To determine the extent to which all regulatory costs impact on a business’ profit, we developed the CAR methodology. This methodology provides us with a clear insight into the impact of legislation on profitability and viability in a specific business sector. Sectors, in this way, can then bring specific regulatory pressures to the attention of government authorities.
The added value of the CAR methodology
The CAR methodology looks at the actual costs listed in a company’s accounting records. Regulatory burdens are traced back to the laws and regulations from which they originate. The result is a complete overview of all the (unnecessary) regulatory burdens imposed on a specific businesses sector and their impact on the viability of businesses.
The CAR methodology is focused on the impact of laws and regulations on a specific business sector. It measures the total regulatory burden on a business, and identified unnecessities. The CAR methodology is evidence-based and examines traceable business costs that are shown as cost centres in business accounts.
In addition, the CAR methodology identifies unnecessary burdens that are not directly quantifiable, such as impediments or bottlenecks encountered by businesses that want to expand, innovate or further develop their business. The removal of unnecessary burdens can make a noticeable contribution to the viability of businesses and hence to economic growth and employment – often not just for the sector in question, but for other sectors too.
The CAR methodology in practice
The CAR methodology has been used successfully at both national and international level in:
- The chemical sector (designated as a Top Sector by the Dutch government);
- The mental healthcare sector;
- The bakery sector;
- The apothecary sector;
- The catering and hospitality sector.
The results of the CAR methodology provide businesses with hard data which they can then use to engage in a dialogue with public authorities. The experiences gained in these projects have been incorporated in a CAR manual made available by the Dutch Ministry of Economic Affairs.