Coalition is failing to control red tape

Allister Heath
THANKS to John Redwood, the Tory MP, we now know that the coalition’s supposed commitment to deregulation is a sham. Small business owners – which are most affected by red tape as they can’t afford vast HR departments – already knew this, of course, and all firms in the country, not just the finance sector, are being hit by new regulations. These include the ill-thought through ban on compulsory retirement which – while well-intentioned – actually means that many workers will end up being sacked instead, triggering huge litigation.

The coalition’s official policy is “one in, one out” when it comes to regulation, which would imply no net increase. Redwood tested this with Parliamentary questions to see how government departments are getting on. He compiled figures for statutory instruments introduced and removed over the past six months, and discovered that only two departments have actually reduced red tape. These figures obviously don’t give the whole picture but provide the best indication so far of what is happening.

Communities and Local Government has added 21 regulations and abolished 40, cutting a net 19; Environment has added 31 and abolished 45, cutting a net 14. These figures don’t clarify whether regulations abolished will make any difference, or whether only disused, irrelevant bits of legislation are being jettisoned. But the two departments are nevertheless to be congratulated – they account for 80 per cent of the 106 regulations abolished.

The Cabinet Office, International Development and the Foreign Office have neither added not cut rules. But the remaining ten in the survey have added more than they have taken away, breaching the coalition’s own policies. They have introduced a total of 155 regulations and abolished just 21. Energy and Climate change has added 14 and repealed none; Transport added 15 and repealed none; Health added 19 and abolished two; Work and Pensions added 31 and cut 11; Business has added 20 and abolished none; and Justice, the worst offender, has added a 22 and eliminated only one.

In many cases the UK government is merely implementing EU regulation, albeit often with its very own gold-plating. The House of Commons Library’s October report How much legislation comes from Europe? is a good place to start to work out who is at fault, though it highlights how hard it is to find a definitive answer.

It proposes several different estimates of the EU’s impact. One of its metrics – which seems about right to me – estimates what proportion EU regulations and EU-related UK laws form out of the total volume of UK laws. It finds a figure of 53 per cent for last year, with the answer ranging from 37 per cent to 65 per cent between 1997 and 2009. It is hard to know for sure. But while the EU accounts for a large chunk of all UK laws and regulations, it remains the case that most departments ought to have been able to cut – or at least not increase – the burden of red tape. The fact that they are actually still adding to it demonstrates that they don’t really understand the challenges facing the private sector and how passionately small firms feel about the burden of red tape. Until we get a pro-growth policy that encourages small firms to hire staff and invest, the UK economy will continue to under-perform. It’s hardly rocket science but some officials evidently never learn.