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Government’s deregulation drive could damage growth, says business group Aldersgate

The Government’s drive to cut regulations on business could threaten the economic recovery, according to a group of the UK’s largest companies and environmental groups.

In a report to be launched at Parliament to an audience of MPs and business leaders on Wednesday, the Aldersgate Group argue that effective regulation is essential to drive growth and jobs. It states that Government initiatives such as the red tape challenge that threaten "to rip up" vital green legislation will lock-in polluting industrial processes for decades to come, jeopardise future competitiveness and damage the UK’s attractiveness for green investment.

While the Government is committed to reducing the cost and volume of regulation on the economy through measures such as a ‘one-in, one-out’ rule, the report questions whether this makes sense to address pressing environmental challenges such as climate change. This is an example of a market failure that requires more, and not less, regulation to safeguard the environment and drive growth in
new industries.

It recommends that regulation should seek to achieve "best value" and all regulations should be assessed on merit. It highlights the negative impact of putting sensible environmental regulations at risk with the consequent loss of business confidence.

Peter Young, Chairman of the Aldersgate Group, said: "It is a myth that all businesses want less regulation. Effective green laws create a level playing field which drives efficiency, early action and the innovation in UK companies that will be the engine for future growth and jobs."

"A crude deregulation drive risks damaging competitiveness and severely threatens the Prime Minister’s commitment to a green industrial revolution. The regulatory framework should encourage a rapid shift to a sustainable economy rather than being held back by vested interests or the lowest common denominator."

"The Government’s ‘war on red tape’ must not become a crusade that threatens regulatory outcomes such as protecting the environment. Even the threat of de-regulation on the Climate Change Act and renewable energy support is massively eroding investment and making growth more difficult."

According to reports in the Guardian today, Chris Huhne, Secretary of State for Energy and Climate Change, said: "Regulation can help make businesses globally competitive, drive down costs for consumers and realise benefits for the environment, society and the economy as a whole. Win, win, win. The argument shouldn’t be about regulation versus deregulation, more laws versus less. It’s about the kind of regulation we need."

Commenting on the ‘one-in, one out’ rule for new regulations, Chris Huhne is also reported as saying: "This is a sensible approach, but there are some new areas, like climate protection, where we need to be realistic if there are no old regulations of equal impact to scrap."

The Government believes that regulation should only be used as a "last resort" and has introduced a number of initiatives to reduce the cost and volume of regulation on the economy. These include more rigorous scrutiny processes, a ‘one-in, one-out’ approach to all new regulations and the Red Tape Challenge to give the public and businesses "the chance to rip up some of the 21,000 rules and regulations that are getting in your way", including all of the UK’s 278 environmental laws.

The Aldersgate Group report Dealing with Deficits argues that while reducing outdated, excessive and burdensome measures are welcome, this must not be at the expense of the vital role that regulation plays in correcting market failures, promoting fairness and protecting the environment. Regulatory reform should be primarily concerned with the effective achievement of outcomes and maximising innovation potential. Costs must be minimised but a long term and fully informed view of costs and benefits must be made to deliver future competitive advantage and set the UK on a sustainable growth path.

Consequently, the debate on regulation should not be presented as a trade-off between burdens and growth. Instead, the focus should be on how markets and regulation can work in mutual support with aligned objectives to deliver sustainable outcomes.

The Aldersgate Group is an alliance of leaders from business, politics and society that drives action for a sustainable economy. Its mission is to trigger the change in policy required to address environmental challenges effectively and secure the maximum economic benefit in terms of sustainable growth, jobs and competitiveness.

Aldersgate Group members include: ACCA, AXA Investment Managers, Bank of America Merrill Lynch, Biffa, Bioregional, BT, CIWEM, Cranfield University, eftec, Environmental Industries Commission, Knowledge Transfer Network, Friends of the Earth, Green Alliance, IEEP, IEMA, InterfaceFlor, IPPR, Jaguar Land Rover, Johnson Matthey, L&Q, Microsoft, MITIE, National Grid, Ownergy, PepsiCo UK & Ireland, Philips, Reed Elsevier, RSPB, SKM Enviros, Speechly Bircham, Sustain, The Co-Operative, TUC, Tyco, UK Green Building Council, Veolia Environmental Services, Willmott Dixon and WWF.

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