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Two weeks ago, I wrote about the new government’s pledge to purge £10bn of legal red tape by 2020 to benefit the nation’s businesses. I stated here my belief that whilst this is unquestionably a target worth aiming for, the efficacy of the initiative – spearheaded by the new business secretary Savid Javid – will likely be stymied by the actions of EU lawmakers. But in the past few days, some very interesting articles have been published detailing the EU’s response to long-standing allegations of meddling and the overregulation of markets, as well as the business response to the Conservative pledges.

On the whole, it seems that UK businesses have acknowledged the worth of the £10bn target but, as the FT reports, this is “tempered with a healthy dose of skepticism.” As was noted in the earlier blog, many thought the “bonfire of red tape” promised by the 2010 government failed to materialise, and have interpreted this as part of a larger trend of government inaction. The Director-General of the British Chambers of Commerce, for example, has warned that “every government [since Thatcher] has said they will cut or limit regulation and has signally failed to do it.” The views of such an eminent figure will undoubtedly be reflected more broadly across industry. And with the regulatory policy committee finding that net savings achieved through the coalition’s cutting of regulations from 2010 – 2015 were smaller than the costs imposed by new EU regulation in just 2013, they can clearly support this viewpoint too.

It should come as some relief to red tape skeptics then to hear that the EU has realised this cannot continue. Frans Timmermans, the Dutch Vice-President of the EU Commission, is the man that has been tasked by Jean-Claude Juncker with cutting down on the EU’s flabby regulatory framework. Seen by many political commentators as sympathetic to British concerns on regulation, Timmermans has now set out the EU’s “Better Regulation” programme which will implement the desired changes. So what exactly will this initiative entail? Some may be disappointed to hear that unlike the UK government the EU Commission has not put a quantitative target on the reforms, explaining somewhat loosely in a Q&A that it means “doing different things, and also doing them better.” But despite the lack of hard targets, it has been reported that Timmermans has ruled that only 23 laws will be proposed this year, down from a recent annual average of 130.

With David Cameron already crediting the Dutchman’s plans as a “significant step in the right direction”, we must hope that this news will be heeded by the nation’s Eurosceptic lobby.

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To say this year’s election was divisive is an understatement. Three days after the announcement of voting results, the atmosphere outside Downing Street was febrile: police were forced to stake out the area to meet banner toting anti-austerity protestors determined to express their ire at five more years of Conservative government.
But what of those who supported the Conservatives? After all, it is the so called ‘shy-Tories’ who chose not to disclose their voting intentions that have left pollsters predicting the ‘closest election in a generation’ red-faced. The 2.3% surge in the FTSE 100 that took place on Friday is perhaps the best bellwether for gauging their sentiments. Indeed, this is a government that many of the electorate brought to power for the benefits they expect them to bestow upon UK businesses and the economy. And this is an expectation that the Conservatives themselves have propagated. Overtures were made during the campaign not just to big business, but also to the small and medium-sized firms that they portrayed as the very ‘lifeblood’ of the UK economy and to whom they devoted a ‘Small Business Manifesto.’

The party’s attempts to woo these smaller businesses seemed to strike a chord too. “We get them, we respect them, we understand them, we back them” said Cameron. The response was an open letter published in The Telegraph and signed by 5,000 small business leaders stating that Cameron’s party should “be given the chance to finish what they started.” These businesses have a long wish list for the next 5 years, but dealing with the proverbial ‘red tape’ that they encounter is a chief concern according to recent surveys.

The Conservatives have sought to address this issue by pledging to cut down on regulations and bureaucracy to save businesses £10 billion. In fact, the party made this same pledge during the 2010 campaign and their efforts since have been met with mixed appraisals. Dragon’s Den venture capitalist James Caan commented in 2012 that regulation was still far too much of a burden, noting that opening a warehouse in the UK takes 4 ½ times longer than in Germany. Furthermore, a report conducted by business information group Croner in 2014 found that half of the businesses surveyed felt efforts to reduce red tape had had no positive effects on their businesses. “There has not been the bonfire of red tape that the government promised,” surmised a Croner executive.
Nonetheless, the government will undoubtedly work hard to make good on their regulation pledge this term. But to some extent their hands are tied, with much regulatory change pushed through by EU law; although, with an EU referendum now promised for 2017, this situation may change. Some small businesses may have acknowledged this, voting Conservative in an attempt to wriggle free from what they perceived as onerous European regulation. But whether trading EU membership for a reduction in red tape is a worthwhile choice for the nation’s SMEs is a question that needs to be asked.

Tag: Conservative

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