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Benefits of New Rules Outweigh Costs


BIS Department for Business Innovation and Skills - Expert Author

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Issued 21 October 2009

The benefits of new regulations enacted in the last financial year outweighed the costs by £9 billion and at a ratio of nearly 2 to 1, according to new figures published by the Department for Business, Innovation and Skills today.

The figures, published as part of a new benefit – cost ratio, showed that overall quantifiable benefits exceeded costs by about 85 per cent, meaning that Government regulation is expected to deliver £1.85 in yearly benefits for every £1 of cost, or a ratio of 1.85 to 1. The publication of the ratio, covering the entire legislative programme in 2008-09, will be published annually in the future.

The Pensions Act 2008, aimed at enabling and encouraging more people to build up a private pension income to supplement the money received from their basic State Pension, is an exceptional piece of legislation which has a significant effect on the overall ratio, with the highest benefits and costs. If removed the benefit to cost ratio increases to 4 to 1, revealing a generally higher rate of return from the impact of regulation.

The benefit-cost ratio is drawn from the detailed assessments of the impact of new regulations produced by government departments and regulators. All departments and regulators that introduce new regulations that have a cost or benefit must produce a full Impact assessment which must be published in an online library.

Ian Lucas, Better Regulation Minister, said:

“Publishing these figures shows that Government is serious about making sure that all new regulation is justified and proportionate and that the costs of regulation are justified by the economic benefits provided. It builds on our commitment to increase transparency and accountability, following on from the publication of the Government’s forward regulatory programme.

“We recognise that the cost of regulation is a key concern, especially to business, which is why this new measure helps us keep better control of the flow of new regulations.

“Regulations provide essential protections to employees, employers and citizens. Striking the right balance between costs and benefits is vital to make sure the regulatory framework is fit for the 21 st century.”

Notes to Editors

1. The Department for Business introduced a commitment to publish the benefit-cost ratio of new regulations, as part of its most recent Public Service Agreement. The information is drawn from Impact Assessments that are published through the IA Library, which can be found at

2. The ratio is based on Impact Assessments (IA) that relate to legislation enacted in the 2008-09 financial year. IAs include the average annually recurring benefits and average annually recurring costs of regulation. The benefit-cost ratio is calculated as the ratio of the total equivalent annual benefits to the total equivalent annual costs based on data from published Impact Assessments. 196 Impact Assessments were included as part of the 2008-09 benefit-cost ratio.

3. A full breakdown of the ratio and a list of the 196 Impact Assessments included in the benefit-cost ratio can be found at re/index.html

Department for Business, Innovation & Skills

The Department for Business, Innovation and Skills (BIS) is building a dynamic and competitive UK economy by: creating the conditions for business success; promoting innovation, enterprise and science; and giving everyone the skills and opportunities to succeed. To achieve this it will foster world-class universities and promote an open global economy. BIS - Investing in our future.

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© Crown Copyright. Material taken from the Department for Business, Innovation & Skills. Reproduced under the terms and conditions of the Click-Use Licence.

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Article Published/Sorted/Amended on Scopulus 2009-10-22 12:04:39 in Business Articles

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