Addressing the root cause of regulatory over-reach

by Pete Bowyer, DRD Partner

The idea of regulatory over-reach is a common cry in certain circles on the other side of the pond, although few have gone as far as the free-market James Madison Institute in warning of a “regulatory genocide of our rights and freedoms.” Here, we don’t go in for such hyperbole, our language and manner more restrained, but still we hear the clarion call of a “bonfire of regulations” with increasing regularity.

Just last month, for instance, it was announced that the Chancellor has been charged by the PM to seize the initiative in 2021 by leading “a bonfire of Brussels red tape” now that the UK has left the European Union. He will chair a new Better Regulation Committee, which will identify opportunities through a series of deep dives across the economy and into EU-derived regulation, and implement agreed changes focused on cutting EU regulations. Apparently, Brand Rishi™ wants to turn the UK into a free-wheeling “Singapore of Europe” (where there are regulations banning chewing gum).

This is the fourth attempt, at least, to slash bureaucracy since the Conservatives gained power in 2010. Ironically, though, it’s also the first to coincide with the Government itself erecting a whole mountain of new red tape through the EU–UK Trade and Cooperation Agreement which has further burdened British business already struggling to survive during a global pandemic.

Rather than generating PR coverage to highlight the “opportunities of Brexit”, the Chancellor should perhaps look closer to home: our own, domestic regulators who quietly continue to accrue new powers. Take, for instance, the Gambling Commission, whom one industry commentator accuses of being “determined to destroy what it was set up to protect,” wondering aloud whether we will have a gambling industry in five years’ time.

The Commission recently imposed new regulations without consultation required by the 2005 Gambling Act under the thinly evidenced guise that the Covid-19 lockdown would lead to an explosion in problem gambling (it hasn’t). The regulatory burden on operators will be increased further through new interventions and tighter requirements on “affordability checks” on customers. And more is still to come. The Government has launched a review of the 2005 Act which, in part, aims to strengthen the regulatory powers and resources of the Commission (whose staff numbers have already increased by over a quarter in the last five years alone).

But it is not just in gambling, a sector which some may criticise for having weak standards historically, where this trend of Regulators gaining enhanced powers to over-regulate and throttle innovation is apparent. It is widespread across industries from financial services to advertising; from retail to ticketing; from transport to energy.

For most politicians, whether left or right, regulators are a convenient vehicle in all sorts of ways. Politically, they represent an alternative between unbridled capitalism and state ownership. Practically, they are useful to shift the blame onto when politicians themselves are under attack. More prosaically, the truth is that secondary legislation, the type that regulators typically oversee, is far too dull and dense for politicians to expend too much of their valuable time scrutinising, compared to the “glamour” of primary legislation (the few brave ones who do venture into the regulatory realm tend, unsurprisingly, to be the fiercest critics of the regulators, but they are still a tiny minority).

It’s not difficult therefore to see how regulators stealthily accumulate ever greater powers, and the regulatory burden on business grows. If it is to address this fundamental issue, the Better Regulation Committee may be better advised turning its attention to the root cause of the problem.

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