Do we really have too much red tape, or too little, or the wrong kind?
On Monday, the new-ish UK Government hosted an investment summit as an early step to rekindle economic growth in the country. The Independent proclaimed:
Sir Keir Starmer will promise a bonfire of red tape to get Britain building as he gathers global chief executives at an investment summit in the City of London on Monday. The prime minister is pledging to “rip out the bureaucracy that blocks investment” and ensure regulators prioritise economic growth in their decision-making.
This is reminiscent of the language of another new PM, David Cameron, who in 2010 pledged a “bonfire of the Quangos” before finding out that many of those much-maligned public bodies actually did useful stuff. And it got me wondering what regulations actually stop business doing things that aren’t harmful?
For example, you could get a short term economic boost by allowing house-building on floodplains, but you’d soon regret it as the waters start lapping around owners’ sofas. The last Government made noises about abolishing the nutrient neutrality rules which are designed to curtail water pollution, but the state of our rivers and streams was one of a number of key issues that led to their downfall last July. People care about this stuff.
As a small business owner, I don’t find ‘red tape’ really curtails what I do from day to day. International trade rules can be complex – ‘do you add VAT to a bill for webinars for someone in Norway?’ was a particular mental conundrum, but I’ve never felt constrained by rules. I don’t employ anybody which would bring a whole raft more legislation, but if I wanted the right people, then I’d accept that I’d have to give them similar protections to a large business or I could lose them at a moment’s notice – loyalty goes two ways.
Where red tape does hit the average Joe – business or personal – is the design of the implementation of the rules. I recall getting into a right tizzy over renewing my car tax (VED) 20 years ago as I repeatedly struggled to get the right set of documents to the right kind of Post Office in time through a series of incompetent-going-on-slapstick moves. Nowadays the website for paying VED should be held up as the epitome of user-friendly simplicity. Likewise the HMRC website used to be a disaster area (“Please, please, please just let me pay my taxes and get on with my day…”) and while it still could be improved to similar elegance levels as the VED site, I don’t get a queasy feeling of dread in my gut anymore when typing the URL into my browser.
Other legislation can be puzzling in how it is formulated. The EV mandate on manufacturers – which required a certain % of sales to be EVs – was held up as a totemic piece of legislation as one PM, Boris Johnson, introduced it, before another, Rishi Sunak, watered it down. But it always left me slightly puzzled as to how a manufacturer would make it happen as the ultimate determinant of sales is market demand. Of course a manufacturer may address it by going all in for EVs, but that may be (or perceived to be) risky if others are still selling ICE cars. Incentivising consumers is generally a better bet, as demand ultimately determines supply.
As always, there is much power in flipping received wisdom on its head. One of my old clients (head of sustainability at a FTSE100 company) used to say that he saw environmental legislation as a spur to innovation and, often, a business opportunity. If legislation does incentivise EV sales then that’s an opportunity from everybody from battery manufacturers to those who train emergency services. Note that leaders in Sustainability often call for tighter legislation to ensure laggards aren’t rewarded for sitting on their hands.
I hope Starmer’s rhetoric is just talk, and he understands how important legislation is to protecting our planet and all of us who live on it. The focus instead should be about making regulatory processes as simple and elegant as they can possibly be. Imagine if the Kafkaesque process for connecting renewables to the grid was as elegant as the VED website. That’s much harder and, frankly, less sexy than abolishing rules and regulation, but it is the right thing to do.