this is a pain in the arse? You can do it with half the paperwork’.”

Fair enough, says Walsh. That’s precisely why the IoD presented members’ first-hand accounts of the problems arising from excessive or badly applied regulation to the government in an IoD policy paper, In their own words: Volume II.

But Juliet Price, managing director of human resources consultancy, Park City is sceptical that after years of what felt like extra regulation, the government is now moving the other way. “I’m astonished by this incredible government u-turn,” she says. Price feels the BRE needs to do more to reward excellence and convince directors that it’s on their side. She would like to see Whitehall establishing a more direct dialogue with the small business “movers and shakers” whom she thinks tend to do the right thing anyway. “Talk is cheap,” says Price. “He [Sargent] needs to get out there and really start engaging with directors who are crying out for help with compliance.”

It may take some time for Sargent to win the hearts and minds of directors, and to help departments find the balance between clarifying, simplifying, and protection. But he’s not daunted. In fact, he says he’s taking sole responsibility for the success of this project. “If you look back at previous initiatives, you never quite had everybody on board. On this occasion, if it doesn’t work, then I’m to blame because I have no excuse. The goodwill is there. The PM, the Chancellor, the ministers, the permanent secretaries—everything is in alliance this time. I have no excuse for failing.”

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