capx.co
There are, says Robert Colville, only five things a government can do about anything: ban it, mandate it, tax it, subsidise it, or give a speech about it.
The British state devotes far too little to the second of those than the others. Tax and spending decisions on tax and spending attract lots of attention; those on regulation, very little.
Yet regulations matter hugely.
The biggest obstacles to economic growth in the UK are more often to do with regulation than tax and spending, as a new report from the Centre for Policy Studies shows. In the decade beginning in 2010, a total of £35bn a year in regulatory costs were imposed on UK firms (£57bn if you include the cost of auto-enrolment in pensions). One-off transition costs imposed an additional £40bn (£148bn including changes to pensions indexation).
Of course, these regulations brought benefits as well – “at least, the government claimed they did”. But even if you include offsetting benefits, and exclude the pensions measures, you still get a net total of £6bn a year in extra costs over the decade – almost enough to cover a 2p cut in corporation tax. All the while, the government uses creative accounting to claim the regulatory burden is decreasing.
Britain actually has a good system for analysing the costs and impacts of government decisions. In practice, however, the impact assessments are “usually carried out long after the decision has actually been taken”, and “rubber-stamped” with scarcely any scrutiny.
Take the f
