The Aldersgate Group has launched a report, Help or Hindrance? Environmental regulations and competitiveness, which looks at the impacts of ambitious environmental standards on business competitiveness, skills and innovation.
The report, which is based on interviews in the waste, construction and car industries, concludes that well-designed environmental regulations can deliver positive economic outcomes in the form of increased business investment in innovation and skills, better quality products and infrastructure, greater business competitiveness and job creation.
The report, commissioned by the Aldersgate Group and written by BuroHappold, is based on business interviews studying the impacts of three key environmental regulations in the buildings (London Plan), waste (Landfill Tax) and car (EU Regulations on passenger cars) industries.
“We now have the opportunity to look to the future with an Industrial Strategy and a new Waste and Resource Strategy due where policy, regulation, and market incentives can come to the fore to help shape the Britain of tomorrow.”
It concludes that the compliance cost attached to each regulation has been more than offset by the economic benefits they have triggered. These include increased business investment in innovation and skills, better quality and performing products and infrastructure, greater business competitiveness and net job creation.
Examples include:
- The low carbon infrastructure (heat networks and renewables) development required under the London Plan for building planning applications in 2015 is estimated to have created around 4,000 full-time equivalent jobs in the design, consultancy, construction and manufacturing parts of the supply chain
- The Landfill Tax helped trigger significant investment by the waste industry in new infrastructure and services (such as investment in waste recovery, sorting and recycling facilities), while also cutting the amount of waste sent to landfill by 72% in 20 years
- The EU passenger car and light vehicles CO2 regulation has provided a consistent and clear legal framework. Car manufacturers and suppliers have responded by developing an innovative, competitive and highly collaborative industry, with automotive companies now ranking third in R&D investments globally.
However, the report also highlights flaws in each of these regulations (from poor regulatory enforcement to a lack of focus on supply chain skills), which hold valuable lessons for designing the policies needed to deliver the Government’s objectives under the recently published Industrial and Clean Growth Strategies. To maximise environmental and economic benefits and avoid unintended impacts, well-designed regulations need to:
- Be pitched at the right geographic scale
- Provide a clear, stable sense of direction
- Be coherent with existing policies
- Be implemented in a way that works with business timescales
- Be accompanied by complementary policies (such as on skills and regulatory enforcement).
Nick Molho, Executive Director, Aldersgate Group, said: “With clean growth positioned as one of the four Grand Challenges of the Industrial Strategy and the recent Clean Growth Strategy promising to drive growth of the UK’s low carbon industries, the report comes at a crucial time to show how environmental regulations can act as a help rather than a hindrance to innovation and growth, whilst also delivering positive environmental outcomes.
“The government recognised in the Industrial Strategy White Paper that regulations shouldn’t just be seen as red tape; on the contrary, they can also act as an important tool to support business innovation and competitiveness. The challenge ahead will be to ensure that regulations to deliver the UK’s environmental and industrial objectives are sufficiently ambitious, stable, practical and compatible with other policy objectives.”
Dr Adam Read, External Affairs Director, SUEZ, said: “Regulation has been at the heart of the positive evolution of the UK waste and resources sector, driving quality, delivering recycling and reducing our reliance on landfill, and landfill tax has been critical to this journey.
“We now have the opportunity to look to the future with an Industrial Strategy and a new Waste and Resource Strategy due where policy, regulation, and market incentives can come to the fore to help shape the Britain of tomorrow.”