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NEF - The regulation reform you need to know about

Blog posted by: CHRISTINE BERRY (25th July 2014)

It’s common knowledge that austerity means government now has to operate with one hand tied behind its back. But it’s less widely known that the other hand is also tied – through a little-known policy called ‘one-in, two-out regulation’. Government departments can now only make new rules if they get rid of existing regulation costing business double the amount.

Introduced in 2010 as ‘one-in, one-out’, and quietly doubled last year with no democratic debate or consultation, this is not just a tweak to the bureaucratic machine: it’s a deeply ideological policy that matters to us all. It’s the justification for scrapping workers’ rights. It’s responsible for delaying vital new regulations on climate change. It’s the reason environmental protection has been labelled ‘red tape’.

How does it work?

When any government department wants to introduce a new regulation, they must produce an impact assessment estimating the costs to business. This assessment is then ‘validated’ by the Regulatory Policy Committee(RPC): if the RPC gives an assessment the ‘red light’, it has to be redone until it’s passed. It’s then onwards and upwards to the Reducing Regulation Committee, made up of government Ministers, for final sign-off. Only then can the regulation be introduced – and only if the department can show that the new costs are being double-offset by scrapping other rules. Just to reiterate, the test is not whether the benefits of new regulations justify the costs: it takes no notice of benefits whatsoever. The only thing that matters is getting costs to business down.

The RPC boasts that its ‘corrections’ to departments’ figures have increased the cost estimates for new regulation by £407m since 2011. Why would they boast about this? Because if the new rules are going to cost more to introduce, then the department in question must find even more old ones to scrap first. They call this their ‘very real brake’ on the ability of departments to bring in new regulation.

The Department for Environment, Food and Rural Affairs (Defra), whose raison d’etre is to protect the environment where the free market fails to do so, has been hit particularly hard, being slapped down by the RPC more times than almost any other department. On one occasion, a proposal on Marine Conservation Zones was given the red light in part because Defra had used cost estimates provided by the Joint Nature Conservation Committee – the government’s own independent scientific advisors – rather than accepting the word of industry.

Who’s got the power?

Reading the RPC’s own description of its task – to “provide an opinion on the quality of analysis and evidence presented in the impact assessment” – you’d be forgiven for assuming it was stuffed with technocrats. A quick glance at its membership reveals that it is anything but. It includes the deputy chief lobbyist at the Institute of Directors; a Councilman of the City of London Corporation; the Chief Executive of the Chartered Institute of Internal Auditors; and Chairman Michael Gibbons, whose interests in the energy industry include two company directorships and the chairmanship of an industry trade association. In other words, it’s a committee of businessmen. The Committee includes just one trade unionist, seemingly representing the entire third sector, and just one woman; oh, and they happen to be the same person. Now there’s government efficiency savings for you. Suddenly, the RPC’s ‘corrections’ start to look less like good government and more like corporate capture.

So what?

It’s hard to avoid the conclusion that the RPC’s real purpose is not technocratic but political: this is nothing less than an organised attempt to put regulation in the hands of the regulated. If that sounds like a conspiracy theory, it’s one the government seems more than happy to admit to. The Focus on Enforcement initiative, for example, proudly proclaims that it “puts driving the reform of regulatory enforcement in the hands of business”. Letting business decide when we can regulate and how we enforce regulations is now a clear part of economic policy.

All this has so far largely escaped the public’s notice, and not surprisingly – regulatory reform is hardly a subject to get the pulse racing.  But if we want a democracy capable of holding business to account, rather than the other way around, the fightback against deregulation urgently needs to begin.

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