The Regulatory Burden - The Four Areas of Concern
Ministers have in recent years found that regulation is generally more politically attractive than the alternatives (such as tax and spend). This has led to consistent complaints about the burden and intrusiveness of regulation. This note summarises the four quite distinct areas of concern.
First, some politicians express concern that there is no effective oversight of the powerful Regulatory State - a sort of "State within a State". See a separate note on this subject.
Second, businesses express concern about the cumulative impact of regulation. They point out that employers are expected to act as tax gatherers via PAYE (deduction at source employee taxation) and the national insurance contribution system. Employers are expected to pay out sickness benefit and income support in the form of tax credits. And then employers' contractual relationship with their employees is affected by a raft of legislation aimed at protecting employees against unfair dismissal, ensuring they earn a minimum wage, and have access to "family friendly" rights to take time off work to look after children ..... not to mention health & safety legislation, disability discrimination legislation and so on and on and on!
Ministers have responded to these concerns in a number of ways, most recently by considering regulatory budgets and and introducing one in, one out - and then two out - and then three out - rules. More detail is here.
The problem is even worse in the public sector, which is subject to much of the regulation that applies to the private sector, as well as its its own panoply of guidance, rules, regulations and inspection. This leads to constant complaints from, for instance, the police and doctors that they spend all their time filling in forms rather than collaring criminals or treating people. Unfortunately the obvious answer - which is to employ assistants to do the more routine work - runs up against two problems. First, politicians are determined to cut, not increase, the number of bureaucrats to release staff for "the front line". Second, unions (supported by the media) object to cuts in the numbers of doctors, police or whatever, so it is difficult to find the savings necessary to pay for the improved support, even if the net result would be more efficient.
Third, critics draw attention to the apparent growth of "the nanny state". Most of the media, and many politicians, seem hopelessly confused about the extent to which the state should interfere in our private lives. The extent to which we can smoke cannabis, gamble in casinos, enjoy a glass of wine after 11pm, hunt foxes with dogs, kill fish with barbed hooks, and beat our children, owe much more to prejudice than hard unemotional analysis. According to the FT, the Future Foundation even found, in 2005, that c.300 out of 1000 UK adults agreed that pregnant women should receive a police caution for smoking in public. Not everyone agrees with the Bishop Magee's declaration, in the 1800s, that he would rather see England free than sober.
Another aspect of this problem is society's determination to "do something" whenever there is a tragedy, such as on a school trip. The usual result is more or improved guidance which adds to the regulatory burden on the public sector (see above). In the case of school trips, the guidance is now said to run to 200 pages, and of course many teachers are now very reluctant to organise any trips at all. The Conservatives said (April 2005) that they would get rid of much of such guidance, but one was forced to wonder whether this promise would survive the first child death of the summer. Indeed, I am not aware that this promise was ever fulfilled.
Click here for a more detailed discussion of the regulation of risks to health and safety.
Last, but not least, there is the burden of inspection. Regulations need to be enforced and, in the UK at least, this is usually done by the state as distinct from via private enforcement. This has led to a proliferation of regulatory agencies whose activities were the subject of the 2005 Hampton Report, summarised in this note.
(It is only fair to point out, however, that UK businesses are less regulated that many of our competitors. Indeed, the UK resists constant pressure, within the EU, to implement yet further social legislation, whilst US businesses are in effect intensively regulated via the threat of private litigation driven by a strong compensation culture. The UK Trade and Industry Committee accordingly reported, on 21 March 2005, that it could "find little hard evidence to support the assertion that UK competitiveness is being threatened by overly stringent employment legislation". The OECD reckons that the UK is the second-least regulated OECD country when it comes to product market regulation, and the fourth-least for employment legislation. The World Economic Forum and the World Bank come to similar conclusions when assessing global competitiveness and ease of doing business respectively.)