The independent body set up to scrutinise new Government regulations needs sharper teeth to defend small businesses against poorly framed regulations, the Federation of Small Businesses (FSB) has warned.

A micro-business moratorium from new regulation was launched at the FSB’s National Conference in Liverpool in March 2011 and to mark the anniversary the FSB has published a report which argues that the Regulatory Policy Committee (RPC) needs more powers to scrutinise performance, advocate regulatory reform and act as an ombudsman.

The report, entitled ‘Regulatory reform: where next?’, also calls on the Government to look at models from the USA, Australia and the Netherlands to see what structural changes could be put in place to improve to UK’s regulatory system.

John Walker, National Chairman, Federation of Small Businesses, said:

“Poorly designed, ill-thought out regulation isn’t just an irritation for small businesses, it costs in time, money and may not even achieve what it set out to. It’s good that the Regulatory Policy Committee is there to clamp down on this sort of bad regulation, and we welcome the Government’s progress so far on this issue, but the RPC needs real powers if it is to drive change and challenge Whitehall culture.

“It needs to be able to scrutinise performance in a transparent way and be a powerful advocate for Government-wide change.”

While the FSB welcomes the Government’s regulatory reform programme so far, FSB figures show that in the last year four in ten small firms saw the cost of complying with regulation increase and six in ten said the cost of complying with regulation costs more than £1,000 a year.

And despite numerous initiatives, only one in three impact assessments for new regulations show the regulations are fully fit for purpose. Further, the UK ranks 83 out of 142 for the compliance burden it places on businesses.