I may be appalled by the energy and environment section of the coalition document, but I am extremely impressed by section 2, on Business. As Vice-President of an organisation dedicated to Competitive Enterprise, I have to say that most of these policies are excellent:
• We will cut red tape by introducing a ‘one-in, one-out’ rule whereby no new regulation is brought in without other regulation being cut by a greater amount.
This sort of regulatory budget idea has been a great success whenever it has been tried. It forces regulators to think hard about the utility of existing regulations, which are often introduced as a knee-jerk reaction to a one-off problem.
• We will end the culture of ‘tick-box’ regulation, and instead target inspections on high-risk organisations through co-regulation and improving professional standards.
One of the worst aspects of regulation is the creation of a 'tick-box' culture, which engenders a false sense of security and leads to lapses. It is plausible that the recent BP oil spill in the Gulf of Mexico was at least facilitated by a 'tick-box' approach. In most cases, 'tick-box' cultures cause massive amounts of time to be spent on minutiae, greatly harming economic efficiency and driving up costs for end-users, which is you and me.
• We will impose ‘sunset clauses’ on regulations and regulators to ensure that the need for each regulation is regularly reviewed.
Zombie regulations that keep on existing years and even decades after their useful life has ended are an important part of regulatory bloat and the "tick-box" culture.
• We will review IR 35, as part of a wholesale review of all small business taxation, and seek to replace it with simpler measures that prevent tax avoidance but do not place undue administrative burdens or uncertainty on the self-employed, or restrict labour market flexibility.
• We will find a practical way to make small business rate relief automatic.
Regulation is a particular burden on small business. These are very welcome.
• We will reform the corporate tax system by simplifying reliefs and allowances, and tackling avoidance, in order to reduce headline rates. Our aim is to create the most competitive corporate tax regime in the G20, while protecting manufacturing industries.
Corporate taxes are generally extremely inefficient. It is likely that the US corporate tax actually costs more to the economy than the revenue it raises. I imagine there will be Laffer Curve effects from this measure as well.
• We will seek to ensure an injection of private capital into Royal Mail, including opportunities for employee ownership. We will retain Post Office Ltd in public ownership.
The Royal Mail desperately needs reform. I suspect this does not go far enough, however. I am also disappointed not to see moves to open up the Mail to more competition in this section. Any moves towards injecting private sector disciplines are nevertheless welcome.
• We will give the public the opportunity to challenge the worst regulations.
A very welcome move, which amounts to the crowdsourcing of regulatory policy. But the regulatory ombudsman, or whoever is charged with being the honest broker here, must be seen to have teeth. The nation's regulators will not give up powers without a fight.
• We will review employment and workplace laws, for employers and employees, to ensure they maximise flexibility for both parties while protecting fairness and providing the competitive environment required for enterprise to thrive.
On the face of it, this sounds like a good thing. However, the European strictures within which employment law operates likely make reform little more than cosmetic.
• We will make it easier for people to set up new enterprises by cutting the time it takes to start a new business. Our ambition is to make the UK one of the fastest countries in the world to start up a new business. We will reduce the number of forms needed to register a new business, and move towards a ‘one-click’ registration model.
• We will end the ban on social tenants starting businesses in their
own homes.
Laudable goals and so much more important in encouraging entrepreneurialism than grants.
• We will promote small business procurement, in particular by introducing an aspiration that 25% of government contracts should be awarded to small and medium-sized businesses and by publishing government tenders in full online and free of charge.
I'm not a great fan of this sort of quota - small and medium businesses need to compete effectively in the market, but will instead start competing for government rents. This is exactly what led to crony capitalism in the first place. If they can find other ways of encouraging procurement from small businesses, I'd be happier.
• We will review the range of factors that can be considered by regulators when takeovers are proposed.
Again, a laudable policy aimed at reducing the over-arching power of regulators.
• We will end the so-called ‘gold-plating’ of EU rules, so that British businesses are not disadvantaged relative to their European competitors.
Anyone who has followed the work of Christopher Booker will know that gold-plating has led to significant problems for British businesses. I am not sure how they are going to implement this, but, again, a laudable goal.
• We will support the creation of Local Enterprise Partnerships – joint local authority-business bodies brought forward by local authorities themselves to promote local economic development – to replace Regional Development Agencies (RDAs). These may take the form of the existing RDAs in areas where they are popular.
If these partnerships have the character of Thatcher-era enterprise zones, lifting regulatory requirements in order to encourage development, then this will be a good policy. If they turn into grant factories, then it won't be.
There are certainly a few policies in section 2 that aren't much good, but they are far outweighed by the excellent deregulatory policies outlined above. All in all, I give this section an A-. Britain should be more competitive and enterprising place after all these policies are implemented.
Now if only it wasn't all going to be made moot by the energy crisis entailed by the Coalition's energy and environment policies...
