In opposition — or as they first enter government — it is common for politicians to promise to tackle unpopular, burdensome and expensive rules. When the coalition government came to power in 2010, then deputy prime minister Nick Clegg promised a Great Repeal Bill. Grand claims had been made about this being an opportunity to “renew Britain”. In office, however, the initiative made little headway. Similarly, David Cameron launched a challenge to generate proposals for the removal of red tape on a sector-by-sector basis. Its results were similarly feeble.
Other efforts to stem the tide of regulation include the “one in, one out” approach, the idea being that any department proposing a new law needed to find one of at least equal cost that it was willing to repeal. This may have done something to prevent the flow of new legislation, but it now appears to have been abandoned.
Any serious effort to deregulate comes up against several challenges, all of which are difficult to overcome without an abundance of political will.
First, the precise costs of any given regulation are fiendishly difficult to quantify. Increasing a tax on a particular product or service is transparent and easy to measure. If you increase beer duty by 5p you can be sure that the price of a pint will rise as a consequence. But if you bring in new rules about, say, the required levels of cleanliness in a pub or the processes by which a landlord must verify the age or level of intoxication of a potential customer, these costs are rather vaguer.
This makes them no less real, just much harder to precisely point at. Legislators and bureaucrats are much more likely to embrace proposals where the exact financial impact is unclear and nebulous than those where a direct cause and effect in rising prices can be easily shown.
Second, the Whitehall machine is geared to passing laws rather than scrapping them. Campaigning politicians and imaginative bureaucrats are hardwired to finding new problems, whether real or perceived, and concocting solutions to them. Looking through swathes of previous legislative solutions to problems that may no longer exist and then advocating their repeal is not a route to civil service advancement or acclaim in the national media.
Third, the total quantum and diversity of regulation is such that the removal of any specific rule is unlikely to be a game-changer. The process of state regulation can be likened to standing by the side of a river and continually throwing pebbles into the water. Throwing in — or extracting — one stone is not going to have any discernible impact on the flow of the river. However, over time if you are tossing in more pebbles than you are removing, you are slowly constructing a dam. Regulation has a similar impact on economic growth and productivity gains; it grindingly reduces them to a trickle and requires a sizable one-off effort, rather than tiny incremental changes, to correct matters.
The advent of Brexit provides such an opportunity for a major reboot of Britain’s regulatory landscape. This needn’t mean that we throw aside an entire body of rules relating to product safety, employment rights or environmental standards. However, it surely presents a chance to question whether the laws we are inheriting after decades of EU membership are perfectly crafted to achieve desirable outcomes. There should be no presumption that they are.
The present approach of the government is to incorporate the totality of single market regulation into British statute to provide certainty for businesses. Little or no thought appears to have been given to how to go through the rulebook and rescind, alter, amend or reframe any of this legislation to make it work better for the modern economy. Loathe as I am to miss an opportunity to close down a branch of Whitehall, perhaps a case could be made for keeping the Department for Exiting the European Union in existence after our departure with the sole remit of seeking to lower the burden of red tape we have steadily accumulated. This could mean reconsidering whether it should be legal for female drivers to secure lower insurance premiums given their better safety record. We could look again at whether regulations such as MIFID and Solvency II are the best way of regulating the financial sector. The British government opposed the Agency Workers Directive, so is there really a case for retaining it when no longer obliged to?
To reconnect with a disillusioned electorate, it may be that politicians are wise to focus on rescinding some laws rather than always generating them. A carefully controlled bonfire of red tape post-Brexit could achieve that. It would certainly justify a celebratory fireworks display if our politicians have the courage to carry it out.
Mark Littlewood is director-general of the Institute of Economic Affairs. Twitter: @MarkJLittlewood
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