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Daft Regulation of the Month

You may well consider it reasonable for local authorities to charge users for their supervision of building regulations. Someone has to keep an eye on developers and if the developers themselves did not pay, the rest of us would be subsidising them. Local authorities should aim to recover their costs but not profit from this activity. The basic law dates from 1984.

So far well and good. What is daft is re-stating this with supposedly new regulations every few years thereby wasting the time of the local authorities, parliament and the civil service. On reflection maybe that keeps them out of worse mischief. These regulations were laid before parliament on 25th February and they are full of splendid Whitehallese. For example a “building” means any permanent or temporary building but not any other kind of structure or erection, and a reference to a building includes a reference to part of a building. In other words, a building means a building. That’s a relief.

The regulations say absolutely nothing of any substance: trust me, I read them several times. For example, it doesn’t say anything about what can be included in costs or what the charges ought to be.

Whoever dreamt up this nonsense will soon be providing regulations allowing ice cream sellers to charge for their ice creams. How would ice cream sellers know that they could charge if the government didn’t tell them? In the case of these building regulations, local authorities may not only charge for their services but collect the money as well. Just as well they mentioned that.

This blog is part of the ongoing series: Daft regulation of the month. The first port of call for any government that is really committed to cutting useless red tape. Click here to find out more.

According to a new proposed directive from the European Commission (Late Payment Directive), governments are soon to decide the content of contracts between businesses when it comes to agreements concerning payments. The intention of this directive was originally to ensure that government institutions made payments to private companies on time, a principle of which one can only approve. However, government regulation tends to grow in the making and this directive is not an exception.

The latest discussions from the European Parliament reveal that some groups intend to make the directive include business-to-business contracts as well. This will mean that businesses can't decide the conditions of payments in future contracts, making it completely impossible to compete on these parameters. If loss of competitive advantages wasn't enough this system also looks to expand the bureaucratic burdens on the economy in order to monitor it. All in all a loss – loss situation!

It sounds from the discussions in Brussels that they have lost track of what they intended to do in the first place. Instead of intervening in the content of contracts between businesses, the EP should instead increase the possibilities for actors to sanction late payments if they wish to do so. Politicians ought to accept private contracts as legally binding documents made by enlightened adults!

If the Commission intends to hold back European enterprise, and make the Saharan desert look like a better place to do business, the approach this directive indicates is surely the way to go. However, if the Commission wants to fulfil its own vision of making Europe the most competitive knowledge-based economy in the world, I would suggest that the Commission view this directive as a sunk cost and moves on!

In 1999, the Competition Commission succeeded the Monopolies and Mergers Commission (MMC), which was established in the 1970s during an era of unlamented corporatism.

The CC continues to undertake sector investigations – a useful little earner for lawyers and a few superannuated academics. Hardly surprising, perhaps, that there is a strong lobby to investigate the planned UK tie-up between Orange and T-Mobile. Regulators talk grandly of invoking the ‘nuclear option’ – a reference to the CC. But what does the CC actually bring to the party?

Its advocates will point to the various mergers that the CC ruled against – and were endorsed by Government. But whether banning these planned mergers benefited UK plc is doubtful. In recent years, MMC/CC intervention has been unpredictable. The CC has just announced yet another investigation into the bus sector outside London. As expected, Stagecoach, the doyen of such enquiries – and the bearer of battle honours from Darlington and Carlisle – has been critical: sector investment will be delayed.

In aviation, the lengthy enquiry into BAA’s airport ownership produced the obvious results. BAA should sell Gatwick and Stansted airports. And, given the row about panel membership at that enquiry, those responsible should read the well-known case – studied by most law undergraduates - of R v Sussex Justices (1924) regarding justice being seen to be done.

In the energy sector, the MMC/CC’s efforts have been ineffectual. The long saga of the MMC and British Gas held back the latter for years – until peace was eventually signed by Ofgas and British Gas with the Treaty of Transco. Subsequently, British Gas’ three succeeding companies have prospered. Since the large energy players are crucial in building new power plants, their supply businesses – despite many threats of CC referrals – have avoided real scrutiny.

With the next Government seeking savings, should the CC be finally put down?