Failing the red tape challenge?

17 Dec 14
Richard Harries

The coalition has tried to cut number of regulations coming out of Whitehall departments, but the total burden on business has still increased. Can the next government learn the lessons?

When it comes to deregulation, David Cameron would like you to believe that he is not only tough on red tape but tough on the causes of red tape. ‘Every bureaucrat in government has got to understand that we cannot afford to keep loading costs onto businesses,’ he told delegates at the Conservative Party Spring Conference in 2011, ‘and if I have to pull these people into my office to argue this out myself and get them off the backs of business then I will do it.’

It is always easy to blame ‘faceless bureaucrats’ who cannot answer back but why the preoccupation with deregulation in the first place?

After all, no government introduces regulation believing that, by doing so, it will make society worse. Yet successive regimes – of both the left and the right – have worried about the cumulative impact of regulation, particularly the impact on business.

The Blair and Brown administrations may have preferred to talk about ‘better regulation’ but the motivation was the same. It is to the credit of the coalition government that it resisted the temptation to waste time tearing down the New Labour architecture. Instead it retained the discipline of costed ‘Impact Assessments’ for all regulatory changes but improved the way that those costs were measured. Similarly it kept the independent Regulatory Policy Committee (RPC) but gave it sharper teeth to critique departments’ performance.

The big innovation was the ‘Red Tape Challenge’. Launched in April 2011, this was a two-year consultation exercise to reduce the stock of over 21,000 existing statutory rules and regulation. A key part of the challenge was the mandatory attendance of ministers and officials at joint Cabinet Office/Department for Business, Innovation and Skills ‘Star Chamber’ meetings. Although notionally co-chaired by both departments, it was the Cabinet Office minister for government policy, Oliver Letwin, who often played a decisive role in the proceedings – ensuring that the relevant official, no matter how junior, was there to answer his questions.

Assessed against its original aim of securing a radical cut in the number and burden of regulations the challenge was something a damp squib, resulting in just 100 active regulations being scrapped outright. Its real impact was to reset departmental thinking on the management of their regulatory stocks. So, for example, the cost of EU directives was not even recognised as a regulatory burden for the first two and a half years of this parliament. It is now; and the RPC validates the government’s figures in the same way it does for domestic regulation.

Analysis of the entire RPC dataset reveals that, far from cutting the regulatory burden, the Coalition Government has added at least £3.1bn of red tape since it came to office. It would be wrong, however, to criticise Ministers and officials for lack of ambition. Alongside fiscal and monetary policy, regulation is one of the three key levers of state power. At a time of unprecedented fiscal austerity, this makes the Government’s commitment to deregulation all the more remarkable. By voluntarily limiting its capacity to regulate, it has made its task considerably harder.

The pity of it is that David Cameron would prefer to criticise his officials rather than celebrate the transformation that has taken place under his watch. Civil servants are more professional now than they have ever been: more comfortable with the tools of open policy making and behavioural insights, more willing to see regulation as a weapon of last resort. The challenge for the next administration will be to follow the lead of the Coalition, build on the skills and goodwill of their civil servants, and continue to wage war on unnecessary red tape.

Richard Harries is the deputy director of the think tank Reform and a former senior civil servant. The burden of regulation report was published on December 15 2014.

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