If you wanted some ideas for how to boost economic growth, would you ask the people who run businesses or the quangos which regulate them? No prizes for guessing which of them Keir Starmer, Rachel Reeves and Jonathan Reynolds have plumped for. Yes, they really do seem to think that government regulators have some useful ideas for how to boost growth. They have written a jointly-signed letter to the heads of Ofwat, the Environment Agency, the Financial Conduct Authority and healthcare regulators asking them for advice as to how the government might lighten regulation and so make the country richer.
You might as well ask a bunch of turkeys what should be done about Christmas.
You might as well ask a bunch of turkeys what should be done about Christmas. The only answers the government is going to get are those which ensure that regulators get to keep their jobs. Any initiative to cut government regulation is going to send them into survival mode. How could they ever abolish the many regulations which give them something to do and make them feel important?
But then whom do you ask for advice when you want to reduce regulation? Previous efforts to consult businesses and the public have not been hugely fruitful. Tony Blair appointed a ‘red tape czar’ Lord Haskins, who gave up in frustration after a while – having come to the conclusion that excessive regulation was rather popular with big business because, while it made their lives a little more difficult, it made the lives of smaller competitors a lot harder. If the lives of the village butcher and greengrocer are made a misery by some pettifogging health and safety rule, that is just fine in the minds of the supermarket which has just opened down the road.
In 2011 the Coalition government launched its ‘Red Tape Challenge’, asking the general public for ideas for how regulation might be trimmed. The result? Within weeks, business secretary Vince Cable was saying ‘very perversely, we are being bombarded by messages from the public saying please increase regulation.’ While David Cameron later claimed that 800 pieces of legislation were later abolished or amended, the Coalition soon abandoned its great red tape challenge.
Any government which tries to take on red tape finds out very quickly that actually, red tape is quite popular among the general public. Most people do not run businesses and don’t care too much about the burdens placed upon those who do. What matters most to them is that they can get their money back if a product proves faulty, that they can sue their employer if they suffer a workplace accident and that there is some rule by which they can cause the closure of the noisy metal-bashing works down the road. The views of the public can also be very easily manipulated by campaigners who, for example, try to blame the Grenfell Tower disaster on deregulation – even thought that disaster should really be seen as a consequence of the perils of over-regulation. People did not die at Grenfell because of a lack of building regulations – we have tens of thousands of pages of them – nor through a lack of regulators: the building works were inspected no fewer than 16 times. People died because in the fog of pointless regulations the important, and obvious, things, such as not wrapping tower blocks in flammable cladding, got lost.
The paradox is that the public does, however, want economic growth. People want above-inflation wage rises every year, as well as good dividends to feed their pensions. It is just that they struggle to see the connection between over-regulation and a struggling economy. If the present government really is going to tackle red tape it is going to have to work hard to make that case. Asking the red tape establishment for ideas laws to repeal is not a great start.
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