Regulation is the tool that Labour ministers would use more than any other in government. Tax and spend – fiscal policy – grabs the headlines, but it is regulation that translates these and other policies into practice. Collectively, UK ‘fiscal events’ in 2022 contained around 120 tax and spend measures. By contrast, there were almost 1,400 UK statutory instruments, a rough proxy for regulatory activity.
Some within the party may baulk at the idea of ‘regulatory reform’. But Wes Streeting is absolutely right to say that “reform is not a Conservative word”. Progressive regulatory reform is about the most transformative agenda the next Labour government could pursue.
The Conservatives have proven incapable of regulating well. In recent months, I have spoken to more than a dozen current and former politicians, officials and advisers to government with expertise on regulation. They included politically independent figures who have served under both Conservative and Labour governments, as well as those who led regulatory reform efforts under the last Labour government. The message was resounding: our regulatory system, like much else in British public life under the Conservatives, is in decline, driven by near-constant political instability and a collapse in governing standards.
The expert evidence is backed up by the data. Three features of regulation are vital: process, design and enforcement. On each of these, there is clear evidence of decay.
Proper regulatory process has withered under the Conservatives. In the final years of the last Labour government, the equivalent of around one in eight pieces of primary and secondary legislation received a full, published impact assessment. In 2022, it was one in 20. In-depth analysis and scrutiny have simply not been happening to anywhere near the same extent.
Even where recent impact assessments have been done, they have often been substandard. The government’s own Regulatory Policy Committee (RPC), which analyses regulatory quality, said of the Retained EU Law Bill that the government “has not undertaken any substantive [cost-benefit] analysis to support the Bill” and rated the impact assessment “not fit for purpose”. This is nothing short of astonishing for a bill of such wide-ranging importance. The RPC did not even receive an impact assessment for the Strikes (Minimum Service Levels) Bill until it had completed its Commons stages.
When designing legislation, time is crucial. Officials need the space to carry out proper analysis and carefully craft regulation to minimise costs and unintended consequences, as well as cater to the nuances of the activities and sectors being regulated. Under the Conservatives, there is evidence of much less careful consideration. Since 2015, an average of 3.4 bills per session have been fast-tracked through the Commons, more than double the number (1.5) under the last Labour government. And this is no quirk of recent years. Conservative governments before 1997 fast-tracked an even higher number of bills, so they can’t blame Brexit and the pandemic.
Enforcement is a bin fire. Look at almost any enforcement body today and, more likely than not, they will be doing significantly less than in 2010. The Health and Safety Executive is a case in point. In 2022, it pursued 70 per cent fewer prosecutions than in 2010.
Non-compliance has not disappeared. Instead, more law-breaking is going unpunished. This is yet more evidence of the supposed “party of law and order” willing to turn a blind eye and the British public paying the price.
The Conservatives’ failure on regulation is also bad for the economy. Economists and regulators stress the importance of regulatory quality to support economic growth. The idea that we simply need to cut regulation is, at best, simplistic. It is not, where the UK is concerned, mainly about ‘less’ but about ‘better’. There is ample evidence that UK businesses do not want sweeping deregulation – just look at the government’s own consultation on the Better Regulation Framework. They do, however, want better regulation and better regulators. That is what a Labour government should be focused on delivering.
The next Labour government will need to rebuild the regulatory ecosystem. Political gimmicks like “one-in, one-out” and “red tape challenges” don’t work and, frankly, miss the point. There needs to be change to our institutions, process and culture. The Better Regulation Executive should be moved back to the Cabinet Office where it can better drive change from the centre. The RPC should be strengthened and provide broader oversight of and support to departments. The impact assessment process needs to be made more robust and post-implementation reviews should be much more routine.
Finally, there needs to be a shift in culture to place as much priority on improving the existing stock of regulation as bringing forward new ones. ‘Regulatory reform’ need not be a synonym for ‘deregulation’. For Labour, it should mean high standards and higher growth.
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