Regulations cost business an extra £1.6 billion in 2006

The extra 1.6 billion spent in 2006 on complying with regulations is hurting the UK's competitive advantage despite some increase in business for the IT sector, a leading business organisation has warned.

In its 2007 Burdens Barometer report, the British Chambers of Commerce (BCC) showed that the cost of regulatory laws hit 10.3 billion last year, up from 8.7 billion in 2005. The figures - provided by government departments via Regulatory Impact Assessments (RIA) - showed that since 1998, UK businesses have spent 55.7 billion to comply with European Union and UK directives.

"The UK's growing burden of red tape is unsustainable and economic success cannot be taken for granted," said Sally Low, director of policy and external affairs at the BCC. "Unless this increase is curbed we risk significant damage to the competitiveness of UK companies."

But regulations requiring firms to invest in technology could benefit some IT firms. The data protection bill has cost 6.6 billion since 1998 and is set for more changes later this year. Flexible working regulations, which have cost 1.2 billion since 2002, are set to expand next month.

"Some companies do benefit, just as any industry could," said Carrie Hartnell, program manager at UK IT trade body Intellect. "While IT firms benefit by helping compliance, it also affects them too. IT companies are businesses too, so have all the burdens plus some benefits."

Government needs to build on existing regulations and use incentive program rather than creating new laws, Hartnell said. "Too often they regulate without talking to companies," she said. "They think it's positive but it's just causing more problems."

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