I was only able to keep a diary of my time as SpAd in the last two and a half years. The first eighteen months passed like a distressing satirical overdose, and flashbacks occur fitfully. This stems from one of them.
One of the key missions of the early months of Coalition was to find damaging regulations to cut, and thereby allow the great British Economy to leap forward once more. However, the low hanging fruit was remarkably unreachable. I remain surprised at how little preparation the Conservatives had carried in this area, given the famed clout of the CRO. But the hyper-naive idea of the Red Tape Challenge –
“hey let’s just put all the regulations on a website and if the People come forth and smite them, then out they go!”*
was some acknowledgement of a lack of prior work, and quickly morphed into the sort of process its inventors would have hated: a Westminster room of very bright officials and politicians rapidly learning about each rule, doing a lot of guessing, challenging each other – statism par excellence, Whitehall knows best.
Other strands of the anti-regulation architecture had a similarly wobbly start: bright sparks immediately noticed that One In One Out can’t mean that literally, because anyone can find a defunct “pit pony” piece of law and scrap that, in return for some horrible new rule.
But at the heart of all of the problems lies politics, and how it trumps the uncertain foundations of regulatory mathematics. The regulatory-control function looks enviously onto the world of money, wishing its pressures and costs could be so easily totted up and weighed against one another. The ideal is that every regulation is like a time penalty- “The government orders you to spend 8 minutes per working day on this stupid form, because they are either wicked or foolish”. That 8 minutes is turned into some 35 hours per year, call it £350 per SME boss … ooh, that’s £10bn! This sort of factoid would be handed to some slavering journalist, who might say “Regulation X costs the country as much as ONE AIRCRAFT CARRIERS EVERY YEAR!”
No, it is not that simple (although the analytical method is surprisingly popular with some lobby organisations, see e.g. here). Above all, it didn’t work as smoothly as normal financial budgeting to limit department’s actions. In finance, once they are out of money, that is it. If you want to spend, you have to cut. Game over. Ardent deregulators hope for the same effect in regulation. It doesn’t happen, for a few reasons.
Awkwardly, regulations bring benefits – imagine what water safety rules have achieved. They are not all of the “straighten your banana” variety. They can create industries – whether Bastiat-style “Broken Windows” style industries, which are less admirable, or valuable ones (air quality rules bringing a market for new filters, say).
More generally, they often represent transfers. A typical regulation asks a company to do something to help its work force or customers, or some environmental aim.
Take, for example, the Right to Request Time to Train, the extension of which was limited in the Coalition’s first few months. There was the usual process of consultation and response (this is where democracy really plays into administration), and something called an Impact Assessment. In this case it shows that failing to extend this right to request, you save employers £460m annually – and cost workers £1bn annually from lower productivity (we still went ahead, because the regulatory system focusses only on the former number).
People also exaggerate, horribly, and fail to take into account dynamic responses to a new rule. Consider, for example, the warning by the CBI that Agency Workers Directive rights would cost 250,000 jobs. It came in. It didn’t. Firms and workers adjusted. But in the meantime it panicked some in No10 into thinking they needed to flirt with taking the EU to court.
This fuzziness gives departments enough arguments to wriggle around the rules against regulations, and use their political clout to push it through anyway. This, for me, is the clincher. The stereotype is that civil servants regulate, politicians try to stop them. No: the reason the baroque architecture of rules against rulemaking fails is that at the end there is a room full of politicians arguing about whether to enforce the limit on regulation, and political power comes in to play.
Imagine you are dealing with the Home Office wanting to silt up the immigration channel somehow, in response to a security scare. The regulatory calculators whirr, and out pops the response: you have to find £100m of regulatory savings or this can’t happen.
The response in Home Office: look at my face. Does it looks like it cares? I care about national security. I’m doing this. Yes, sure I’ll find these savings. Watch this space. In the meantime, prepare to brief the tabloids about what we’re doing to clamp down on foreign criminals.
The whole point of the department proposing that regulation may be to promote that interest. They aren’t going to change their fundamental reason for existing because some other department has a mission to cut the regulatory burden. Until the politics is dealt with, the bureaucratic dance and fantasy maths comes a very distant second.
* Perhaps you think I’m exaggerating. I am not. It never occurred to the parents of this idea that regulations hang together, that they are not quite like Celebrity Come Dancing, and above all that such a website would overwhelmingly attract organised comments from people really very strongly in favour of the regulation. Nor did they notice that about half of the regulations were about things like closing a particular road on a particular day.
In the end the Red Tape Challenge did useful work, but working in a much more traditional way