The race to ‘slash red tape’ has begun
By Emily Scurrah and Christiane Heisse: Shortly before leaving office, the former Chancellor Sajid Javid announced a Brexit ‘red tape challenge’ for the upcoming budget. For avid followers of the deregulation agenda, these are three words that have become all too familiar. Javid is merely the latest in a long line of ministers to use them.
Despite Javid’s departure, this looks set to be a big year for cuts to regulations, as the UK and EU prepare to negotiate their new economic relationship. Today the Confederation of British Industry (CBI) has called on the government to “minimise red tape through negotiations so companies can focus on jobs and growth.” They won’t be the last lobby group to do so.
In this context, it is important to understand the ideology underlying the ‘red tape’ agenda, and why big business embraces it so wholeheartedly. We urgently need better healthcare, large-scale environmental action, safe buildings and food, and well-defended labour rights. So why do those in power want to deregulate? And what exactly does deregulation entail?
One in, three out
Deregulation is when the government weakens, or removes rules on businesses in a particular market. It is based on the idea that markets, if left alone, produce the best outcomes – economic thinking that can be traced back to Ludwig von Mises and Friedrich Hayek in the early 20th century. Together with privatisation, tax cuts for high earners and corporations and public funding cuts, deregulation is a central tenet of neoliberalism – the economic and political philosophy that has dominated policy-making in Britain since the 1980s.
The process of deregulation comes in many shapes and forms. Technocratic rule-cutting exercises such as the business impact target, or the one-in-three-out rule aim to cut the ‘costs’ that laws impose on businesses. The one-in-three-out rule in Britain – which stipulates that “for every pound of new regulatory burden introduced, government departments must reduce burden elsewhere by at least three times that amount” – is indicative of the arbitrariness of this legislation. The drive to reduce regulation is based on ideology rather than evidence.
Other deregulatory instruments include measures to prevent new regulations from being introduced, or deregulating by stealth by not enforcing existing regulation. What these methods all have in common is a narrative which sees laws as a burden to business and society, rather than tools to shape and protect the kind of society in which we want to live.
This framing of laws as inherently burdensome has given big corporations seats at the policymaking table alongside democratically elected lawmakers. When this happens, the scale of state capture (where private companies are able to influence a state’s decision-making process to their own advantage) that results is mesmerising: big oil and tobacco firms even managed to initiate an ongoing EU-wide programme of deregulatory reform called ‘Better Regulation’. Better Regulation paints itself as providing more scrutiny and transparency in lawmaking, but in reality it creates fast tracks for firms to shape legislation in a way that serves them.
Shrouded in technical reports, driven by revolving doors between regulators and industry and protected by huge lobbying budgets, the immediate effects of deregulation are often difficult to pin down, which is part of the reason why there has only been limited pushback against it. But a three-year research project by the New Economics Foundation has identified cases from the health and safety and the health sectors.
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One example of how the Better Regulation agenda has impacted people’s lives in the UK is through ‘impact assessments.’ In principle, impact assessments impartially weigh up the financial cost of a particular regulation to businesses, against the benefits to business, society and the environment. The Better Regulation agenda has changed impact assessments so that the latter objective has become completely subsumed by the former. Estimating compliance costs to businesses is prioritised over analysing the benefits a regulation might bring to people, environment, and nature – which can also be more complex and therefore more difficult to calculate.
What’s more, bureaucrats have warned that impact assessments are often used retrospectively to justify policy decisions that have already been taken, as opposed to being used as part of the process through which policy is developed. In 2014, the former EU chief scientific advisor Anne Glover warned that civil servants preparing impact assessments may face political pressure to include evidence to support a predetermined conclusion. In this process, the views of ‘social partners’ – a term the EU uses to refer to employer organisations and trade unions – are repeatedly ignored in favour of powerful business and expert stakeholders.
Pregnant workers across Britain and the EU have already suffered the consequences of this. The European Commission launched a consultation with social partners in 2006 on revisions to the directive on pregnant workers. In 2009, a proposal to increase maternity leave to 20 weeks, with an allowance of 100% of the mother’s salary, and the creation of adoption leave was put forward by the European Parliament’s FEMM Committee. Business partners and employers’ organisations strongly opposed women receiving a full salary during maternity leave. Despite initial adoption by the European Parliament, the Commission surrendered to business opposition and withdrew the proposal.
Civil society and trade unions widely challenged the withdrawal. Businesses claimed that pregnant workers were already adequately protected. Using the impact assessment as evidence, they claimed that, against the backdrop of economic crisis, there was no justification for proposals which would be costly for companies.
The capitulation to business interests over the concerns of social partners is indicative of the way in which supposedly neutral tools for consultation are weighted in favour of business interests and frequently override the concerns of social partners. Women’s rights across Britain and the EU were sacrificed in the name of a dominant economic culture, which prioritises minimising costs to business above all else, infecting processes which are purportedly ‘neutral’.
Technical impact assessments and the one-in-three-out rule are just one part of the equation. Health policy in the UK is brimming with deregulation by stealth and confusion. The UK is required by EU law to share results of all clinical trials in a public registry. In practice, however, the results from studies finding that drugs are unsuccessful or have harmful side effects rarely see the light of day because the British government fails to enforce this important rule.
Keeping this evidence hidden away can make new drugs seem more effective than they are, as billions of public money spent on important medical research is used for the private gains of big pharma firms. In 2014, the NHS was found to pay £500 million for a flu drug that, as it turned out, was not even proven to work. There is a human cost to this system: one study found tens of thousands of people might have died from unrecognised side effects of a popular drug for heart conditions.
“revolving doors and seats on high-level advisory groups have historically given big pharma firms high-level access to policymaking”
Of course, none of this is isolated from other forms of deregulation. A recent report on state capture by lobby groups in the EU explains that revolving doors and seats on high-level advisory groups have historically given big pharma firms high-level access to policymaking. Similarly in the UK, industry groups were so strongly involved in the Drinkaware campaign that government consultations on alcohol legislation failed to even discuss minimum unit pricing in a fair way.
Brexit: a new dawn for deregulation?
For decades in Brussels, Britain has pushed harder for deregulation than any of its European counterparts. The Brexit campaign has been underpinned by a consistent argument that Europe enforces burdensome and costly regulations, ignoring how these regulations protect British people.
As laws are redrawn in the aftermath of Brexit, it will come as no surprise to see the deregulation agenda pushed further. There are already grave concerns about possible financial deregulation, and about the type of trade deal that the government will seek with the EU. We are facing a climate emergency which will require much more regulation, so this agenda is a significant threat.
Britain may face poor economic conditions following its exit from the EU, which have historically been exploited by multinational corporations who lobby for weaker working conditions, less corporate regulation, and lower environmental standards. In an economy like Britain’s, which prioritises deregulation as one of its core ideological tenets, this is a significant threat.
As this deregulatory agenda threatens to inflict more harm on us, it is easy to feel powerless.
As this deregulatory agenda threatens to inflict more harm on us, it is easy to feel powerless. But perhaps counterintuitively, the very instruments and functions which are repeatedly ignored, overridden and bypassed through the Better Regulation agenda reveal the levers of power which are available to us.
The groups that make up the social partners, whose interests stand separate to a myopic and harmful profit motive, are in desperate need of strengthening. Enhancing the power of these partners – trades unions, campaigning organisations and civil society – in relation to national and international policy can only be done through growing these institutions to increase their membership and put greater pressure on governments. Doing this means joining up social movements – such as those struggling for workers’ rights and those campaigning for environmental justice – in order to develop collective strength, as well as having greater readiness to take action.
We can also establish a counter-narrative to the prevailing calls to ‘cut red tape’. This narrative has led to the slashing of laws protecting our health and environment to increase the profits to business – with the tacit approval of a public assailed by this narrative, which has dominated the British press for decades.
It is only by revealing the deregulation narrative for what it really is, and highlighting the threat that it poses to our health and environment, that we can generate public and electoral pressure to halt this agenda.
Emily Scurrah is an Assistant Researcher at the New Economics Foundation and Christiane Heisse is a quantitative researcher at the New Economics Foundation.