Richard North, 18/01/2021  

A piece in the Guardian should, if it is read properly, put to bed the complaints about "paperwork" and "red tape" relating to Brexit.

For sure, traders and shippers are having to get used to handling new forms of paperwork, with which many are unfamiliar, and failure correctly to complete the necessary papers is giving rise to delays and additional costs.

To some (limited) extent, however, the problems can rightly be put down to "teething troubles" and once there is a degree of familiarity and practice, recruitment has been improved and IT problems have been sorted, the system should settle down into an uncomfortable routine to become the new normal.

Undoubtedly, there is going to be continued grief until these issues are sorted but, as the Guardian intimates with its headline: "Shock Brexit charges are hurting us, say small British businesses", they are only part of the problem.

Clearly, the charges are also problematic, although the paper spoils the effect of its own headline with its sub-heading: "Levies to cover the increase in red tape, VAT and customs declarations are hitting trade to the European Union".

The point that should emerge is that while completing paperwork incurs costs, some of the costs (such as VAT) would arise even if we were inhabiting a form-free world.

In other respects, the paperwork is the least of the problems. For traders dealing in products of animal origin, for instance, the requirement to submit consignments to a border control post for physical inspection, and the payment of the associated fees, cannot be classed as "paperwork", while "red tape" hardly conveys the nature of the processes involved.

It seems though that the legacy media is unable to break out of its own self-imposed narrative, and will continue to trot out their generic "red tape" stories, even though the subject matter is diverse and wide-ranging.

Descriptions notwithstanding, there is good evidence to suggest that the cumulative effects of newly-applied border controls, and related issues, are building towards a perfect storm which is set to precipitate a major crisis in our trade with European Union Member States.

It seems vastly inappropriate at this juncture, therefore, that the government should be devoting limited "bandwidth" to the subject of deregulation, with the Telegraph reporting that Chancellor of the Exchequer Rishi Sunak is to chair a Whitehall taskforce "to lead bonfire of EU red tape".

This is to be a new "Better Regulation Committee", based in Downing Street, focusing on "cutting EU red tape for businesses", with the prime ministers saying that he wants the changes to allow the government "to seize opportunities in the UK as an independent nation".

Whatever the merits of this approach – and there are very few – it also sends an unfortunate signal to the EU, effectively declaring that regulatory divergence is an important and immediate priority of the Johnson administration.

This can only feed the developing trade crisis, as the level and intensity of border checks on goods imported into the EU (and the rest of the EEA) will depend to a very great extent on the degree to which the UK's regulatory standards match those of the EU.

Where, as is the case, there is a declared intent to move away from EU regulation, the inevitable consequence will be that customs authorities in the EU Member States (possibly with the encouragement of Brussels) will veer towards a more rigorous control regime than might otherwise have been the case.

As if that was not bad enough, one draws from the Telegraph piece the view that, even if reducing regulation was to be fostered, the government is going about the process in entirely the wrong way.

The report has it that Number 10 wants the new committee to "refresh the strategy on making better regulation outside the EU, review existing rules and cut red tape for businesses".

One of those anonymous sources then develops the theme, saying that: "With newfound control of our laws, reviewing and reforming regulation will be at the forefront of the Government's agenda to take advantage of opportunities outside of the EU".

Officials (also anonymous) are saying that the Committee will, "coordinate and drive through an ambitious programme of regulatory reform to over the parliament. It will push the boundaries, boost creative thinking and inject pace at the centre of the government".

Sunak himself is quoted, telling as: "Now that we have left the European Union, we have an opportunity to do things differently and this government is committed to making the most of the freedoms that Brexit affords us". He adds: "This isn't about lowering standards, but about raising our eyes to look to the future - making the most of new sectors, new thinking and new ways of working".

We are then told that the Committee will be backed by a unit of civil servants who will be charged with carrying out "a series of systematic deep dives... into EU-derived regulation to identify and implement agreed changes". By way (presumably) of reassurance, we are also told that "any reforms would not come at the expense of the UK's high standards in areas like workers' rights and the environment".

The reason for my distinct lack of enthusiasm is partly to do with the fact that we've been there before. Booker and I took part on several deregulation initiatives in the 90s, including Major's "deregulation offensive" lunched at the party conference in October 1992, when he appointed his trade and industry minister Michael Heseltine to "take responsibility for cutting through this burgeoning maze of regulation".

Famously, Major asserted that there was no one better "for hacking back the jungle", telling Heseltine: "Come on, Michael, out with your club, on with your loin cloth, swing into action".

Over the next four years, inspired by the gold-plating of EC directives, this was to remain a flagship policy. Yet during that time, when Major's government put its lengthy "Deregulation Bill" through Parliament, not a single regulation implementing a directive was changed.

The annual number of regulations issued, which only topped 3,000 for the first time in 1992, never dropped below that figure. Only at the end of the Bill's passage through Parliament did a junior minister in the House of Lords finally admit that it was always intended to exclude regulation stemming from the (then) EC.

From that, we could adduce that the major failing of the initiative was the failure to deal with "European" regulation, but it would be wrong to draw that conclusion for the present day. Since the early 90s, and continuously right up to the present, EU standards have been progressively replaced or augmented by international standards, even if they have still been labelled as EU laws.

Any attempt to cut back regulation, therefore, will quickly impinge on the "double coffin lid" phenomenon, where we will find that we will be in breach of our international commitments – more so as many of them are built into the TCA.

Crucially, though, what we (Booker and I) learned from previous attempts is that deregulation, per se can never work. What must be appreciated is that regulation is an instrument of policy, and policy is a response to a need, real or perceived.

To tackle "excessive" regulation, you have to address the "need" in the first place, and then modify the response with a more appropriate policy – from which new measures will naturally emerge. If you simply play around with the written word, you create a political vacuum which will act as a driver for more or replacement regulation, or simply act as a barrier to change.

For instance, if you look at the current tranche of financial services regulation, this is driven by the financial crash of 2009 and the need to prevent it happening again, where states, at great cost, had to bail out the banks.

Thus, you can't play around with the regulation, without first understanding why it came into being in the first place, and the functions it was intended to perform, looking at the bigger picture and deciding how best to secure policy objectives.

This is a subject to which we must inevitably return, not least as the current ideas have the makings of another Johnsonian train wreck – as if we didn't have enough already.

Also published on Turbulent Times.

comments powered by Disqus

Log in

Sign THA

The Many, Not the Few