The ‘better regulation’ agenda and nature conservation

Donal McCarthy, RSPB

“Reconciling Nature and Prosperity – A New Paradigm” (WWF Living Planet Centre Woking, 2nd July 2014)

What is Regulatory Reform?

“I want us to be the first government in modern history to leave office having reduced the overall burden of regulation, rather than increasing it” – David Cameron (2011)

Regulations are “...placing ridiculous costs on British business” – George Osborne (2011)

Red Tape and the Regulatory 'Burden’

• Distinction between regulatory cost and regulatory burden

• Administrative cost (red tape) vs. Policy (compliance) cost

The ‘Better Regulation’ Framework

• A two-pronged attack on the regulatory burden:

– Reducing the volume of existing regulation e.g. red tape challenge.

– Reducing the flow of new regulation e.g. using regulation “as a last resort”, one-in, two-out rule.

Why does this matter for Nature?

• Properly enforced regulations play an important role in protecting nature.

• Tackling new and existing threats to nature will, in many cases, require new regulatory solutions.

• Regulatory frameworks underpin effective market-based solutions e.g. PES

Red Tape Challenge – a “blitz on bureaucracy”

• A cross-government programme to review the stock of existing regulation to see “which ones can be scrapped”.

• Since 2011, the government has been asking businesses and the public which regulations should be abolished by inviting comments on the RTC crowd-sourcing website.

• “The default is that regulation should go…together we can fight back – and free up business and society from the burdenof excessive regulation.”

...reaction to the Red Tape Challenge

Source: Lodge, M., & Wegrich, K. (2014). Crowdsourcing and regulatory reviews: A new way of challenging red tape in British government?. Regulation & Governance (early view).

Defra Better for Business: A Strategic Reform Plan for Defra Regulations

“To unlock growth we must get out of people’s hair…fossilised strata of rules and bureaucracy…we have started to untangle some of the rules that can have a stranglehold on business….a cashcow for lawyers and consultants.”

Regulation “as a last resort”: using alternatives to regulation

The Government’s Principles of Regulation

We see conventional regulation as a last resort. The Government will regulate to achieve its policy objectives only:

• having demonstrated that satisfactory outcomes cannot be achieved by alternative, self-regulatory, or non-regulatory approaches

• where analysis of the costs and benefits demonstrates that the regulatory approach is superior by a clear margin to alternative, self-regulatory or non-regulatory approaches

Do self-regulatory approaches work?

• Defra (2013): “...over-ambitious to assume that partnership approaches will be as effective as regulations...”

• The RSPB has conducted a review of the available published evidence on the performance of voluntary schemes:

– More than half of all schemes fail to achieve either the majority of their targets or industry participation rates in excess of 50%. The majority of schemes fail to set weak or unambitious targets

• Lack of sufficiently strong incentives to participate and/or comply a key factor in explaining the results of this analysis.

One-in, Two-Out

“It is now much harder for ministers to regulate!” – Michael Fallon, Minister for Business and Enterprise 

• Under OIOI, any net costs to business associated with new regulations have to be offset by the removal or simplification of existing regulations, leading to equivalent net cost savings to business.

• Under OITO, double the cost savings must be found! This is providing a “very real brake” on the introduction of costly new regulations (RPC, 2014)

Regulatory Impact Assessment

• Impact Assessments (IAs) are required for all new regulations that impose costs on business and must be independently assessed by the Regulatory Policy Committee.

• All measures require a “fit for purpose” rating from the RPC before receiving final clearance from the Cabinet Office Reducing Regulation Committee. At the final stage, this rating is “based solely on the accuracy of the estimated cost to business.”

• 50% of IAs treat social and environmental impacts with low rigour or not at all (Tinch et al. 2014).

• Focusing on the cost to business risks ignoring the benefits of regulation and also ignores the fact that future costs are frequently overestimated by those keen to avoid regulation.

Related Policies – “... getting regulators to put growth first”

• Deregulation Bill: introduces a ‘growth duty’ requiring non-economic regulators to “have regard to” promoting growth.

• Regulators’ Code: statutory code governing the way in which regulators’ carry out their regulatory functions.

– Principle 1: Regulators should carry out their activities in a way that supports those they regulate to comply and grow

Improving Inspection/Enforcement

• Business Focus on Enforcement Initiative: “…gives trade associations and representative business groups…the dominant role in identifying enforcement issues and driving reform to benefit their industries.”

• Farming Regulation Task Force: Earned Recognition and “rewarding good practice with less frequent inspection”

EU and Better Regulation?

• UK Government: “Guiding Principles for EU Legislation”

• Balance of Competences and EU Business Task Force

• 10 Point Plan for EU Smart Regulation

• SMART Regulation and REFIT

What does the future hold?• Small Business, Enterprise and Employment Bill (2014)

– Deregulation Target: future Governments required to publish and transparently report against a target for cutting regulatory burdens in each parliamentary term

– Regulatory Review: new regulations that impose a burden on businesses will contain a statutory review provision

– Business Appeals Champion: an independent Small Business Appeals Champion to be appointed to each non-economic regulator to ensure complaints and appeals procedures are business-friendly, providing an easy pathway to challenge regulators’ decisions

Underlying Assumption(s)

• We have too much regulation.

• Regulation is bad for business and bad for the economy (environmental regulation is a barrier to growth).

• The costs of regulation outweigh the benefits.

Inconvenient Facts• No evidence to suggest that the UK is

excessively burdened by regulation; already among the top deregulated countries in the world one of the best places to do business.

• “... no inherent incompatibility between preserving and enhancing natural capital and economic growth”.

• Benefits of environmental regulations outweigh the costs by more than 2:1 (almost 9:1 for biodiversity regulations)

• Business “perceptions” of regulatory burden are unreliable.

How can we influence this agenda?

• Regulatory Reform Committee Inquiry

• Smarter Environmental Regulation Review Phase 2

– The first phase of Defra’s SERR made recommendations to improve environmental guidance and information obligations. Phase 2 of the review will consider the scope for reform of environmental legislation more broadly. It will be supported by a high level external panel and will report to Ministers in late 2014.

How to Respond?• We need an evidence-based approach to regulatory reform. All policy

instruments have different strengths and weaknesses, many of which are context-specific. We need a presumption in favour of what works!

• We need smart regulation, not deregulation!

– We support efforts to reform measures that impose unnecessary or disproportionate regulatory costs and efforts to simplify regulatory monitoring and enforcement.

– Smart regulation is about balancing the costs and benefit of regulation, maximising the net benefits to business and society. Improving regulatory quality, not simply reducing regulatory quantity.

• The OITO rule and the principle of using regulation “as a last resort” are perverse and should be scrapped.

• Impact Assessments need to be properly scrutinized by independent experts, based on the quality of the IA as a whole, rather than

solely based on the estimated costs to business.

Further Information:• Department for Business, Innovation, and Skills (2013). Better Regulation Framework Manual.

• Regulatory Policy Committee. (2014). Improving the Evidence Base for Regulation: Regulatory Policy Committee Scrutiny in 2013.

• Department for Environment, Food, and Rural Affairs. (2014). Defra Better for Business: A Strategic Reform Plan for Defra’s Regulations.

• Department for Environment, Food and Rural Affairs. (2013). Review of Partnership Approaches for Farming and the Environment Policy Delivery;

• Gibbons, M., & Parker, D. (2013). New development: Recent changes to the UK's regulatory process. Public Money & Management, 33(6), 453-457; Gibbons, M., & Parker, D. (2012). Impact assessments and better regulation: the role of the UK's Regulatory Policy Committee. Public Money & Management, 32(4), 257-264.

• European Commission. (2012). Action Programme for Reducing Administrative Burdens in the EU Final Report. Commission Staff Working Document SWD(2012) 423 final.

• European Commission. (2012). EU Regulatory Fitness. COM(2012) 746 final.

• https://www.gov.uk/government/policies/reducing-the-impact-of-regulation-on-business

• https://www.gov.uk/government/organisations/regulatory-policy-committee

• https://www.gov.uk/government/collections/better-regulation-red-tape-challenge

• http://www.oecd.org/regreform/

• http://ec.europa.eu/smart-regulation/index_en.htm

The RSPB is the country’s largest nature conservation charity, inspiring everyone to give nature a home.

The RSPB is part of BirdLife International, a partnership of nature conservation

organisations working to give nature a home around the world.