Sajid Javid wants to cut £10bn of red tape

The Government failed to actually cut regulation last parliament - and it'll be hard-pushed to do so this time round.

by Rachel Savage
Last Updated: 27 Oct 2015

Sajid Javid is getting into his new job as business secretary with decidedly more enthusiasm than he tackled culture. Last week he said he’d be taking ‘a fresh look at deregulation’ and, lo, he is now promising that by 2020 he will slash red tape currently costing businesses £10bn a year.

‘We will sweep away burdensome red tape, get heavy handed regulators off firms’ backs,’ the former Deutsche banker will say in his first speech as business secretary later today in Bristol, where he grew up.

The avowed Thatcherite and free marketeer is also going to make plenty of reference to his childhood to bolster his case that he is on small business’s side. ‘[My parents] came to this country in 1964 with dreams of a better life. My dad started off working in a cotton mill. Then he drove buses. And, at weekends, ran a clothing stall at the local market,’ he will say. ‘It instilled in me an unwavering belief in enterprise, opportunity and reward.’

That’s all very well and good, but what about the substance of the announcement? The Enterprise Bill, due to be unveiled fully in next week’s Queen’s Speech, will target independent regulators (Ofcom, Ofgem, et al) as well as government departments for the first time. It will also make local councils respect advice on regulation given to a business by any other through the Primary Authority Scheme.

Finally, it will set up a Small Business Conciliation Service to help tackle disputes with larger companies, particularly over the vexing – and increasingly headline-grabbing – issue of late payments.

None of those are bad ideas, but even detangling red tape, never mind getting rid of it, is one hell of a task. The Government is claiming Javid’s bonfire will be the first time successive administrations have rolled back regulation. But think tank Reform pointed out in December that those calculations conveniently ignored financial regulation and edicts from Brussels. Overall, it said, red tape cuts worth £1.5bn annually had been outweighed by an extra £3.3bn of bureaucracy.

Moreover, Javid is playing up to the ideological argument that government must get out of the way. While giving businesses more freedom to do what they do best is generally a good thing, not all state intervention is bad. Some is necessary for the economy to function properly. But don’t expect to hear much about that from the new business minister.

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