Would Brexit cut red tape?

Further to the lies, damn lies and statistics post, which might be summarised by saying you can't trust them because they use some credible numbers but associate them with the wrong words, one of the Leave camp's arguments is that exiting the EU would allow a bonfire of red tape which would free up British business, making us more competitive.

Michael Gove estimated the cost at £600M a week, though Full Fact poured cold water on that figure (see https://fullfact.org/europe/michael-goves-today-programme-speech-factchecked). But whatever the figure is, would that bonfire really happen?

According to my economics guru, David Smith, the answer is not at all. Writing in the Sunday Times on 22 May he said that red tape is an important issue, which goes beyond irritation for many firms. But he blew the argument out of the water.

There is a common feeling (which I for one shared) that Britain obeys and even gold plates the rules, while other EU countries ignore them. And Michael Gove has also told of the high proportion of British rules and regulations which emanate from Brussels, saying that they added nothing.

Some rules are important, e.g. for genuine health and safety reasons. And much red tape is home grown - apparently we initiate many of the EU rules. I don't know if Gove would agree that the flow of EU regulations stem in part from Britain, but would he have recognised or wanted to account for that? In any case, our government agrees with nearly all of it, whatever Gove says. According to In Facts, a group seeking to promote accuracy in the Brexit debate (good luck there), of nearly 2,600 EU votes since 1999, Britain has voted against only 56 times and abstained 70 times. So on more than 95% of occasions we have been happy with what was being proposed. Not the received wisdom.

But the key point is this - however bad it may seem, Britain is LESS regulated than nearly all our main competitors, whether they are in the EU or not. For product market regulation, Britain is the 2nd least regulated of 34 OECD countries. Only the Netherlands ranks lower. We are marginally less regulated than the USA and significantly less regulated than Germany, France and Japan, for example. For employment legislation, Britain is the 4th least regulated OECD country.

This shouldn't be that surprising. The UK ranks 6th out of 189 countries in the World Bank's Ease of Doing Business rankings and 10th out of 140 in the World Economic Forum Global Competitiveness index. Which is why Britain does well for inward investment

There are many reasons why Britain is not more competitive - shortcomings in education and skills, low productivity, lack of innovation in some sectors and a failure to invest enough, particularly in infrastructure. Blaming it on the EU doesn't wash, as we are less regulated than the vast majority of our competitors. Smith says when we look for failings we should look in the mirror.

And that leads on to a key conclusion. If we exit, would there be a bonfire of regulations?

Open Europe estimates the cost of EU red tape to be £33bn a year. But there is a parallel estimate of £59bn a year of BENEFITS from EU regulations. How can there be benefits? The Treasury cites things like cost reduction from a single testing regime for cosmetics and "gains to both operators and consumers in the transport sector". I presume this latter example refers to interoperability requirements, which leads to more competition in procurement. If so, it's theoretical in my experience, but one can see that in principle there would be benefits like this.

Open Europe also estimates that a politically feasible maximum reduction in the £33bn cost of EU red tape would be £13bn, mostly from scrapping labour market and environmental regulation and easier regulation of financial services. Smith thinks that likely to be an over-estimate. Thinking of the problems the government had over the zero hours contracts debate, could it face out the inevitable row over workers rights if we tried to roll back EU requirements? And EU environmental regulations on diesel emissions are being criticised for being too lax, not too tight.

Smith contends that a post Brexit Tory government with a small majority would face significant opposition from its own side as well as from Labour and the Nats if it attempted to push through a programme of scrapping workers' rights, reducing environmental regulation and adopting a softer-touch regulatory regime for the City. I would add that, in some cases, it would be impossible if we want to sell into Europe. Smith concludes the idea of such a programme is entirely unrealistic.

So there is very unlikely to be any significant bonfire of red tape we leave the EU. Smith concludes that, given this has been a significant plank in the case for leaving the EU, it is a big flaw in that case.

I'm sure the answer to "Would Brexit cut red tape for business?" is a resounding "No".

This was a question that I didn't think would have a clear cut answer, but it does.

And not only that, my preconceptions about EU red tape have been significantly changed. Like many, I thought that it was the EU who stopped us buying incandescent light bulbs and made us use what Jeremy Clarkson referred to as ceramic dog turds for light bulbs. I've been known to get incandescent myself at the dim glow from a low energy bulb, slowly cranking itself up to what is supposed to be full blast, which still doesn't cast enough light for my ageing eyes. (Like lots of things, lighting is designed by young folk who seem to forget that old fogeys eyes don't work as well). All for no material saving if the light is one that is used occasionally and briefly. But guess what - it wasn't the EU what done it, it was Hilary Benn, Labour environment secretary in 2007, when he said "Britain was leading the way". And probably not a bad thing, once industry responded by making better bulbs that don't take so long to reach full intensity at almost affordable prices. So this is an example of the EU following the UK leading to regulations coming through that Gove sees as coming from Brussels.

Like Smith, I've come to the view that the EU is a convenient target for the default finger of blame for politicians and the media. I'm not sure about not guilty, but definitely not proven.

Wharever, red tape is not a valid reason to vote "Leave".