The Thin Red Line

Kingsley Amis said, amongst his many other witty comments, that more means worse. And nowhere is this truer than with regard to bureaucracy. Over-regulation continues its parasitic growth burdening almost every activity with cost and complication and, more often than not, not only failing to deal with problem sought to be addressed but instead creating an a new problem where none existed before. For far too long the answer from the politicians to every perceived problem (many of which only seem exist in their own warped imaginations) has been to pontificate, legislate, regulate and self congratulate seemingly oblivious of the harm they do to the economy and the common good. What is the solution?

Well, it appears that at long last it is beginning to dawn on the some of the politicians that action is needed. I attended an event at the British Embassy here last week on the theme of less bureaucracy, more digitalisation (as if a bureaucratic burden cannot be imposed digitally, but let’s be charitable). The gathering was attended by the British ambassador, the undersecretary of the state at the Ministry of Economy in Poland, various representatives from the Department for Business Innovation and skills from the United Kingdom, and from the EU the deputy head of the evaluation and simplification unit of the European Commission, as well as from business.

As with all such events the right sentiments were expressed. To create the efficient state government must change its approach from seeing citizens as applicants to seeing them as partners. In the current economic climate it is particularly important that red tape is reduced and that digital tools are in place to create the single market which market, if it is to compete successfully globally, must become digitalised. The United Kingdom and Poland have a shared interest in a resolution of the euro zone crisis but this of itself will not resolve the problem of growth. The economic balance is moving from west to east and from north to south and this is a function of competitiveness. Put simply, EU performance is weaker than that of its competitors and the gap is widening. The UK thinks that single market must be completed, that regulation should be smart and that the EU should look outwards. Of course, I have written here before, this is one of the cultural problems in the UK’s relationship with EU – we are not the “little Englanders” as the genuinely little mittel europas would have you believe but through history, culture and inclination are “big worlders”. The UK does look outwards.

Be that as it may, we will not succeed in having less bureaucracy, apparently, if policy does not support better regulation and digitalisation which, from the UK perspective, means ensuring the that single market and trade policy are right as these are key to EU prosperity. The single market is only half as effective as it could be and fully implemented singe market measures could make the EU from three to five per cent richer. A liberalised EU trade policy towards the rest of the world is needed as most of the growth is coming from emerging markets elsewhere. The EU needs inward investment and an open trade environment to place the EU in the global supply chain and generate wealth. In this context the EU/USA free trade negotiations are to be welcomed.

Turning then to smart regulation, the UK has implemented the red tape challenge which is aimed at reducing regulations by working through and considering the stock of regulation as a whole, discussing and agreeing which may be removed. Of the 2500 regulations considered so far half will be scrapped. The process should be completed by the end of this year. In addition there flow of new regulations had also been considered with a “one in one out” approach already being replaced by a “one in two out approach”. The cost of a new regulation is now assessed before it is imposed and so far £1 billion of cost burdens has been saved and more is expected. But – and it is the biggest of buts – much new regulation is a result of rule setting at the EU level where the impact assessment work of the EU has been patchy. The brakes need to be firmly applied there. Last November, 13 member states did write to the EU Commission asking for a reduction in the regulatory burden and a new strategy was brought out last December. Much more needs to be done to reduce the overall regulatory burden faced by EU businesses if they are to compete effectively in the world.

In summary, the UK experience is that a clear and agreed objective is needed to eliminate unnecessary regulatory costs; a change of culture so that costs are thought of before reaching Pavlov like for new regulation; and decisions on regulation should be informed by evidence, for example impact assessments (themselves a form of bureaucracy, alas). There is still a long way to go.

In my view the problem is that although the evidence is clear, there is little general acceptance amongst the Eurocrats that here is a problem that needs urgent and dramatic action. One simple example: the latest nonsense proposed by the EU Commission is to seek to require every member state to hold EU elections on the same day, a Sunday, as well as some even more sinister requirements. Why? Each member state has its own traditions and there is no need for any change. The fact that the EU now seeks to regulate something which needs no regulation and which has not been regulated in the past betrays a mind set which is out of touch with reality and contemptuous of anything other than its own navel gazing.

A thin red line? No, rather a Gordian knot of broad red tape with no Alexander in sight.

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