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Politicians frequently resort to regulation as a quick fix, but this approach could be costing businesses £70bn a year.
As of September 2025, all new building applications exceeding 18 metres in height are required to include a second staircase, a rule implemented following the Grenfell Tower tragedy to enhance building safety. However, the government at the time lacked evidence demonstrating its life-saving potential, and a cost-benefit analysis yielded overwhelmingly negative results.
This exemplifies a pattern: politicians seeking regulatory solutions without adequately considering their impact on key priorities like housing affordability and construction.
Britain’s regulatory system is demonstrably broken, imposing a significant burden on both businesses and the public.
The current regulatory landscape is a product of successive governments proclaiming a desire to reduce red tape while simultaneously introducing new rules, often based on insufficient analysis and minimal parliamentary scrutiny.
The second staircase review is just one example of flawed regulation. Martyn’s Law, enacted in response to the 2017 Manchester Arena terrorist attack, was estimated by the government to have costs outweighing benefits by a ratio of 70 to one. This fails to meet the proportionality requirement outlined in the business department’s principles of economic regulation, yet it became law regardless.
Give the watchdog teeth
Since 2022, the Regulatory Policy Committee (RPC) – the independent regulation watchdog – has rated departmental assessments as “weak” or “extremely weak” 25 per cent of the time. Since 2020, 60 per cent of the Treasury’s impact assessments were deemed unfit for purpose. Regulations with inadequate impact analyses should be blocked, but currently, there are no significant consequences for poor work.
To address this, Re:State’s new paper calls for strengthening the RPC and giving it enforcement powers. However, there are rumors of the government considering its abolition – a shortsighted decision for a government purportedly committed to reducing the cost of regulation and reforming Whitehall.
while the system readily approves thousands of regulations (often of questionable quality), it largely fails to review existing rules to assess their effectiveness. Departments are legally required to conduct Post-Implementation Reviews, yet only seven were recorded in the last year.
This matters. Regulation is an appealing solution for policymakers due to its ease of implementation, visibility, and perceived lack of cost. However, regulation is not cost-free. The government’s Regulatory Action Plan estimates the cost to business at £70bn annually, representing 3-4 per cent of GDP, though many believe the actual cost is significantly higher.
Whitehall should introduce a world-first system of regulatory budgeting, akin to the way the Treasury manages public spending, where a total spending envelope is set and divided among different departments
With economic growth stagnating, bold action is needed. Whitehall should pioneer a system of regulatory budgeting, mirroring the Treasury’s approach to public spending, where a total cost envelope is established and allocated among departments. This would necessitate a more deliberate approach to regulation, clearly articulating the trade-offs involved in enacting new rules. The Office for Budget Responsibility (OBR) should also incorporate these costs into its economic forecasts, as it does with fiscal measures.
this is a matter of political choice. As the second staircase rule demonstrates, regulation has become the easiest path to visible action – a way for governments to respond quickly without confronting difficult trade-offs. However, politics is inherently about trade-offs. A government genuinely committed to growth must be willing to abandon this convenient shortcut and acknowledge that not every problem requires a new rule.
Cory Berman is a researcher at Re:State