Lessons On Regulatory Reform: The United Kingdom

by Christian Rice on March 8, 2013

in Deregulate to Stimulate, Regulation

In 2001, the United Kingdom passed the “Regulatory Reform Act” which allowed a government minister (similar to the head of a government agency in the U.S.) the ability to reduce regulatory burdens. A minister had the ability to write a government order which would then be reviewed by both Parliamentary houses and voted on without debate.

 Results from UK Regulatory Reform

Within four years, 27 “regulatory reform orders” had been made and estimated annual savings were in the hundreds of millions of pounds.

For instance, the Regulatory Reform Fire Safety Order of 2005 simplified legislation that had previously been spread over more than 50 public acts. These 50 acts were complied into a simpler fire safety regulation which was estimated to save between £47 million and £137 million per year.

Lessons from the UK

This 2001 bill was undoubtedly successful as it allowed ministries to deregulate themselves, and refrained from granting ministries the power to extend regulations. Evidently, when given the opportunity, agencies will sometimes reduce burdensome and unnecessary regulations. In the U.S., this could result in hundreds of millions or even billions of dollars in savings if the heads of our agencies act similarly to their UK counterparts. But even if an agency deregulates to a small degree, there will still be savings to the economy.

Another advantage to the 2001 bill is that it still allowed for parliamentary authority and accountability. Since Parliament had to vote on the proposed regulatory reforms, the people knew how their representatives were voting. This put pressure on Parliament to vote for reform rather than for burdensome and unnecessary regulations.

If the UK’s experience is any guide, the U.S. economy could benefit from a law like the 2001 regulatory reform act.

To see the previous post in this series on regulatory reform, please read Lessons on Regulatory Reform: Texas.

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