The cost of compliance with regulations is adding significant costs to business, which act as a barrier to competition and reduce productivity. To lower these costs the government set the business impact target to reduce the total cost of regulation for business by £10bn between 2015 and 2020.

As it stands, the government has achieved £1bn of its target which is due to the mandatory 5p plastic bag charge, which government has counted as a saving for retailers because it adds extra revenue.

Other costs are excluded from the target, undermining its credibility, such as the higher National Minimum Wage, which is expected to cost businesses £8.3bn by the end of the current parliament.

Many departments that advise on regulation have limited understanding of how regulations affect businesses and how the costs can be reduced.

Five of the 14 departments with regulatory responsibility within the scope of the government's regulatory cost cutting target currently have no plans to calculate the costs and benefits for business of their existing regulations.

Without knowing which regulations affect businesses the most, the government is unable to decide which regulations should be prioritised for amendment or should be discontinued.

The government is calling for more action to be taken on monitoring and evaluating the impact of departments’ regulatory decisions, analysis of whether the regulations are working and whether the expected costs and benefits have been realised.

Parliament’s publication into better regulation is available here.