BAD regulations are like moles on the lawn. It is futile to chase around armed with a spade, hoping to hit them on the head the moment they surface. While you are dealing with one, a dozen more are appearing behind your back. The best way to stop bad regulation (and moles) is to dig down to the root of the problem.
Of course, the Better Regulation Task Force has hit the mark a few times with its trusty shovel. For example, we have successfully argued for a slimmer data protection code, fewer payroll burdens and less record-keeping for the minimum wage. But my priority, since I accepted the chairmanship of the task force in 2002, has been to tackle bad regulation at source.
This has meant tracking the policymaking process back to the point where a proposal is little more than a gleam in a minister’s eye and putting in place a series of checks and balances to introduce a bit of circumspection and to slow down the regulatory machine.
Legislation should not be passed on impulse or to grab tomorrow’s headlines. The impact of new proposals must be assessed, it must be shown that regulation is the best way of achieving the policy goal and there must be proper consultation. After all this, major proposals must still be cleared by a Cabinet committee, which I attend alongside the Prime Minister.
Robust procedures are important. But I want more than grudging compliance. The real challenge has been to change the culture of Whitehall. I want regulation to be the last resort of government, not the first instinct. I want ministers and civil servants to embrace the systems we have introduced and use them to produce efficient, effective, enforceable laws. I sometimes feel that they are still regarded as bureaucratic hurdles to be circumvented if at all possible.
But there are encouraging signs that the tide is turning in our favour. Perhaps the task force’s most important achievement has been to expose the cost of regulation. I have estimated that this exceeds £100 billion — about the same as income tax revenue. Of this, a third is probably administrative costs — red tape to you and me. But, unlike tax and budgets, regulatory costs have never before been calculated.
Figures of this magnitude serve to concentrate even the most sceptical minds. The Government has accepted my recommendation that it should embark on a major project to measure the administrative costs of regulation and set a public target for reducing them. For the first time, the cost of red tape will become visible and regulators will be held to account for the burdens they impose and the savings they deliver.
It will take strong leadership and political will to implement our reforms, which amount to a sea-change in the way government manages regulation. But the prize — potentially a more than 1 per cent increase in GDP — is too great for the opportunity to be missed.
Too often the better regulation debate is reduced to headlines about cancelled school trips and village fêtes. But in my four years as chairman of the task force, I have learnt that regulation is not a simple subject. It is not about binary choices — productivity or protection, free-market or nanny state. There are complex balances to be struck and genuine tensions between the needs of industry and citizens. For example, when I chaired a water company, I needed somewhere to put a waste transfer station and railed against the red tape and bureaucracy involved in finding a site. But as a citizen, I would not have wanted one at the end of my garden.
I have also come to understand that some people rather like, and benefit from, complex and excessive regulation. It supports an industry of regulatory consultants, many of whom were dismayed to find that business no longer needed their services when, on our advice, the Government started introducing many new regulations on just two dates a year. Just look at Sarbanes-Oxley in the United States — the latest millennium bug, this time just for accountants.
Nor should we make the mistake of thinking that the regulatory debate is confined to government and business. Regulation equally affects voluntary and charitable organisations, which also have a vital role in the economy and whose voices must be heard. As with any debate, there must be constructive engagement. Better regulation is a shared enterprise. It is not good enough for either the private or public sectors to wring their hands about the excesses of regulation unless they are prepared to work with government on finding solutions As the task force has continued to dig deeper into the policymaking process, we have finally hit bedrock. Ultimately, regulation is a product of the way society perceives and responds to risk. In a sense, we get the regulation we deserve. But society’s perceptions and responses are themselves influenced by what government chooses to regulate and how it goes about it. There is a cycle that needs to be broken.
In January, I will step down as chairman of the task force and it will be put on a permanent footing as the Better Regulation Commission. I expect the commission to be at the forefront of the debate about how we interrupt that cycle.
