We need to make the case for strong regulation

"Along with plenty of other woes, Brexit has brought us to a potentially dangerous deregulatory moment in which a vote to reign in elite power could be exploited to slash the protections we will inherit from the EU"

Those of us subscribed to GOV.UK updates are used to scrolling through endless statistics for find the real nuggets of information. So it was for me last week, when I came across an announcement from the Department for Business, Energy and Industrial Strategy that the “growth duty” would come into effect on 29 March. No, this is not some sort of socialist nightmare of an additional tax on economic activity; it is the statutory responsibility for regulators to take into account the impact of their decisions on growth in the sectors they oversee. 

The growth duty was introduced by the Deregulation Act 2015 and broadened by the Enterprise Act 2016, part of the Cameron-Osborne attempt to stimulate growth while undertaking an unprecedented withdrawal of public investment. The duo’s economic policy was not the only case of doublethink involved. Regulators across most sectors are now required to keep a check on business while also helping the government meet its headline-grabbing growth aspirations. 

Call me old-fashioned, but this is surely not what regulators are there to do. In an ideal market economy, regulators would exist as independent, government-endorsed watchdogs to ensure that business operates in accordance with the common good. In the dysfunctional market economy that we actually have, they may accept a rather generous interpretation of what constitutes the common good – and may often find themselves with less hearty endorsement from the government than they might wish – but they generally manage to get the job done. However, imposing on them a growth duty that effectively contradicts their primary purpose is nothing less than farcical. 

Only the free-market Leninists of the modern Conservative Party could conceive of a system in which regulators are obliged to be cheerleaders of the private sector while also trying to keep them in check, but this is not an isolated case. The rhetoric of “red tape” in need of perpetual cutting has infiltrated our entire political discourse. Never mind that a good proportion of red tape constitutes our hard-won labour and consumer rights and environmental protections, or that certain corporate lobbyists have been making the same allegations of burdensome bureaucracy for decades, regardless of the actual state of legislation. It has become an article of faith in our political economy that the private sector is overregulated, and, like all articles of faith, this is one divinely immune to contrary evidence.

 The heretical truth is that strong regulation is necessary for a strong economy. Free enterprise is still the least bad method we have for generating wealth, but that freedom must be contained and directed to the ends we want to see. It is a liberal fantasy to think that the interests of private individuals and firms will somehow naturally correlate with the common good; if politics is nothing else, it is the attempt to adjudicate between competing interests. It does not follow that business should be the only voice heard on matters of regulation, thereby locking society into a downward spiral of freer and freer markets. There is a much wider community of stakeholders who are likely to have very good reasons for demanding stronger regulation. 

Along with plenty of other woes, Brexit has brought us to a potentially dangerous deregulatory moment in which a vote to reign in elite power could be exploited to slash the protections we will inherit from the EU. Theresa May’s claim to one-nation politics has already been thrown into doubt by her threat to turn Britain into an ultra-liberal fringe economy if she does not get her way in the upcoming negotiations. Once again, it will fall to Labour to make the case for a balanced economy in which the rich and powerful are not permitted to profiteer from the rest.

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