Red tape, blue moods

Date: 15/11/03

Business discontent with regulation (and tax - see next article) is growing. How serious is it - and could it offer a chance to the Tories?

IT IS the most pro-business Labour government ever. Both Gordon Brown, who runs Britain's finances, and Tony Blair, the prime minister, will speak at the Confederation of British Industry (CBI) conference in Birmingham next week.

In the past they have had a warm welcome. Business still thinks well of Mr Brown's macroeconomics. He and the prime minister speak enthusiastically about enterprise. And though there are moans about red tape, Mr Blair has made ministries conduct a “regulatory impact assessment” of all measures they propose. There is a cabinet-office unit to chivvy them. A given minister is responsible for regulation in each big department. A task force of business people helps them all.

What more do companies want? Results, comes the reply, especially from small firms, which cannot afford armies of experts in health and safety, environmental or employment law. Whitehall goes through the motions, says Ian Brough, from the Black Country Chamber of Commerce, but it's “a charade”.

The number of rules, their complexity and their costs, in time and money, are multiplying. The West Midlands' best-known property developers, Don and Roy Richardson, say 50 years ago, 15% of their time went on the bureaucracy of their trade; these days it is more like 75%.

Why the ever-louder complaints? The bosses blame a flood of European Union directives, made even more stringent when turned into British law and regulations, and applied relentlessly. For manufacturers, the Health and Safety Executive (HSE) is the regulator they love to hate. Its inspectors are few, but annoying. To take just one example: your lorry is delivering rods to a building site. Its driver cuts the steel bands circling the bundles of rods for a fork-lift truck to offload them. Stop, says the HSE inspector, both drivers must stay in their cabs, while a third man, trained to cut bands, cuts them.

Not that safety rules are always wrong: “We've always done it that way” is to blame for countless accidents and unhealthy working conditions. But the rules, says David Grove, president of the Birmingham Chamber of Commerce (and owner of the aforementioned lorry), “are written as if we were all raving idiots”.

Moreover, they are fiercely applied. This is not the case in competing European Union countries, the business lobby complains. One source compares the stern safety regime in a (now closed) Midlands tractor plant with the way workers wander over the moving assembly line in a sister plant in France.

Environment law too bites hard. The EU wants pollution stopped before water reaches the reservoir, rather than having the stuff clean in pipes. Fine, says a water-company boss, but “how far do you go? It's stopping the last 10% that eats 90% of the cost.” Tightened rules on contaminated land are another bugbear, though business did fight off an idea to force company accounts always to reflect the cost of returning every site to a pristine state.

The CBI's biggest regulatory beef is labour law. Some is justified, says the director-general, Digby Jones, but it all adds to costs. Long maternity leave dissuades at least some firms from hiring young wives. The possible end to Britain's opt-out from EU working-time rules is a nightmare for firms working odd hours. The cost of complying may be less than the cost of checking compliance; a hotel in Dudley had to hire an extra person just to record the irregular hours worked.

What is to be done? One idea is better consultation. Using a Whitehall website to invite opinions is no way to ensure they arrive. Few small firms will notice; not all business bodies are good at telling them. Yet even if that works, says Andrew Sparrow, of Birmingham Forward, a lobby group, the views of business “tend to vanish into the ether”.

A chance, then, for the Conservatives? “Business is out of love with Labour, but not yet in love with us enough,” says John Redwood, a former industry minister. The Tories like to allege that red tape costs £6 billion ($10 billion), and pledge both to slash it and fight in Brussels against more. But in the past, “they were no better,” says Mr Brough. To most bosses, so far, regulation remains a battle with Brussels and Whitehall, not with any party.

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