Death to 1,000 cuts
- Business & Industry ,
- Management ,
- Corporate governance ,
Richard Walsh argues that problems with regulation tend to arise because rules are often poorly understood, rather than "red tape"
Government cuts are nothing new, but for some the term “austerity measures” has become part of their daily vocabulary. Despite recent signs of recovery, the chancellor, George Osborne, remains convinced that further public spending cuts are necessary and, yet again, Defra is in the firing line.
The environment department is one of the smallest in government, but has faced some of the most substantial financial cuts in recent years. Since 2010, Defra’s budget has been slashed by £500 million and it must find a further £300 million of savings by 2016.
As a result, the Environment Agency, which is funded by Defra, is in the process of shedding 15% of its staff and is facing its most challenging time in its near 20-year history. Its workforce will shrink from 11,400 to just 9,700. Paul Leinster, the agency’s chief executive, expects the most significant cuts to be felt in the environment and business division, which is responsible for regulating and enforcement activities and is set to lose 34% of its funding.
Red tape challenge
The latest round of cuts came in January as David Cameron announced that his government would be the first in history to end a term in office with less regulation on the statute books than when it came to power. Cameron declared that he wanted to “get out of the way of small business success” and “celebrate enterprise and risk takers”. In the same speech, the prime minister proudly declared that Defra would delete 80,000 pages of guidance by March, claiming that such a move would save businesses around £100 million a year.
Cameron’s speech echoed the words of former environment secretary Caroline Spelman in March 2012, when she announced the results of the environment regulation element of the government’s red tape challenge. Back then the claim from the government was that environmental rules would be made “more effective while remaining as strong as ever”.
It was stated that the changes would save businesses more than £1 billion over five years and protect the environment by being cheaper and easier for companies to follow. Spelman was keen to point out that cutting red tape was “not about rolling back environmental safeguards”, but about upholding environmental protection and removing unnecessary bureaucracy.
I cannot help but think that all the fanfare around getting rid of bureaucracy is simply a nice way of packaging the implications, whether positive or negative, of tightened budgets.
Step forward self-regulation
The recent changes to legislation and budgets have resulted in more emphasis being placed on self-regulation. This is not the best route forward. I have not known a time when there has been so little new legislation published. In my opinion, the majority of existing regulations are not preventing businesses from succeeding, but are let down by a lack of education and understanding of the law.
Last year, the requirement for construction site waste management plans (SWMP) was abolished. Since 2008, contractors embarking on construction projects in England costing more than £300,000 had been required to implement an SWMP detailing how they proposed to handle the waste the site would generate before starting work.
The plans ensured that all construction site waste was disposed of in the correct manner following best practice guidelines. Many contractors argued that SWMPs were a waste of time and money and that it would be best if they were allowed to self-regulate. It’s difficult to believe that all construction companies will voluntarily follow best practice; after all, it’s human nature to do things in the simplest way. If contractors are looking to cut costs, or even corners, it will now be easier for them to look for savings in their waste strategies.
The only way this form of self-regulation will work is if contractors’ clients make effective waste management a contractual obligation and build it into ongoing reporting requirements for site managers. But this approach puts the onus firmly on the client rather than the contractor.
In need of guidance
It is commonplace for people to see any form of legislation as bureaucratic, especially if they find themselves swamped by paperwork. However, this feeling is usually due to a lack of understanding, which often results in them going about compliance in the wrong way. The now defunct SWMPs are a prime example of this. What the government and Defra should be looking at is offering better guidance and assistance to avoid excessive paperwork.
The government used to provide this guidance through the NetRegs website. NetRegs took legislation and turned it into plain English but, afterthe comprehensive spending review in 2010, it was decided that the site cost too much and it was taken offline.
At the time, all of the information on the site was supposed to be integrated with other guidance, such as that from Defra, and hosted on the centralised Business Link website. However, the result has never been as effective as the original NetRegs at being the first interface businesses have with environmental legislation. The environment regulators in Scotland and Northern Ireland still have a NetRegs site and its value is well recognised.
Many of my clients bemoan the removal of NetRegs more than anything else relating to environmental legislation. It was the link between them and the government, and was a gateway to the support they needed to manage the environmental impacts of their businesses effectively.
The private sector
As a result of the spending cuts and the red tape challenge, many companies now find themselves in a position where they want to do what is right for the environment, but have little guidance to follow. This has forced private industry to act in place of the regulators and assist firms, particularly small and medium-sized enterprises, in understanding and implementing best practice.
Assessors who audit against ISO 14001, for example, are increasingly put under pressure by clients asking for consultancy and help in understanding and checking legislation on their behalf. For the self-proclaimed “greenest government ever”, it seems that any progress it intended to make has been firmly halted.
If companies are having problems with legislation, surely it makes more sense to help them understand it rather than remove it. It is like abolishing school tests that children find difficult and, rather than educate them, expect the pupils to teach themselves and set their own exams. The result is never going to be a classroom full of educated individuals. Similarly, companies are not going to be in a position to self-regulate if they are not guided by legislation or if they don’t have access to proper advice.
Header image source: istock
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