Red tape, cabbages and the law

Last month he looked at the EU cabbage myth, especially in the light of the forthcoming Brexit referendum.

The story goes, as most of us know, that the Pythagorean theorem has 24 words; The Lord’s Prayer, 66 words; Archimedes’ Principle, 67 words; The Ten Commandments, 179 words; The Gettysburg Address, 286 words, The Declaration of Independence 1,300 words and the EU government regulations on the sale of cabbage: 26,911 words.

It’s a great story, but about the regulations on cabbage, (have a look at the BBC website and www.snopes.com/language/document/cabbage.asp) it’s not true.

But it is true there are approximately 5,500 pages of FCA rules – and growing. Just tap into the FCA website and be amazed at the length and quantity of rules, consultations and regulations issued on one day alone.

A start could be made by requiring regulators to pass a diploma before they can practice on the rest of us

This incredible regulatory incontinence has been noticed not just by the usual suspects, such as aggrieved IFAs, but by specialist government departments both in the EU and the UK, and a dedicated Cabinet sub-committee.

The chief economist of the Bank of England for example has ridiculed the explosion of financial services regulation (see The Dog and the Frisbee on the Bank of England website).

The problem is that despite occasional reforms (the Deregulation Act 2015 helpfully cancelled the Trading with the Enemy (Japan) Regulations 1942, which was counted as a win) in real life the position just gets worse.

Sir Brian Leveson, the High Court judge complained last year in relation to criminal law that all the law from 1130 to 1988 (around 650 years) was able to be printed in one volume; the additional laws made between 1989 to 2013 needed four more volumes.

So what might be done? It is clear making rules to reduce rules doesn’t work. The Canadians last year passed a ‘one in one out’ law, but we have had government policy, which has supported ‘one in two out’ since 2010, and it has been profoundly ineffective.

What might be better would be to change the mindset of legislators and regulators so they thought less of regulation and more of common sense, rather like the Lord Chancellors of the Middle Ages who, distressed by the excessive legalisms of acts of parliament, invented the concept of ‘equity’.

Changing the mindset would take longer than having a rule about a rule. But a start could be made by requiring regulators such as officials at the FCA for example to pass a diploma before they can practice on the rest of us (rather like solicitors, doctors, bus drivers and IFAs have to pass a test before they have an opportunity to do harm).

The syllabus would include for example an understanding of regulatory risk, and of the laws of unintended consequences.

They would also have to swear a form of Hippocratic oath (unenforceable but hopefully mind-changing) requiring them to both read – and understand – any rule they introduce. They would promise not to grandstand.

And they would be trained to find non-bureaucratic ways to solving problems other than by eg issuing s166 notices – perhaps by taking out the directors for a coffee to fix an issue.

The entertainment bill might rise a fraction; but just think of the savings in rules, regulations, levies and fines. More Blue Mountain, perhaps, but less red tape.

Robin Ellison is a consultant with Pinsent Masons, the international law firm, and author of Red Tape, to be published by Cambridge University Press next year.