Better Regulation – Rethinking the Approach for SMEs
October 2008

Background to research

There are increasing pressures on the regulators to rethink their approach to how they build relationships with, and regulate, small and medium enterprises (SMEs).  Increasingly, as larger point sources are controlled, the UK agencies are required to regulate smaller sources. However, these smaller sources and risks may be less amenable to the permit-inspect model traditionally used.  In addition, the modernising regulation agenda and the post-Hampton review follow up are likely to drive agencies towards modernising their approach in this area.

The Scotland and Northern Ireland Forum for Environmental Research (SNIFFER) commissioned this research to investigate the regulator’s compliance assistance and good practice approach to SMEs.

Objectives of research
  1. To understand the drivers for compliance or non-compliance with environmental law amongst SMEs and to compare and contrast those views with research conducted in other spheres such as for food safety and health and safety law. This will require research to gain understanding of agency staff and other stakeholder views on current and possible compliance assistance programmes.
  2. To review the UK agencies’ compliance assistance programmes, particularly those aimed at SMEs, by reviewing programmes in an American and European context via a desk study and limited interviews.
  3. To summarise the agencies’ current programmes aimed at SMEs and in the light of feedback and best practice observed elsewhere, make proposals for a possible SME strategy that could be implemented by the agencies.

The finding that environmental compliance can be improved for small and medium enterprises when regulatory resources are aligned to the compliance orientation and capacity of firms is both challenging and exciting. It is challenging because it requires that we question preconceived ideas about how we should regulate firms – and exciting since it provides an opportunity for improved environmental performance for all firms. A key feature of the analysis is that we can accommodate differences in compliance orientation and capacity by correctly aligning regulatory instruments, mechanisms for ensuring compliance with these regulatory instruments, and when these fail, strategies for dealing with non-compliance. Also, to ensure that the most effective practices are used within this schema, the project reviewed approaches in other countries and advisory and non-environmental regulators in the UK. The suitability of these practices was then assessed by canvassing the views of environmental agency staff and small and medium enterprises in Scotland and Northern Ireland. With this information in hand the practices were then positioned against the environmental compliance orientations of firms, producing four distinct compliance postures that are named ‘most difficult to control’, ‘most vulnerable’, ‘most easily controlled’, and ‘most compliant’. The report concludes by recommending that aspects of the approach be piloted to assist future implementation.

Key words: better regulation, compliance capacity, compliance assistance

Copies of this report are available from the Foundation, in electronic format on CDRom at 20.00 + VAT or hard copy at 35.00, less 20% to FWR members.

N.B. The report is available for download from the