Regulation is one of those words used by politicians that is nearly always bad in the abstract and good in the specific. They rail against bureaucracy, red tape and pettifogging rules that get in the way of innovation and efficiency. But the moment something bad happens, they immediately accept that more regulation is the only way to avoid a recurrence.
This contradiction is one of many reasons the previous government struggled to match its rhetoric with any kind of real-world agenda. Every approach to reducing regulation was foiled by an inability to find any that people didn’t want to keep.
In 2011, the coalition government commissioned a wealthy Conservative donor, Adrian Beecroft, to do a review into employment regulation. His main recommendation—that employers should be able to introduce “no fault dismissals” which allowed them to fire at will—was quickly rejected following an inevitable backlash.
Steve Hilton, David Cameron’s resident charlatan for his first few years in office, took a different approach. He insisted on a “red tape challenge” whereby 21,000 rules would be put on a website and the public invited to explain which ones were unnecessary. Unfortunately for Hilton, the majority of respondents turned up to defend the status quo.
Brexit, of course, was sold as an unprecedented chance to bin all those stifling EU rules about which the right-wing papers had been complaining for so long. Yet, as Tim Shipman recounts in No Way Out, the latest volume in his Brexit saga, these rules turned out to be ones that the public wanted. David Davis, as Brexit secretary, established “Project After”, the aim of which was to set out all the benefits of scrapping regulation—but it had to be quietly binned when his team couldn’t think of any substantive ones.
This inability to get rid of anything existing meant the Tories were keen to avoid adding anything new, regardless of the merits, unless there was a specific political motivation for doing so. Proposals for regulating football got a series of helpful Sun headlines, for instance.
Thus the accusation, in September’s inquiry report on the Grenfell fire which claimed 72 lives, that the government ignored calls for changes to building regulations following a number of other fires in the UK and elsewhere. The report argues that pressure from ministers to appear deregulatory, and the government’s “one in, one out” rule, which demanded any new regulation be accompanied by the removal of an old one, led the department responsible for housing to give poor advice to ministers, which was then not questioned.
This isn’t a Tory-specific problem. The last Labour government was also criticised after the financial crisis for an overly complacent attitude towards regulation of banks and other institutions.
In both cases, after the event it became widely accepted that new regulations and rules were needed. The same has been true following numerous other inquiries into scandals, such as that into infected blood and the Mid Staffordshire hospital trust. Often the resulting recommendations are not particularly well designed and may cause further problems. But by this point, governments have little choice but to accept them.
The new Labour government is less rhetorically hostile to state intervention. One of its first acts has been to propose new rights for workers despite grumbling from businesses. But the desire to deregulate remains powerful, and given Labour’s desperate need to get the economy growing faster, it is likely to reassert itself. Meanwhile, the Conservative leadership candidates are falling over themselves to avoid learning any lessons from the past 14 years, as they try to outdo each other in their condemnation of regulation in the abstract. In the same week the Grenfell report was published, one candidate, James Cleverly, proposed a “one in, two out” policy.
We would have hoped that politicians would have realised this doesn’t work; it creates a disincentive to think about what regulation is needed. The actual volume of rules is far less relevant than the specific impact of each one. Removing 100 low-cost regulations that may cause future problems, but then introducing one immensely costly and pointless one, is not an improvement.
The obsession with the quantity of regulation also means too little thought is given to the quality of regulators. After Grenfell, there was an industry-established regulator for construction products and systems, creating significant costs for compliant organisations, but the companies most responsible for the disaster ran rings round them.
This is far too common with government-run regulators, too, especially those responsible for commercial markets where the firms involved can offer vastly higher salaries to those negotiating on their side.
And even when regulators do have adequate expertise and the right powers, they are often caught in the middle of competing political objectives. The water regulator Ofwat, for example, has been left trying to handle politicians’ desire to avoid dealing with trade-offs between lower bills, spending on infrastructure and the financial viability of providers. This is a near-impossible task.
A serious conversation about improving regulation requires that we stop seeing it as simply good or bad, and instead think about doing it well. That will never happen if we always end up doing it reactively, in response to failure.
