20 June 2023

The Brexit dividend: deregulation and economic growth

By Brendan Chilton

Seven years after leaving the European Union, we have seen absolutely no change in our regulatory framework. Successive Tory governments have promised to change the UK’s regulatory landscape to make the UK economy more competitive and dynamic and for the UK to become the best place in the world to set up and run a business.

We are told by ministers and civil servants that it is not possible to implement sweeping changes to regulation at pace and therefore there have been delays and setbacks. This is all utter nonsense. The Independent Business Network has produced a report detailing changes that can be made immediately, to the benefit of business and at zero cost to the taxpayer.

We at the IBN believe the Government’s decision to lift the sunset clause from the retained EU Law Bill signals it is not serious about regulatory reform. With no deadline, unnecessary EU laws will remain on the statute book indefinitely and the UK will not realise the benefits of having a leaner and more competitive regulatory environment in which to do business. The retained EU Law Bill is currently back in the House of Commons with amendments being considered, following Report Stage in the House of Lords concluded. However, it is still possible for the Government to make a significant difference by taking a pragmatic approach and ensuring that meaningful deregulation takes place and quickly.

And the case for doing so could scarcely be more urgent.

The British economy is stagnating, there is a general view that things are simply not working in Britain, and chronic high inflation is crippling businesses and consumers alike. Meanwhile, high interest rates make borrowing more difficult, which limits economic expansion. A high tax burden discourages investment and leads global companies to choose our competitors as a place to set up rather than the UK.

The Government needs to make the UK an attractive destination to do business and removing unnecessary EU regulations is a key element of that. There’s no use arguing that leaving means we can do things differently when the Government has done the square root of sod-all so far.

So what should ministers be looking at?

The IBN’s latest report looks at 100 EU regulations and directives affecting British businesses in a broad range of policy areas, covered by 11 central government departments and their agencies. We found that 33% could be immediately repealed or reformed and an additional 20% could also be considered for either repeal or reform.

Of course, our paper only examined 100 EU regulations, and there are thousands more enshrined in UK law. The number of regulations repealed or reformed is not necessarily the most important thing here. What really matters is the cumulative impact of removing the most burdensome regulations will have on businesses and their future growth prospects.

There is no reason why the recommendations in our report cannot be implemented immediately. It has taken the IBN, a small business campaign group, around two months to delve into all the directives and legislation and produce a list of directives to abandon or amend now. If we can do this in two months, what have thousands of civil servants been doing for the past seven years?

The Independent Business Network of family-run and family-owned businesses speaks for most businesses in the UK who trade domestically. One of the primary arguments put forward by those who still have not accepted the outcome of the referendum that we must remain aligned to Brussels to maintain trade fail to understand one basic point – the overwhelming majority of UK businesses are not exporting to the EU and therefore do not need to comply with EU regulations and standards, just as businesses operating in the UK do not need to comply with South African standards or Brazillian standards if they are not exporting to those respective countries. There does not need to be a uniform approach to regulation and, unfortunately, the mindset of the current government and the civil service is still trapped in the Euro-world, not the post-Brexit reality.

It is high time the government stopped talking and started acting on these issues. The IBN is ready to support any government that wishes to embark on regulatory reform to improve the prospects for family run and family-owned businesses here in the UK. We’ve done the work, now it’s over to the Government to put it into action.

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Brendan Chilton is chief executive of the Independent Business Network.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.