“Rules Britannia” – analysing Britain’s regulatory burden

Coincidentally following on shortly after publication by the National Audit Office of its report entitled “Gambling regulation: problem gambling and protecting vulnerable people” (which contained a number of criticisms of the Gambling Commission in relation to its regulation of commercial gambling in Great Britain), the Institute of Economic Affairs (“IEA”) has published a report entitled “Rules Britannia” (that you can download below) which provides “a broad overview of the theory behind regulation as well as examining the real-world effects in Britain today”.

Summarising the report in a press release published on its website, the IEA states:

Over-regulation in the United Kingdom risks undermining the rule of law as objectives are expanded, oversight is weakened, and policymakers use regulation as a political tool, according to a new report out today from the Institute of Economic Affairs.

Figures from government’s own Better Regulation Task Force put the cost of regulation to the UK economy at £220 billion (adjusting a 2005 calculation for the size of the economy in 2020) but this is likely to be an underestimate, with the wider impacts on freedom and democracy difficult to quantify.

‘Rules Britannia’, written by the IEA’s Head of Regulatory Affairs Victoria Hewson, is the first report from the IEA’s new Regulatory Affairs Programme and gives a broad overview of the theory behind regulation as well as examining the real-world effects in Britain today.

The report concludes regulation has become a political tool, used to drive social or distributive objectives, rather than to correct market failures. Failure of regulation, including over-regulation, has led to increasing barriers to entry for new businesses, stagnating competition between incumbents, and in many cases no evidence of beneficial outcomes for consumers.

Regulations are being judged on their intentions – not their outcomes – and increasingly weak mechanisms for accountability of state regulators risk undermining the rule of law, the report warns.

The report argues over-regulation increases exposure to risk as people lose the ability to judge for themselves what is in their best interests.

The report also marks the launch of the IEA’s Regulatory Affairs Programme, which has been set up to analyse regulation and regulators in the UK.

In the coming months the Programme will:

  • compile a series of regulators, their powers and accountabilities
  • publish detailed studies of individual regulators to assess their performance, beginning with the Information Commissioner
  • inform the debate on regulatory aspects of the UK’s ongoing negotiations with the EU, free trade agreements, and the proposed development of free ports.

We await to see whether the IEA includes the Gambling Commission within its list of regulators whose performance will fall to be assessed.

Victoria Hewson, Head of Regulatory Affairs at the IEA and author of the report, is quoted as saying:

Regulators’ objectives have been gradually expanded over the decades to the point where it is hard to identify areas of economic and civic life which do not fall under the remit of a regulator’s powers. By attempting to quantify the impact regulations have on the economy, as well as the rule of law and personal freedoms, the Regulatory Affairs programme will contribute to the ongoing discussion around the UK’s future relationship with the EU as well as general discussion of red tape in the UK. This kind of analysis is essential for policymakers to make informed decisions about the UK’s regulatory future, especially as we face transferring existing EU law into UK law without considering amendments and improvements.

Professor Syed Kamall, Academic and Research Director at the Institute of Economic Affairs, has added:

Our new Regulatory Affairs programme is designed to understand the rationale for regulation and the impact of politics on regulation and vice versa, such as: Why regulate? Who regulates? What works and what doesn’t work? And what are the implications? By setting out to map the regulatory landscape in the UK, we hope to give a much clearer picture of where responsibility lies and whether regulators have clear goals and if they are accountable to politicians and the public. A regulatory database is essential to map the scale regulation and provide a valuable resource for anyone who wishes to identify where deregulation is possible.