finance

Britain is a world champion in pointless regulation


A friend of mine, doing up a barn in a picturesque part of England, recently discovered there might be bats in the belfry. The “preliminary assessment” cost £500 and involved a bloke stumbling around looking for droppings. The full scale bat survey cost £2,000, including £200 for checking the local area record. Whatever you think about the rights of endangered bats versus enraged homeowners, it looks as though our regulations have spawned a rip-off industry.

Those who campaigned to leave the EU in the belief that Brussels was the originator of this kind of red tape are about to be disappointed. Britain is brilliant at creating bureaucracy all on its own.

Bats, it turns out, are protected under both UK and EU law. It is our own authorities which have made a meal of things. If you “recklessly disturb” a bat — an offence I imagine would be hard to define in court — you can be jailed for six months. If you want to survey bats, you must apply to the regulator, Natural England, for one of four different types of licence. Such ambiguity and complexity are the friends of lawyers and vested interests — and the enemies of the entrepreneurial spirit that Boris Johnson, the prime minister, and his adviser, Dominic Cummings want to unleash.

Britain has long been famous for its habit of gold-plating EU regulations. London has gone further than Brussels on all sorts of things, from maternity leave to bank capital requirements — as was our right. But as Brexit looms we do need to examine our tendency to overcomplicate.

The National Health Service should benefit from the lifting of the EU working time directive, which has harmed medical training by preventing students from watching a procedure from beginning to end. But the British Medical Association has already demanded that the rules be kept, so the poor things don’t lose sleep.

Leaving the EU will necessitate further bureaucracy in the short term, because many sectors, such as aviation and chemicals, will need their own domestic regulators. Moreover, businesses in many sectors will have little desire to diverge, to protect trade.

Britain ranks eighth in the World Bank’s latest ease of doing business index. Sadly, there is no equivalent ranking for the ease of being a citizen. I sometimes feel that money-laundering regulations have resulted in high street banks treating longstanding customers like criminals; while repeated tweaks to the tax system have left some middle-income families facing much higher marginal tax rates than chief executives. None of this has much to do with Brussels.

Regulation and inspection have become mini-industries. I once sat with a harassed care home manager who was sticking up equal opportunities posters in advance of an inspector visit, and showing me the data she was compiling for agencies including the Health and Safety Executive, Building Standards, the local government ombudsman and the Care Quality Commission (of which I was a non-executive director). There was a good argument for all of these; but no one thought about the collective impact on her, or the cost of compliance.

The contradictions are legion. Heritage officers refuse permission for double glazing in old buildings, while ministers worry about climate change. Government promises to hire more doctors, teachers and nurses, while failing to relieve them of a mounting paperwork burden which is driving some to retire, so far has it taken them away from their vocation.

The current government has promised to review IR35, the 2017 tax legislation which is potentially disastrous for the self-employed. Even then, the word “review” suggests a doleful caution. Too often, Whitehall’s default reaction to a demand for action is to put an idea out to review or consultation, or to commission a feasibility study. These devices can sometimes shed light and build consensus. But they can also be make-work schemes which elongate the process unnecessarily.

Ministers can be just as inclined to fudge as civil servants. As home secretary, Theresa May was an ardent fan of the public inquiry. I once asked, when I worked in Downing Street, to see the results of one of those inquiries which had been announced the previous year. I was told that it had not even begun;
the inquiry team was still being appointed.

Mr Cummings has seen all of this at first hand. He is regarded with deep alarm in the civil service, partly because he is so aggressive. But whatever his record on Brexit, he was on the right side when he and Michael Gove battled local authorities which were leaving ethnic minority children languishing for years in care, rather than be adopted by loving families who did not meet the criteria for an exact racial match. The adoption rules were actively harming the interests of children.

You don’t have to be libertarian to want intelligent regulation. The new administration does not have to blow a Schumpetarian gale through every corridor. It must value objective advice from civil servants, not create such a culture of fear that officials simply tell the prime minister what he wants to hear. But it should wage war on duplication, launch a proper drive for tax simplification, and make a concerted effort to relieve frontline staff from paperwork.

If Brexit were simply to bring more red tape, that would be batty.


The writer, a former head of the Downing Street policy unit, is a Harvard senior fellow



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