De-regulation - Time to ditch the One-In, Three-Out Rule

When the One-In, One-Out rule was launched in 2010, the stated objective was to ear down on the cost and volume of regulation in the economy. The central aim of the policy was to restrict government departments from implementing new regulations, unless they also identified for repeal another regulation with an equivalent estimated cost to business.

When the One-In, One-Out rule was launched in 2010, thestated objective was to ear down on the cost and volume of regulation in theeconomy.The central aim of the policy was to restrict government departmentsfrom implementing new regulations, unless they also identified for repeal anotherregulation with an equivalent estimated cost to business.

The introduction of this rule by Government placed the valueof the UK regulatory stock in the context of net-cost to business, ratherthan net value to society and the environment.

The narrative of egulation being a burden on businessmisses the point that regulation provides essential protection for people andthe environment. Government shouldprovide far more focus on the reasons why and the benefits of regulation i.e.in terms of reducing the risk of harm.

When properly framed, regulation is efficient and effectivein providing the necessary protection for people and the environment. It also provides an important backstop forbusinesses to be able to compete on the basis of quality and efficiency creating a level playing field.

Fast-forward to 2016 and the Government raised it to One-In,Three-Out; new regulations could not be brought forward until regulations withthree times the equivalent cost-impacts on business were identified andscrapped.

The One-In-1/2/3 Out rule contains an inherent structuralbias, where businesses are assumed to be the primary recipient of beneficial orburdensome regulation. This has givenrise to a narrowly defined approach to cost-saving which fails to considerwider society and environmental costs/benefits.

The problem is compounded, because Regulatory ImpactAssessments are often poor in the way in which environmental externalities arereflected in cost-benefit analysis. TheGovernment aim in the 25yr Environment Plan is to restore and enhance theenvironment over a generation. As toolsand support for natural capital accounting have been developed through theNatural Capital Committee, and with the recent revision to the Treasury GreenBook for policy evaluation, the potential exists to better reflectenvironmental externalities and natural capital accounting in decision making;but it not being realised yet.

Regulation needs effective enforcement. In the absence of a fully funded regulatorable to take effective enforcement action, protections for people and theenvironment are effectively lowered. This also penalises those businesses that pro-actively manage theircompliance and gives non-compliers an economic advantage. It is vital to ensure that regulatory fundingfor monitoring, pollution prevention work and enforcement is maintained atlevels to ensure effective compliance and retain public trust and confidence.

The One-In Three Out rule is arbitrary, illogical andpotentially harmful. It should be immediately scrapped and replaced with anappraisal process which considers individual regulations based on their meritfor society, the environment and the economy, not just business.

IEMA has submitted evidence to the House of CommonsRegulatory Reform Select Committee inquiry into the Government de-regulationagenda. Full details on the inquiry,including evidence submitted, is available here.