A critical eye on the regulatory burden

The Adam Smith Institute aims to highlight the worst excesses of bureaucratic red tape and excessive compliance costs in the UK. Through our research, publications and media operation we cast the searchlight on some of the latest proposals for further regulation, with the aim of scrutinising whether these initiatives are really necessary. Our aim is to curb the enthusiasm for implementing cumbersome and expensive regulation before it is adopted.

Over the last ten years there has been a striking boom in the regulation industry as a raft of new agencies have been established to regulate whole sectors of the UK economy. Some of these regulations have been initiated by Westminster, but an increasing number are generated by the European Commission in Brussels.

“Regulation is the invisible way to strangle an economy,” says Martin Wolf of the Financial Times. As he points out, “ Each regulation always seems reasonable. But each imposes a cost. That cost is felt in wasted time and in the economically inefficient decisions that result”. But the forces piling regulation on regulation are remorseless. Governments are increasingly constrained by public expenditure targets, and regulation appears the cheapest way to satisfy articulate interest groups, redistribute income, protect their own backs, and win votes.

The annual cost of regulation to the UK economy was estimated by the government-sponsored Better Regulation Task Force (subsequently renamed the Better Regulation Commission) to cost an astonishing 10 – 12 per cent of national wealth, measured as GDP. That works out at over £100 billion, the same amount as the income tax burden.

Less regulation not only lowers costs, but opens opportunities for the development of new ideas, making the economy more dynamic.

In 2008 the ASI launched a new project focusing on regulation, led by our Senior Fellow, Keith Boyfield, and supported by our Regulatory Evaluation Group. Please use the menu on the left to find out more.