Cutting ‘red tape’ is nothing but a red herring – and arguably counterproductive | Heather Stewart

Cutting ‘red tape’ is nothing but a red herring – and arguably counterproductive Heather Stewart Blaming a moribund economy on too many rules is a hackneyed neoliberal trope – UK plc needs smarter regulation, not less regulation

B efore becoming prime minister, Andy Burnham pledged to “end 40 years of neoliberalism”. But as he prepares for his first budget on Wednesday, his government is yet to let go of one of its most tedious cliches: red tape.

In the run-up to the chancellor John Healey’s high-stakes Commons address, the government issued a press release last week promising his plans would include measures to “slash the red tape choking firms”.

Named after the tape once used to tie up government bills, and popularised by the historian Thomas Carlyle, the phrase is straight from the neoliberal playbook and has long outlived its usefulness.

Getting the interfering state out of the way of the wealth creators was a trope of Thatcher and Reaganite economics, and on this side of the pond it has been repeated ad nauseam by every government since.

Thatcher unleashed the City with her “ big bang ” deregulation drive, and her successor John Major was enthusiastic about “hacking back the jungle of red tape”. It was the man he appointed for the job – Michael Heseltine – who coined what has become the most hackneyed description of this particular approach: the “bonfire of red tape”.

With Labour back in power, Gordon Brown celebrated a light-tough regulatory regime for the UK’s hard-driving financial sector – until the Treasury had to bail out the banks after the 2008 financial crisis.

Boris Johnson wanted to unfetter Britain’s businesses from “Brussels bureaucracy” and waffled on during the Brexit campaign about bendy bananas. Yet, after Brexit, business groups said their members would rather comply with longstanding EU standards in many areas than adopt an entirely new UK regime. And bananas are no more or less bendy than before.

Rachel Reeves had a more unpleasantly graphic way of making a similar point, referring to regulation as a “boot on the neck” of British business.

There is nothing wrong with ensuring the interaction between business and the state is smooth. But even during the early years of neoliberalism, the free market good, regulation bad dichotomy was always unhelpful, for several reasons.

First, good regulation – a robust competition regime, for example – is essential to make markets work well. And even most enthusiasts for a laissez-faire approach would acknowledge the need for some basic quality standards – for food and medicines, for example.

When it comes to the labour market, Labour has unashamedly adopted a pro-regulation stance. Its Employment Rights Act is the most significant increase in workers’ rights in a generation – but it inevitably, and deliberately, increases the rules firms must follow.