Chris Dillow has punched a hole in David Cameron’s claim that his is the party of enterprise. He found that the rate of business start-ups and failures bears no relationship to which party was in power at the time. The British, it seems, set up and close down businesses at a pretty constant rate, regardless of the government’s colour.
The Prime Minister made his claim during a speech about creating a more business-friendly environment, taking on the bureaucrats and cutting red-tape. It occurred to me that there are similarities between ‘bureaucrats’, ‘red-tape’ and ‘quangos’. All are undefinable; there is no official definition for them. Therefore, everyone who hears a speech about quangos, bureaucrats or red-tape can interpret it as an attack on the organisations, people and rules they don’t like. This makes them the ideal politician’s target. You don’t have to be specific and everyone hears what they want to hear.
It is also why bonfires of regulation, like bonfires of quangos, never deliver. For as long as I have been politically aware, probably around thirty years or so, politicians of all parties have vowed to cut red tape. But the red tape is remarkably persistent. The truth is that some rules, like some quangos, have important functions. Get rid of them and things can go seriously wrong. If anything, some parts of the economy could have done with more red tape over the past few years. Mervyn King and others have been advocating just that as they demand tougher banking regulation.
Even as it condemns red tape, the government is coming under fire for introducing more of it. The ban on the display of tobacco products and the immigration cap, while supported by many voters, have been condemned as unnecessary regulation by some in the business world. That’s the problem with red tape; everyone has their own definition of it.
Which is why I expect this bonfire of red-tape, like the quango bonfire, to produce a lot of noise and smoke, then quietly fizzle out. A few rules will be abolished; most will stay. Business people will ignore the political rhetoric, grumble a bit about this or that regulation, then carry on setting up and closing down firms much as they did before.