It’s understandable that regulation isn’t a fit topic for dinner parties, but there is no excuse for the lack of scrutiny it gets from politicians and policymakers. Perhaps it’s because the costs are so widely distributed and often unseen. To quote, ahem, Wikipedia, “concentrated minor interests will be overrepresented and diffuse majority interests trumped, due to a free-rider problem that is stronger when a group becomes larger.”
A new report from the Centre for Policy Studies makes the case for why we need to tackle this. As Robert Colvile writes in an article summarising the report:
“Think of the biggest obstacles to growth this country faces. Why can’t we build houses in sufficient numbers? Why does it take so much time and money to build new power plants, roads or railways? Why is so much of the money from our pension funds locked up in bonds, rather than being reinvested into the productive economy? All of these issues matter far more for our national future than whether we take a few pence off a given tax, or pour a few more million down the maw of the NHS.”
The report chastises Regulatory Impact Assessments as insufficient, and calls for: a beefed-up Regulatory Audit Office; a senior minister who can challenge and veto new regulations; a full audit of the regulations that are already in place; a system of regulatory monitoring that covers every measure introduced; and full reviews after a set period to see whether they are working properly.
Also, following the former head of the Office of Fair Trading John Fingleton CBE, the report suggests bringing existing regulatory sandboxes together into an economy-wide innovation agency and exploring the idea of replacing sector-specific regulators with a new generation of regulators focused on core, economy-wide objectives.
In their contribution to our Operation Innovation essay collection, John and David Stallibrass – now Deputy Chief Economist at the FCA – set out how regulators need to be ‘innovative by design’. One thing I would emphasise is their call to reduce the number of objectives we give our regulators. It cites the example of Ofcom, whose objectives have ballooned from two primary and six secondary objectives in 1984 to two principle objectives, ten other duties, and six principles of community obligation, many of which are in tension with each other and require delicate discretionary balancing.
It’s not about rhetoric and gimmicks like bonfires of red tape and red tape challenges. And it’s not about shouting into the void that all regulations are bad – good regulation can create certainty and markets. It’s is about getting the apparatus of the state right, reducing rent-seeking and ensuring incentives point in the direction of innovation and competition.
Founders’ Fuel
Adviser to the network Christina Richardson is looking for founders to contribute to the largest study yet on founder resilience. This research, led by Imperial College London and weare3Sixty, aims to influence policy and inform how our whole startup ecosystem can better support and fuel founders to achieve sustainable growth.
We will be convening a roundtable on the topic with Christina as we think there are going to be policy implications to her findings. So once you’ve responded, drop me an email so I can make sure you are invited. It took me about 10 minutes to fill in, but it was worth it. The questions are also great for taking stock of your life as an entrepreneur. Fill in the survey here.
Class Act
In August, our friends at Works in Progress are hosting a week-long residential seminar in Cambridge for people aged 18-22 years old. Classes will be led by our Head of Innovation Research, Dr Anton Howes, as well as Saloni Dattani and Stuart Ritchie. Topics covered will include: how the world got rich; what is going wrong with science today; and how to design public policies so they have a chance of being implemented. Find out more here.
Essential Toil
The Department for Business and Trade has launched the new Help to Grow: Management Essentials course, a short online course with practical tips and resources for small business leaders. The course is developed by experts from accredited business schools. We’ve argued in the past that there needs to be a more flexible option for Help to Grow, so this is good to see. Find out more here.
Deep Impact