Today’s papers carry revelations about the cladding material used in Grenfell Tower, with claims that the choice of a material banned in the US and Germany may have saved £5,000 on a fire-resistant alternative – or 0.06 per cent of the £8.6m cost of the refurbishment. It’s too early to say how big a part this played in the needless tragedy. But we can already learn lessons from the policy context that facilitated it.
That context is one of “regulatory austerity”: an irresponsible race to the bottom in which UK policymakers have led the world.
We all know the narrative of fiscal austerity. “Cutting for growth” was a powerful political message – despite being economically illiterate and predictably leading to lower growth and higher debt. Less familiar is the related narrative of regulatory austerity. This too seeks to justify cuts as if they were good for economic growth – but in this case, the cuts are to fundamental protections for citizens, and to their effective enforcement.
This is a long-established trend. In 1997, Tony Blair created a Better Regulation Task Force, which was followed by the Better Regulation Commission, itself succeeded in 2008 by the Better Regulation Executive.
Nobody wants worse regulation, of course. But very often “better” regulation seems to mean “less”. The Commission’s role, for example, was “To advise the Government on action to reduce unnecessary regulatory and administrative burdens…”. Not, say, “to ensure regulation better promotes the wellbeing of people, the responsible behaviour of business and the effective functioning of markets”.
Section 1 of this year’s Conservative manifesto begins: “Theresa May’s Conservatives will deliver: A strong economy built on sound public finances, low taxes, better regulation and free trade deals with markets around the world.”
The combination of low taxes and “better” regulation shows the balance between viewing these as obstacles to growth, or as necessary conditions for sound markets and healthy societies. It continues: “Regulation is necessary for the proper ordering of any economy and to ensure that people – and their investments – are protected. However, poor and excessive government regulation limits growth for no good reason. So we will continue to regulate more efficiently, saving £9bn through the Red Tape Challenge and the One-In-Two-Out Rule.”
What is the One-In-Two-Out Rule? Any time a new regulation is introduced which has a cost, policymakers are bound to eliminate or modify an existing regulation with double the cost to business. Even if the new regulation is good, and the old ones are too.
In fact, there has been quite some inflation in this commitment. Autumn 2010 saw the introduction of “one in, one out” (a related experiment under Gordon Brown in 2008 having been quickly discontinued). January 2013 saw a ramping up to “one in, two out”. March 2016 brought legislation for “one in, three out” – sold as the cutting of “red tape” by £10bn.
The key theme in all of this is to put the focus firmly on regulation’s costs to business, forcing estimation of this part alone of the overall costs and benefits. Reductions in this aspect of costs are then flaunted as policy successes – regardless of the wider, human impact.
As with the undermining of the progressiveness of taxes and transfers, the true costs are not evenly distributed. Those left exposed by the removal of protections typically have no voice in policy processes – certainly nothing to rival the lobbying power of major industries.
This is not a UK-only phenomenon, of course. One of Donald Trump’s first priorities as he entered the White House was to introduce a version of “one in, two out” – in his case, simply eliminating twice the actual number of regulations introduced.
Former Canadian prime minister Stephen Harper was a leading proponent too – as detailed in the excoriating work of Bruce Campbell, who introduced me to the term regulatory austerity when presenting his work on the entirely avoidable Lac-Mégantic rail disaster, which killed 47 people, destroyed a town centre and spilled 6 million litres of toxic material.
The effects of committing to remove regulations, regardless of their role, are entirely predictable. Important protections can be eliminated, arbitrarily – often leaving people exposed to quite unnecessary risks of the most serious nature. And the narrative enforces a policymaker mindset that opposes any regulation with short-term costs for business, never mind the longer-term and wider social impact.
The FT’s architecture correspondent Edwin Heathcote wrote today of “a long and successful political campaign to denigrate regulation”. In the area of housing, this has eroded everything from space standards to fire provisions, and also led to a failure to stay up to date. Fire regulations have not been reviewed for more than a decade, instead of “every couple of years” to keep up with innovations in technology and building materials. Would a review have seen the UK follow the US, Germany and other countries in banning for tall buildings the flammable cladding apparently used in Grenfell Tower?
Regulatory costs, like tax, are part of the price we pay for civilisation – including protection of the most vulnerable, and protection for us all against vulnerabilities beyond our individual control.
The residents of Grenfell Tower deserve the most rigorous and comprehensive investigation and explanation. Indeed, all of us deserve a grown-up approach to regulation, safeguarded from ideological calls to prioritise business costs above human impact.Reuse content