Michael Fallon launches Thatcherite attack on Labour's failed approach to regulation of banks and the NHS
By Tim Montgomerie
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In an address to the Centre for Policy Studies tonight the Business Minister Michael Fallon MP will launch a strong attack on the regulatory culture that grew up during Labour's years. He will attack Labour and the European Union for imposing social and environmental costs on business - via regulation - that it was too frit to pay for itself, via taxation. He will say that regulation must become a last resort because it distracts businesses from their first task of creating wealth and jobs and forces them to devote scarce time and resources to compliance. Worst of all, he'll argue, the compliance and regulatory regimes have often completely failed to achieve what they set out to achieve and he'll focus on banking and NHS regulation to substantiate his argument.
On banking regulation Mr Fallon will say:
"Despite employing 2,600 people and an annual budget of £300 million, [the Financial Services Authority] failed to spot the risks the banks were taking and to restrict excessive leverage. Despite thousands of pages of guidance, it ended up losing five of the ten big banks entrusted to its supervision. The subsequent fallout imposed massive costs - on UK taxpayers and on our economy. It left our generation with a legacy of debt, public and private; it almost fatally weakened and unbalanced our economy. And all this in the name of regulation."
"A few weeks ago we had the Francis Report into the appalling suffering at the Mid Staffordshire hospital over exactly the same period. This was a “serious failure” on the part of the trust board, and “an insidious negative culture involving a tolerance of poor standards and a disengagement from managerial and leadership responsibilities.” But here too was a failure of regulation: the NHS wasn’t short of rules and regulations, inspectors and quangos of all kinds. Yet Monitor, responsible for Trusts, and the Healthcare Commission, responsible for standards of care, failed to act... Hundreds of bureaucrats, regulators and inspectors failed to spot that banks were collapsing and that patients were dying."
You can read his speech in full here (PDF) but Mr Fallon then makes a number of claims and promises about his determination to deregulate. He says he hopes to extend the moratorium under which no new regulations can be imposed on the smallest businesses and start-ups. He notes that many low-risk businesses have been excluded from Health & Safety regimes. He notes the changes to employment tribunal appeals, recommended by Adrian Beecroft and now enacted, as well as Greg Clark's simplification of planning laws. He says Whitehall has successfully stopped the so-called "gold-plating" of EU regulations. The One-In-One-Out regulatory trade-off has been toughened. Anone wanting to introduce one new regulation now has to identifty two that will be scrapped. The Red Tape Challenge has, he claims, already saved business £155 million by eliminating or simplifying more than 300 regulations identified by suffocating firms.
Mr Fallon concludes that a lot has been done but there's even more to do. "We’re upping the pace," he says, "we must de-regulate further and faster, both at home and in Europe, to remove barriers to growth." Every business will be watching him and hoping that more and more of his words become actions.