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Wednesday, Oct 04, 2023

Untangling the Regulatory Web: A Path to Prosperity in Post-Brexit Britain

Untangling the Regulatory Web: A Path to Prosperity in Post-Brexit Britain

Addressing Regulatory Reform and the Judicial Review Explosion for Effective Governance and Economic Growth
Ever since the start of the Brexit referendum campaign in 2015, British politics have been largely centered on issues of culture. The polarization brought about by Brexit, soon mirrored by a similar American debate over transgender rights, has joined the long-standing discourse on diversity.

Political commentators have argued that cultural matters have replaced economy or public services in the priority list of voters. Predictably, this fixation on cultural issues has dwarfed the mundane but essential work of economic growth and effective governance.

Today, we are led by a determined Prime Minister committed to reforms and progress. He's utilizing all available resources within the government, but unfortunately, few of these resources seem to be effectively operational.

The functioning of the British state has been overlooked for a long time, requiring a thorough revamp, with a specific emphasis on two critical aspects.

Primarily, the growing pile of haphazard and contradictory regulations, which suffocate economic activity, particularly for small businesses, needs to be addressed. Secondly, we need to curb the continual enlargement of judicial review, which has been hindering crucial decisions and escalating costs for everyone. We can only start seeing the effects of our policy intentions once we begin making headway in these areas of governance.

To begin with regulation, a 2019 study by the National Audit Office (NAO) revealed that the UK had approximately 90 regulatory bodies. Collectively, these bodies oversee about 45pc of our private sector. While these regulators often contribute to economic and societal advantages, they also impose monitoring and compliance costs, totaling over £100bn annually for the private sector. As the chair and founder of the Regulatory Reform Group, I've spent months speaking to regulators, businesses, ministers, and civil servants.

The consensus is that the UK's regulatory state has expanded without a clear strategic vision, and without significant scrutiny from Parliament and Government.

This lack of oversight has practical implications. A recent case was when Natural England decided to alter advice to planning authorities concerning nutrient neutrality, causing delays in the construction of over 100,000 homes, as per independent estimates.

Additionally, there is the case of the Competition and Markets Authority. Its recent decision to block a merger hinted that the regulator doesn't consider the impact of its decisions on the UK's international reputation as a place to invest or do business. The Chancellor agrees that while the CMA’s independence is vital, it's crucial for all our regulators to comprehend their broader responsibilities towards economic growth.

So how do we confront our regulatory dilemma? The answer lies in increased accountability and transparency to Parliament and the central government. Regulators should be independent, but that doesn't make them immune. There should be a committee of specialist MPs and peers who can scrutinize the actions of regulators. This will add to the efforts of select committees, which primarily evaluate government departments.

Secondly, we need to address the unprecedented growth of judicial review. Professor Richard Ekins of Oxford University points out the considerable extension of judicial review over the past few decades. It is a critical factor that the government has to consider when planning to act, out of the fear of being overruled by the judiciary.

This fear is particularly noticeable in major infrastructure projects. The National Infrastructure Commission has observed a spike in judicial review cases in recent years, leading to higher government costs and additional taxpayer burden.

As the UK needs to deliver more projects swiftly and on a larger scale, the planning system has become slower and more unpredictable. For instance, to achieve the government's offshore wind target by 2030, National Grid has estimated the need for at least 17 new energy transmission consents in the next four years. To expedite this, the government should legislate to restrict judicial review on decisions regarding nationally significant infrastructure.

The issues of regulation and judicial review may not draw much interest from my political counterparts. Politicians usually lean towards rhetoric over practicality and prefer new issues over old ones. However, unless we address the fundamental issues of governance, we will fail to deliver our agenda for the country, which will rightly lead to backlash from our citizens.

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