Equality law costs ‘will outweigh the benefits’

The cost of implementing new equality regulations will “far outweigh” their benefits, a thinktank report has claimed.

The report from Civitas suggested the burden on business of complying with last year’s Equality Act would hold back Britain’s growth and cost jobs.

Official assessments of the act suggest it will save £102 million to £134m in its first year and £25m-£87m a year after that, quickly earning back the estimated £241m-£283m one-off cost of its introduction.

Over ten years, the impact assessment produced by the government Equalities Office suggests the act could save a total of between £40m and £674m.

But Civitas statistician Nigel Williams argued that many of the claimed savings were “largely imaginary”, and that the cost of introducing the changes would be far higher than predicted.

The Equality Act was one of the final pieces of legislation introduced by the former Labour administration and came into effect over the past year.

It streamlined existing anti-discrimination laws with the aim of banning unfair treatment and achieving equal opportunities in the workplace and in wider society.

Mr Williams said much of the financial gain ascribed to the act came from an assumed benefit to society in general from greater equality, which is estimated at more than £62m a year. The GEO assessment argues that this benefit is generated by putting money in the hands of disadvantaged people, who are likely to spend it – thus boosting growth – rather than save it, as wealthier individuals might.

The report dismisses this estimate as “ideological”, arguing that no money is produced or saved by the “feeling of well-being coming from a belief that differences between people have been reduced”.

The report also disputes claims that the Act will save £13m a year by simplifying anti-discrimination and equal pay regulations, arguing this cost only arises because of the complexity of existing regulations.

And it challenges estimates that it will cost companies only £200m to familiarise themselves with their new duties, pointing out that this allows for only 24 hours of work by personnel officers in large firms and no time at all in one-person businesses.

Estimating that the act will in fact impose an annual cost of at least £10m on the economy, Mr Williams said: “The ideological benefits of the Equality Act are debatable at best. The financial benefits simply do not exist.”