John Penrose is Chair of the Conservative Policy Forum, and is MP for Weston-super-Mare.
Markets aren’t the ‘law of the jungle’ as the political left always claims. Competition needs rules to work properly so that consumers have rights when something goes wrong, staff aren’t exploited, the environment is protected, and monopolies or cartels can’t take over.
But beyond these basic pro-competition rules, too much red tape slows Britain’s businesses down, focusing them on lobbying their regulators instead of delighting their customers, and making them less creative, efficient and dynamic.
The difference is crucial. It’s the dividing-line between potentially-dangerous ‘deregulation’ which might sweep away vital standards that protect us and our environment from being injured or damaged; and ‘better regulation’ which maintains the standards, but applies them in the least-costly, unbureaucratic way possible. If we can cut the size and weight of these regulatory millstones around the neck of British businesses, our post-Brexit, post-pandemic economy will rebound faster and create many more new jobs once things get back to normal.
But how? Better regulation isn’t easy, because every system in Whitehall and Westminster is set up to produce new rules. It’s how politicians, civil servants and regulators forge their careers, so all the vested interests are very close to home. Better regulation systems have to be extremely tough if they’re going to work properly. Or at all.
It’s a challenge we can’t ignore, because international rankings put our major competition and consumer regulators behind their equivalents in USA, France, Germany, EU and Australia. We have stopped making progress on cutting the costs of red tape and, in recent years, have gone backwards. Some sector regulators (Of-this and Of-that) intervene heavily, creating regulatory burdens which make entire industries more ponderous and less focused on their customers than they should be. Investors and business leaders say that officialdom moves too slowly in an increasingly fast-paced digital world. The system needs to be updated, improved and refreshed.
Today sees the launch of a review which offers some of the answers to these questions. It’s called Power To The People, and it’s a recipe-book of changes to make post-Brexit, post-pandemic Britain into a free-trading, global powerhouse so our businesses, exporters and investors can become more competitive, creative, successful, digital and agile too.
What are the recipes? Some cover the entire economy, like stronger powers for consumer watchdogs such as your local Trading Standards teams or the Competition and Markets Authority to crack down on rip-offs, so you and I know the system will be on our side if something goes wrong. Plus there are new Country Competition Courts, so that entrepreneurial startups can fight back if bigger and longer-established local rivals gang up on them unfairly. And there are updated rules to make each digital online shopping trip just as safe and fair as walking down your local high street or shopping mall.
But one of the review’s centrepieces is a stronger anti-red-tape ‘better regulation’ regime, with much sharper claws to make sure we don’t cut or dilute the quality of everything from food standards to workers rights or animal welfare, but that we deliver them much more cheaply, digitally and less bureaucratically than before.
It’s something we’ve done well in the past. David Cameron’s governments cut the red tape burden between 2010 and 2015 with a ‘one-in-two-out’ system that worked pretty well. Its main drawback was that it was pre-Brexit, so it couldn’t stop all the EU rules and bureaucracy that were still being created in Brussels.
So now we’ve got Brexit done, everything ought to be easy, right? Well, yes, in theory – but reality is never quite so simple as it looks on paper, because in 2016 the ‘one-in-two-out’ system changed, and things went into reverse. By 2018, we had a target of cutting the cost of red tape by £9 billion, but ended up increasing it by £8 billion instead.
The good news is that, if we can break out of our recent rut, the opportunities for post-Brexit Britain to cut red tape costs should be huge. We ought to be able to create an enormous Brexit dividend by sharpening the claws of the well-proven ‘one-in-two-out’ system, and then using it to replace bureaucratic EU rules with modern, digital equivalents which deliver the same standards at a fraction of the cost and time.
The first step is to replace rules and regulations by stronger consumer choice and competition wherever we can. If you and I have more and better choices about what we buy, and who we buy it from, we won’t need nearly as much protection because we can simply vote with our feet by taking our business elsewhere.
In other words, new rules and regulations should be a last resort, not the first tool out of the box. And they should be simple, specifying what has to be achieved rather than a process to be followed, so creative firms can work out the cheapest and most efficient way to get something done, and change how they do it whenever new customers or new technologies come along. It’s a great way to future-proof our rules, so we don’t get stuck with analogue answers in a digital world.
For example, we can rebuild natural ecosystems faster and cheaper by repealing EU rules which force water companies to build expensive, high-carbon water treatment plants, when striking deals with local farmers to reduce pollution risks or slow water runoff upstream could be a far greener and cheaper solution instead.
Public contracts can play a role too. They’re a third of all public spending, but EU procurement rules are horribly slow, and too difficult for small firms to navigate. The result is lots of red tape and worse value for taxpayers because entrepreneurs are frozen out. Post-Brexit Britain could deliver far better public services with a new, more digital, faster, automatically-transparent process that is both easier for entrepreneurial firms to compete through, and also more resilient against corruption and fraud as well.
With any luck, Government Ministers will think these recipes are tasty. They asked for them, after all: Power To The People isn’t government policy, but it was commissioned by the Chancellor and the Business Secretary. It proves they’re on the lookout for fresh new ideas and, at a time when Ministers are besieged with multi-billion-pound pleas for help from struggling industries everywhere, the proposals in this Review will be some of the cheapest, best value for money and strongest economic medicine they can buy. I hope Ministers will welcome them with open arms.
The full report can be found at www.johnpenrose.org.