When Keir Starmer this week pledged to the global investors he’d summoned to London that he would clear pesky regulations out of their way, he stood in a long line going back, at least, to the young Harold Wilson—who, as president of the Board of Trade in the Attlee government, staged famous photo-ops to prove the zeal of his “bonfire of controls”. Every government vows to cut through “red tape” and—perhaps aware of their own foibles—Labour governments feel a particular compulsion to make a great show of this.
Starmer would doubtless enjoy pointing out that Wilson, too, ran into unease among trade unionists and left-wingers who briefly feared he was marching them back towards a world of neglect and laissez-faire. But hacking through the thickets of regulations that defined daily life in ration-book Britain is not quite the same as trying to pull off the same trick in the chaotic Brexit Britain bequeathed by Boris Johnson. A closer parallel might be with New Labour, whose approach to regulating the City of London was at one point summed up in the phrase “not just a light touch, but a limited touch”. The credit crunch was upon us within a couple of years of that.
What matters is not the deregulatory pose, but discriminating judgement about exactly which rules it is safe to rip up. Virtually all rules can feel like an annoyance some of the time. But some are pointless as well as grinding, while others that are also cumbersome to comply with are nonetheless life-saving.
The dilution of the force and precision of certain building regulations played a crucial role in the Grenfell tragedy. Nobody could, with the benefit of hindsight, dismiss those particular rules as “red tape” today. But they might well have looked like that in Whitehall shortly before the fire hit, where the regulation-checking “one in, one out” doctrine was being toughened into an outright deregulatory “one in, three out” rule.
So the question is not whether Starmer is right to try to get rid of some rules—seeking and destroying outmoded and ineffective ones is great if you can do it—but how good he is likely to be at pin-pointing those whose removal can get the economy humming without unleashing dangerous risks. Here, there are several grounds for worry.
Even on the narrow question of deregulating for “growth”, the revered economist Diane Coyle picked up with alarm suggestions that the prime minister had the Competition and Markets Authority in his sights. Going easy on trust-busting and anti-monopoly laws might well help established big businesses to expand, but at the expense of insurgents and the innovation they can bring across the economy as a whole.
The other big area where the Starmer administration is touting its deregulatory credentials is planning. There is no doubt that the sloth of the existing system can be an impediment to getting both houses and business plants built. The building lobby likes to present over-regulation as the overwhelming problem, and Starmer found that a useful campaigning line in the general election: it allowed him to stand against the particular paralysis of the 2019 Conservative electoral coalition (which left the Tories unable to get houses built), while offering ideological continuity with the thrust of post-1979 politics by proposing a deregulatory solution.
But as the time comes for translating housing policy from rhetoric into reality many experts, and particularly the councillors now tasked with the getting these houses built, are citing a whole host of other issues, including the excessive price of land and the practice of “land-banking” by developers, who sit on property with planning permission so as to restrict local supply and inflate local sale prices. Tackling these problems requires more “red tape” rather than less. A “deregulation-only” approach would only be likely to suffice if it were pushed to the point of the effective destruction of the Green Belt.
Over and above these risks to sound public policy, there are more particular political risks to Starmer of leaning too hard on anti-“red tape” soundbites. Here there is an important contrast with the Blair years. The real underpinning of New Labour’s social agenda was big rises in the day-to-day budgets of public services: progressives could make their peace with deregulation while it appeared to be generating the growth and then revenues to pay for Sure Start, decent family benefits and, indeed, winter fuel payments for pensioners.
Today, even if Rachel Reeves’s Budget proves to be bold, there will be no comparable turning on of the spending taps. It is at least partly in acknowledgement of the need to find useful social reforms to pursue when public money is tight that Starmer has embraced Angela Rayner’s labour market reforms, which will give workers a host of new worker rights to regular shifts and protections against unfair dismissal.
But how are bosses, businesses and managers likely to encounter these important new rights and protections for the workforce? Many will surely decry them as “red tape”. The great muddle running into the investment summit—where Starmer ticked off his own transport secretary for denouncing P&O over its “fire and rehire” of workers, a practice which the Starmer government had days before proposed new regulations to tackle—is instructive. Ramp up expectations that you can pare regulation right back while simultaneously issuing more of it, and you’re particularly likely to end up in a tangle.
