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You’d hope that after a few weeks watching Elon Musk’s hit squads rampage through the US federal bureaucracy, people might have twigged that his “efficiency” drive isn’t entirely as advertised.
Yet rather than the Trump administration being regarded as a cautionary tale, the cult of worshipping deregulation as necessarily a good thing has acquired a disturbing number of global followers. When France is suddenly pushing the EU for “a massive regulatory pause” you know things are not normal. But it’s in the UK, where habitual genuflection towards the US has persisted despite wildly different political cultures and administrative systems, where the true believers are to be found.
Kemi Badenoch, leader of the Conservative party, bizarrely said this week that Musk’s so-called Department of Government Efficiency (Doge) hadn’t gone far enough. At the end of Trump’s first week, Simon Case, the former head of the UK civil service, wrote admiringly of the “extreme transparency” of the US efficiency drive and said it could provide a global model for reinventing government. Given the damage Musk is wreaking by the day, this argument is already ageing extremely badly.
The prime minister Sir Keir Starmer is far less extreme and has thankfully not cited Trump as an inspiration, though he did bring up deregulation during his first call with the US president. But his government has still displayed some disturbing tendencies in this direction. Going beyond Labour’s long-standing and laudable commitment to ease construction and infrastructure planning, ministers’ speeches and writings are now routinely peppered with general invocations against excessive rules.
You may regard all this as standard empty pro-business rhetoric, but it seems dangerous at a time of such deregulatory destructiveness to give the cult space to take hold. You can be sure it wasn’t in Labour’s election manifesto, which apart from the planning issue had some vague words about co-ordinating regulation and bringing in new rules on artificial intelligence, a commitment from which it is rapidly retreating.
If a government apparently desperate to change the political narrative is going to snatch at any idea labelled as deregulation, it could do some serious damage. Casting around to find the economic model Labour apparently hadn’t come up with itself when in opposition, chancellor Rachel Reeves last month called in the UK’s regulators and asked them for their ideas on growth. The government then kicked out the chair of the Competition and Markets Authority (CMA) for being insufficiently keen to approve mergers.
The CMA has long been criticised by big businesses, particularly in tech, for blocking takeovers and taking too long to make decisions. Now, you can debate the operation of UK competition policy, both in process and outcome. But it’s worrying that the government seems to identify the interests of large companies as identical with promoting growth.
Unlike product standards or green regulations, competition policy is not simply a question of protecting consumers’ or the environment’s interests versus those of companies. Unregulated monopoly produces big profits for monopolists, but it does not traditionally produce growth or innovation.
If the economics of the tech industry mean the trade-off between restricting market dominance and growth is now obsolete, we should hear the reasons why. If your takeaway from US economic history is to look favourably on a few weeks of Trumpian deregulation while ignoring more than a century of antitrust, you’re doing it wrong.
There is of course an enormous irony here for the UK. Rules affecting businesses are not written purely at the whim of malign regulators. Many facilitate growth and are created with and sometimes by companies themselves. For example, the use of the 20-foot shipping container that revolutionised world goods trade expanded hugely after global size standards were officially adopted.
As it happens, the UK has embarked on an experiment in radical deregulation within the past five years, disowning a system of official rules mainly developed in association with businesses. The system was the EU single market and customs union and the experiment was called Brexit. It was based on outright fabrications about EU regulations on bent bananas and the like and it’s failing, costing perhaps 5 per cent of GDP. If the government wants a growth model then, ironically, rejoining the regulatory EU superstate is right there, and I have yet to see any convincing argument that being outside the EU’s AI regulatory framework will outweigh the benefits. The government’s refusal to discuss the issue properly shows it is insufficiently serious about growth.
There is a measured, cogent debate to be had about good and bad regulation. Taking inspiration from Musk, whose streamlining method is pretty much literally “CTRL-F [thing I don’t like]-SELECT-DELETE”, is emphatically not it. Doing everything big businesses tell you to isn’t it either. Unthinking crusades against regulation — the use of hilariously outdated metaphors like “red tape” and “blueprint” is always a warning signal — can end up creating massive damage, and making or unmaking rules in a rush to fulfil a political imperative is a sure-fire way to get it wrong.
alan.beattie@ft.com
