The cumulative burden of new regulation on UK small and medium-sized enterprises now stands at £17.2 billion a year – a staggering figure that has grown steadily since the original “one-in, one-out” rule was quietly dropped in 2020 (Together Accounting Regulatory Cost Report 2025). For a typical small firm in manufacturing, hospitality, or professional services, this translates to thousands of pounds in extra compliance costs every year: new employment rules, data protection updates, packaging taxes, carbon reporting, and health & safety changes that arrive with little warning or consultation.
The British Chambers of Commerce Q4 2025 Quarterly Economic Survey finds that 58 % of SMEs cite “increasing regulatory burden” as a top-three barrier to growth, up from 49 % a year earlier. Many owners report spending 8–15 hours a week just keeping up with new rules – time stolen from customers, staff training, and business development.
Large corporations have compliance teams and lobbyists to shape regulations in their favour. Small firms have spreadsheets and late nights.
The solution is proven, zero-cost, and ready to revive: reinstate and strengthen the “one-in, three-out” rule for all new regulation affecting SMEs.
- For every £1 of new regulatory cost imposed on businesses, the government must remove £3 of existing cost.
- Applies to all new rules, statutory instruments, and guidance notes.
- Independent verification by the Regulatory Policy Committee to ensure genuine net reduction.
- Exemptions only for national security, public health emergencies, or international treaty obligations.
This policy worked when it was in place from 2011–2019: the net regulatory cost to business fell by £8.6 billion over the period (BEIS 2019 evaluation). Countries like the Netherlands and Canada use similar “regulatory budgets” to cap burdens on small firms, with measurable improvements in investment and hiring.
Reinstating one-in, three-out would force government departments to think twice before adding paperwork. It would send a clear signal that SMEs are no longer the easy target for every new initiative. The cost to the Treasury is zero – the benefit is billions in freed-up time, cash, and growth for the 5.5 million businesses that drive our economy.
Stop the regulatory avalanche. Make government justify every new burden on small firms.
The 1832 Club is fighting for these changes. The more members we have, the louder our voice in Westminster.
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