More regulation, less regulation, or better regulation?

There are those who believe the EU is a legislative behemoth, producing vast reams of paper designed to swamp business. Certainly UKIP and their political allies love to make capital out of it, trotting out the statistic that 75% of laws applicable in the UK come from Brussels. The reality, as ever, is not quite so simple. Much EU regulation concerns the protection of workers, ensuring a host of rights and safeguards are in place to protect them from less than scrupulous employers. Less regulation isn’t better for them.

Ask any small business in any EU Member State, and they worry about the burden placed on them by rules, when all they want to do is get on with what they’re good at. Reflecting this, the new Commission President, Jean-Claude Juncker, has in fact designated his right-hand man, Frans Timmermans, as First Vice-President and Commissioner for Better Regulation, Inter-Institutional Relations, Rule of Law and Charter of Fundamental Rights. Juncker’s message is clear: the EU needs neither less nor more regulation, but better regulation. Timmermans, during his hearing before the Parliament prior to his confirmation as Commissioner, pledged to conclude an agreement between the EU’s institutions on better law-making, and also setting out a list of legislative proposals which should be withdrawn. The new decentralised structure of the Commission also reflects this desire to cut unnecessary bureaucracy, allowing the seven Vice-Presidents to scrap any proposal coming from Commissioners in their brief.

However, the financial crash has shown us the danger of under-regulation. With increasingly interconnected sectors, if we don’t build in safeguards, the risk that one company extended into several markets finds itself in the position of being ‘too big to fail’ is a real one. With so many people still feeling the effects of the crisis in the UK and across Europe, it is difficult to justify regulation simply being dismissed not on its merits, but because there is already a lot of regulation in the field.

There is therefore a trade-off. Sometimes we need to accept that certain areas, in particular the financial sector, should and will be subject to regulation. Added to that, complex subjects, like the environment or chemicals, require a great deal of complex regulation. On the other hand, European law-makers must be aware that too much complex regulation risks making starting a business or hiring an extra employee seem less attractive. Given that small and medium enterprises represent 99.8% of European business, and are now responsible for 85% of new jobs in the private sector, the new Commissioners will have their work cut out in ensuring that this balance is struck.

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