Does leaving the EU present a unique opportunity for deregulation?

Does leaving the EU present a unique opportunity for deregulation? In a word: yes; but with some serious caveats.

In the short term though, our post-Brexit transition is leading to more rather than less bureaucracy for business owners.

Most obviously in the need for additional paperwork – export and import declarations – and inspections on trade between Great Britain and both the EU and Northern Ireland.

And just because there are areas where we could diverge from the EU, it might not be in our best interest to do so. There are costs to moving away from EU standards – as there are from moving away from US or global standards. There are trade offs.

For example, if there was a straight choice between getting rid of GDPR entirely and losing our data adequacy agreement with the EU, entrepreneurs would undoubtedly prefer to put up with GDPR rather than cut the flow of data between the EU and UK.

And not everything can be blamed on the EU.

Consider the Online Harms Bill proposals. These will require companies to prevent illegal content and activity online, and ensure children are not exposed to harmful content. Many campaigners don’t think they will be effective, but they will also damage tech startups with sanctions for non-compliance set to be as high as £18 million or 10% of global annual turnover.

Tech startups and investors are also very concerned about government plans to lower the burden of proof needed by the Competition and Markets Authority (CMA) to block mergers and acquisitions involving large tech companies that are deemed as having strategic market status.

Many might not like it, but getting acquired by a Big Tech company is an important way for startup entrepreneurs and their investors to ‘exit’ their firms and make a return. 

Consider Alex Chesterman. In 2001 he started Lovefilm and sold it to Amazon in 2011. But that was just the start of his journey. He has since founded and exited two billion dollar companies: Zoopla and Cazoo. How different would his story be if there was no opportunity to exit his first company? 

When polled by Coadec, half of the UK investors said they would significantly curb the amount they invested if these come into force. If we crack down on M&A activity we will have a lot fewer tech startups – at least in the UK..

And I’ll briefly mention the housing shortage we have in places where people want to live. It is perhaps the most egregious regulatory issue. And once again, it’s not got anything to do with the EU. We need more homes and office space in entrepreneurial hubs, where agglomeration drives innovation, but planning regulations are pricing people and companies out.

That said, there are important areas where we can diverge from the EU. And it’s being driven by innovators – many of whom are already in the UK, and many of whom could be attracted here with the right regulatory teamwork.

The work of TIGRR and the Regulatory Horizons Council is critical here.

Consider the recent success on gene-edited crops.

Recommendations were made in the TIGRR and then the Regulatory Horizons Council reports this year.

Now we are easing requirements for field research on gene-edited crops. This uses gene editing that could be found in nature – not gene modification. 

While the recommendations stopped short of waving these products through to supermarket shelves, or changing the regulations on gene-edited livestock, requirements around commercialisation will be eased.

In the US, we’ve already seen soya-bean oil that has a longer shelf life; in Japan, a gene-edited tomato comes with higher amino acids, and a herbicide-resistant soya bean on its way. EU regulation was clearly holding us back here. 

Technological innovation has the potential to radically transform our lives – everything from drones, autonomous vehicles, ​​cannabinoid clinical research, lab grown meat. TIGRR’s 130-page report is testament to what could be achieved.

But there is one idea I’m less optimistic about. TIGRR’s call for the One-in, two-out rule to be reimposed.

The numbers were fudged in the past, with the most costly new regulations simply not counted.

A National Audit Office report showed that many departments are simply unaware of the costs imposed as a result of their existing regulations. The government of the time had a target of reducing £10 billion in regulatory costs to business over the course of the Parliament. But though they were claiming to have saved £0.9 billion, the report revealed that they had actually increased the net cost to business of regulatory decisions by £8.3bn.

This speech was given at an event of regulation at the Conservative Party Conference.