UK Cuts Regulatory Costs by 3 Trillion Won in 10 Years... South Korea Needs Legalization of Reduction Targets

FKI Analyzes Success Factors in Reducing Regulatory Costs in the UK

[Asia Economy Reporter Dongwoo Lee] It has been revealed that the UK has reduced corporate regulatory costs by an average of 2 billion pounds (approximately 3 trillion won) annually through its regulatory reduction policy initiated in 2010 until last year. There is a claim that for continuous and consistent regulatory reform, our parliament also needs to concretely consider legislating reduction targets.

According to the Federation of Korean Industries on the 22nd, the main factor behind the UK's successful reduction of corporate regulatory costs over the past decade was the ‘one-in-one-out’ policy.

The ‘one-in-one-out’ policy is a system that reduces corporate regulatory costs by abolishing existing regulations with equivalent regulatory costs whenever a new regulation is introduced. This was a general election pledge of the UK Conservative-Liberal Democrat coalition government in 2010 and was implemented as policy after coming to power.

As the coalition government saw results from this policy, it expanded its application to 'one-in-two-out' from 2013 and 'one-in-three-out' from 2015. When a new regulation is introduced, two or three existing regulations with equivalent regulatory costs must be abolished respectively. The total corporate regulatory costs reduced during the parliamentary term from 2010 to 2015 amounted to 10 billion pounds (approximately 15 trillion won).

Since 2015, the UK Parliament enacted the Small Business, Enterprise and Employment Act, requiring the government to set a Business Impact Target (BIT) to be achieved within the parliamentary term (usually five years) within one year of the parliament's inauguration and to report the annual progress to the parliament. This legally obligates the government to reduce corporate regulatory costs.

The BIT is the total amount of annual costs that businesses must bear due to new regulations over five years, and performance is only recognized when a separate independent agency from the executive branch conducts a thorough verification and gives a favorable opinion. The 'one-in-X-out' policy pursued during the previous parliament (2010?2015) served as a means to achieve the BIT.

The UK government announced a reduction target of 10 billion pounds during the '2015?2020 parliament' term. It saved 6.6 billion pounds (approximately 9.9 trillion won) over two years until 2017, exceeding the initial target, but the parliament was dissolved due to an early general election in 2017. The target for the subsequent '2017?2022 parliament' term was 9 billion pounds (approximately 13.6 trillion won) over five years, and it was recorded that 2.2 billion pounds (approximately 3.3 trillion won) were saved over two years.

Businesses have also shown positive responses to the UK's regulatory reform policies. According to a perception survey of businesses conducted by the UK government, the proportion of respondents who said regulations were an obstacle to business success was 62% in 2009 but decreased to 40% in the 2018 survey.

Yoo Hwan-ik, head of corporate policy at the Federation of Korean Industries, said, "For continuous and consistent regulatory reform and to create substantial results, we also need to consider a legal approach where the parliament takes the lead in setting specific targets and promoting regulatory reform."

This content was produced with the assistance of AI translation services.