One myth that has been around for some time is that the UK is more heavily regulated than its major competitors. There is plenty of evidence to prove that this is simply not true. An OECD report in December 1999 showed that the UK has the most lightly regulated product market of any OECD country, including the USA. The Economist Intelligence Unit found that, ranked against 70 factors, including flexibility of the labour market, the UK was ranked 2nd (after the Netherlands) among the 60 largest economies in the world according to how good they are to do business in. The CBI has also found that the UK has more flexible labour market regulation than its major EU competitors

Another common myth is that this Government is more inclined to regulate than previous administrations. If you look at the numbers of Acts of Parliament passed and Statutory Instruments issued each year you will find that the broad numbers do not vary much from year to year.

A third myth is that the UK is the only country to transpose EU legislation thoroughly and on time. The reality is that there is no consistent evidence that other Member States routinely fail to respect European law. For example, in May 2000, the UK was in equal 6th place in terms of the proportion of Single Market legislation transposed, behind Spain amongst others.

Government and business want the same thing; simple regulations, sensibly enforced. The key is to get the balance right so that regulations protect employees and consumers but, at the same time, promote business competitiveness and productivity.

This Government was elected on a manifesto which promised to improve working conditions for people at work, which we have done. But we are determined to introduce regulation only where it is necessary and to impose the least possible burden on business.

It is important to distinguish between the costs of meeting our policy objectives and the cost of administering the regulations involved. A fair wage, decent holiday entitlement and a safe workplace are not red tape.

I know that many readers who subscribe to your website have particular concerns about the introduction of IR35. The new rules which came into effect in April last year replaced a set of rules which allowed some people to choose how much tax and national insurance contributions(NICs) they paid. Other employees could not do that.

The practice of using service companies to reduce tax and NICs liabilities has become common. The main mechanism has been to take money, which should properly be salary, out of the service company in the form of dividends on which no NICs are payable. The legislation ensures that workers using service companies but doing the job of an employee pay tax and NICs on a basis which is fair in comparison with other employees.

Those businesses which invest, take risks and create employment, will not be affected. The rules ensure that measures designed to support small businesses are properly targeted, and do not go to people who are really the same as employees.

It will be for individuals to decide how to act in the light of this legislation. Clearly some people may look abroad, though many other countries already have tax rules similar to ours. However, this was never a justification for continuing a hidden subsidy for workers who choose to set up their engagements in a particular way. The loss to the taxpayer from avoidance through service companies placed a burden on other tax and NICs payers which was also damaging to competitiveness.

The Inland Revenue is providing extensive support for those affected by IR35. This includes a dedicated website which includes detailed information about the measure, a Helpline and a service under which workers can submit their working contracts for opinions within 28 days about whether or not those contracts are caught by the legislation. Assuming all facts are provided, the Revenue is bound by the opinion it gives.

While we believe that the systems for controlling red tape which we have introduced have led to real progress, including revised guidance on assessing the costs and benefits of proposed new regulations; longer timescales for consultation on proposals and the implementation of new rules; and the setting up of the Small Business Service to be a voice for small businesses right at the heart of Government, we are by no means complacent. We know there is still a long way to go. The Regulatory Reform Bill, which is currently going through Parliament, will enable us to tackle many of the problems of existing legislation which is outdated, overlapping or over burdensome. The increasing uptake of the Enforcement Concordat will ensure that local authorities and other enforcers adopt a fair and sensible approach to enforcing regulations. And we are working hard with our partners in Europe to improve the regulatory processes across the EU.

It is a challenging agenda and one which will work best if we can go forward in collaboration with business organisations and other groups affected by regulation. I hope that this article will stimulate a reasoned debate on the issue. You may also like to visit the Regulatory Impact Unit's website which includes a feedback form asking for ideas for regulations which could be reformed by the Regulatory Reform Bill.

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Graham Stringer MP