M Institute

Laying down regulatory burdens

As far as business is concerned, regulation of any sort is a burden. How burdensome is the burden, asks Jyoti Banerjee? And what should government be doing about the burden?

The burden of regulation shows itself in three ways.

One, business carries the burden of much of the interchange between government and its citizens, whether processing tax, tax credits, maternity pay or even alimony payments. This represents anadministrative cost on businesses for the privilege of being employers.

There is a separate regulatory burden that comes from meeting government policies that relate to public safety, correction of market failures or the promotion of a fair business environment. This is usually referred to as the policy cost of regulation.

Finally, there is a cost borne by business that relates to the policy cost – this is the administrative cost of complying with policies: getting to know the policies, keeping records on policy issues, reporting on compliance, and costs relating to government inspection and enforcement.

Each of these costs represents separate strands of regulatory burden. Although it is important to understand the components of the burden of regulation, it is fair to state that, as far as business is concerned, all these costs are taken together when it considers the costs of regulation.

Counting the uncountable

How many M organisations are there in the UK? M Institute co-founder Jyoti Banerjee ventures an estimate.

In a recent blog, Philip Woodgate opines that that there are 26,000 medium organisations, out of an SME population of 4.3m altogether.

Question: Is Philip right?

To answer that question, we need to ask what a medium enterprise is. How do we identify one that we can count it? The trouble is that different definitions give us different answers to the question of how many M enterprises are out there. But right at the outset, let me commend Philip for taking on the challenge of figuring out how many there are.