Bureaucracy

What the popularity of university subjects amongst graduates (a) in the UK, (b) in Westminster and Whitehall, and (c) in other European nations tells us about the UK and its Establishment.

(a) are keen on sciences (esp. biology), arts and humanities, and not keen on practical/commercial subjects.

(b) disproportionately studied politics, economics, philosophy, history and law at Oxbridge/Russell Group universities, to an extent that makes them completely atypical for the population they represent, and far too lacking in diversity of interest and experience.

What do they teach these people on Oxbridge human sciences courses? First the Cameroons demonstrate their ignorance of what it is that is holding British business back (clue: it isn't that it takes 14 rather than 7 days to register a business). Now, with their plans for "worker co-operatives" to run public-sector services (echoing their calls for a "post-bureaucratic age"), they demonstrate their ignorance of the difference between bureaucratic management and profit (or commercial) management.

It looks like George has been reading the wrong book.

Here's a tip, George: try Ludwig von Mises' Bureaucracy, and then you'll understand what profit management means, why it is preferable but not always suitable, where bureaucratic management is necessary, and how it operates on an entirely different basis to profit management. It's only a little book, and a better introduction to real economics than any mainstream textbook or Oxbridge course. Excuse me for quoting at length, but it has never been more clearly explained (and the Tories obviously need it spelling out in very simple terms):

Bureaucratic management is management bound to comply with detailed rules and regulations fixed by the authority of a superior body. The task of the bureaucrat is to perform what these rules and regulations order him to do. His discretion to act according to his own best conviction is seriously restricted by them.

Business management or profit management is management directed by the profit motive. The objective of business management is to make a profit. As success or failure to attain this end can be ascertained by accounting not only for the whole business concern but also for any of its parts, it is feasible to decentralize both management and accountability without jeopardizing the unity of operations and the attainment of their goal. Responsibility can be divided. There is no need to limit the discretion of subordinates by any rules or regulations other than that underlying all business activities, namely, to render their operations profitable.

The objectives of public administration cannot be measured in money terms and cannot be checked by accountancy methods. Take a nation-wide police system like the F.B.I. There is no yardstick available that could establish whether the expenses incurred by one of its regional or local branches were not excessive. The expenditures of a police station are not reimbursed by its successful management and do not vary in proportion to the success attained. If the head of the whole bureau were to leave his subordinate station chiefs a free hand with regard to money expenditure, the result would be a large increase in costs as every one of them would be zealous to improve the service of his branch as much as possible. It would become impossible for the top executive to keep the expenditures within the appropriations allocated by the representatives of the people or within any limits whatever. It is not because of punctiliousness that the administrative regulations fix how much can be spent by each local office for cleaning the premises, for furniture repairs, and for lighting and heating. Within a business concern such things can be left without hesitation to the discretion of the responsible local manager. He will not spend more than necessary because it is, as it were, his money; if he wastes the concern's money, he jeopardizes the branch's profit and thereby indirectly hurts his own interests. But it is another matter with the local chief of a government agency. In spending more money he can, very often at least, improve the result of his conduct of affairs. Thrift must be imposed on him by regimentation.

In public administration there is no connection between revenue and expenditure. The public services are spending money only; the insignificant income derived from special sources (for example, the sale of printed matter by the Government Printing Office) is more or less accidental. The revenue derived from customs and taxes is not "produced" by the administrative apparatus. Its source is the law, not the activities of customs officers and tax collectors. It is not the merit of a collector of internal revenue that the residents of his district are richer and pay higher taxes than those of another district. The time and effort required for the administrative handling of an income tax return are not in proportion to the amount of the taxable income it concerns.

In public administration there is no market price for achievements. This makes it indispensable to operate public offices according to principles entirely different from those applied under the profit motive.

There is much more of similar insight and clarity in this little book, which I urge you to read (it's worth buying, or available to read online if you prefer). But hopefully you get the drift. An understanding of and preference for markets does not imply rejection of bureaucracy where necessary, but it does require an understanding of the critical differences between them. Someone with a real understanding of markets can easily distinguish between the activities where markets are the best means of coordinating social cooperation and the activities where the conditions necessary for markets to work are not present and where bureaucratic management is therefore necessary. In fact, many people unencumbered by an Oxbridge education would probably have a reasonable intuition of which type of management is best to apply in many cases. But the Tories (and Philip Blond, the "Red Tory" who originated this nonsense) are so sophisticated that they believe they can breed exotic hybrids from markets and bureaucracy to coordinate activities in private- and public-sector activities. Of course, they end up with a mule.

As reported on the Environment Agency's website:

A series of civil sanctions will give the Environment Agency the discretion to avoid the time consuming and costly process of having to take businesses that commit certain types of offences to court.  These will include monetary penalties, the power to make business repair environmental damage and the power to stop businesses from continuing operations that are damaging the environment.  Organisations will also be given a formal opportunity to restore voluntarily any damage they cause.  The new powers will not replace the Environment Agency’s approach of using advice and guidance and are expected to be used sparingly.  The Environment Agency will still take criminal cases against business and individuals that cause deliberate, reckless and grave environmental damage.  Such activities also often undercut law abiding business. 

The Environment Agency has already been allowed to usurp the planning process. If you get planning approval, they can effectively over-ride it by applying impossible strictures, and they can overturn it by retrospectively imposing non-viable conditions.

They shoot first and ask questions later, even going public with baseless accusations. Any retraction is grudging, delayed, and not publicized, and apologies rare as hen's teeth. Their behaviour and attitude is arbitrary, depending largely on the attitude of the individual agent. They are one of the single most important obstacles to economic development and to good environmental practice in the country.

They have an infinite budget (because the Government is bound to provide them with funds for any actions they take, however many and spurious). Their powers were already excessive, unaccompanied by responsibility or restraint. And now the Government proposes to further expand those powers, without the inconvenience of having to prove their case in court.

"You have been judged!"

In the established NuLab manner, language is perverted to portray this as a benefit to business:

more flexible powers will be used that make it easier and more cost effective for businesses to operate within environmental laws.

This will mean fairer and more effective environmental regulation. 

So progressive is this development, in fact, that it is to be the model for the expansion of such powers to other regulatory organisations:

The Environment Agency today became one of the first organisations to be granted new civil powers to complement existing regulatory powers.

"One of the first"? So there are others to come?

The reason they are to be trusted with extra powers is because the Better Regulation Executive reckon that they have improved their performance. One would think that a purpose of the BRE would be to oppose extensions of arbitrary regulatory powers. If they can't do that, in fact if they are recommending extension of powers, what good are they? Proof that you can't improve regulation by creating regulators to regulate the regulators, or quangos to recommend on how to control the quangos. Another candidate for the bonfire of the quangos that the Tories have promised and probably won't deliver.

There is much more to make you want to scream or sob in the EA's announcement of this development. Read it and weep.

One way that politicians and civil servants have tried to drive the uptake of renewables is through the application of what became known as the Merton Rule (after one of the first councils to introduce the measure) to planning policy. The Merton Rule stipulates that developers must include a certain proportion of on-site renewable-energy production (typically 10 or 20 per cent, depending on the council) within the fabric of the buildings they are developing.

Why a particular proportion should be encouraged is not clear. Faced with a choice of a technology that could supply a notional 10% of the property's energy needs for £X at an operating cost of £Y/MWh, or another technology that could supply 80% of the property's energy needs for £2X at an operating cost of £0.1Y/MWh, the rational developer focused on the bottom line (and they mostly are) will install the former as the most cost-effective way to meet the Merton Rules.

Nor is it obvious why one would want to target incentives at new-build, rather than providing equal incentives for the existing housing stock, which is vastly more significant. In one way, older buildings offer greater potential, as the lower energy-efficiency results in more energy-consumption (relative to its size), which means higher utilization of any renewables installed, which means faster recovery of the capital cost.

Nor is it fair to assume, as the planners do, that one knows how much energy a particular technology will contribute in particular circumstances, and how much energy will be consumed in total in that property. It's an arbitrary measure that rewards bullshitters (those who provide inflated claims for how little energy will be required for the building or how much energy their technology will produce).

But let's say that they really could plan and assess this accurately. The system would still encourage perverse outcomes. As a supplier of wood pellets, we are seeing at first hand one of the more perverse consequences.

For individual properties, solar panels (thermal or PV) are probably the winning option for many developers. But for larger properties, such as blocks of flats, installing a pellet-boiler that could meet part of the heat load is often a good option.

To minimize cost and maximize convenience, the pellet boiler will be installed to feed the hot-water buffer tank in tandem with one or more gas boilers. Because the Merton Rule is satisfied regardless of whether the equipment ever runs (it requires only that it should produce a certain amount if it were run), and because gas (and oil) are currently cheaper as fuel than pellets (because of stupid energy policies designed to keep domestic fossil fuels as cheap as possible), the developer has no interest in installing a pellet boiler that will run effectively because the plan is for it to rarely run at all. It will be undersized (because you only need renewables to be able to supply a fraction of the properties' energy, and heat is such a big proportion of the whole). It will be the cheapest model available, regardless of whether that model will give trouble-free and efficient operation. It will have an inadequately-sized fuel store, which further pushes up the cost of running, as many suppliers will not supply small loads, and those that will (such as us) will charge much more per tonne for small, frequent deliveries than large, infrequent deliveries. The fuel-store will be located wherever suits the architect, regardless of whether it is practical to get the pellets to that location. The flange, to which the delivery-lorry connects in order to blow the pellets into the store, will be positioned wherever is convenient to the architect and developer, regardless of whether the delivery lorry can get near it, or can stop there (e.g. on double-yellow and red lines). The reality is that no one intends to run the boiler, so who cares?

Recently, this logic may have taken a step further. A developer is touting around a pair of "barely used" pellet boilers of the cheapest, nastiest type, which he is taking out of one of his sites. Are we seeing the start of the next wave, where developers will install the obligatory renewables just long enough to get signed off by the planners and Building Regulations officers, before taking them out and selling them on for installation in the next development that needs to meet the Merton Rule targets? A handful of boilers and solar panels could deliver multiple permissions and positive SAP ratings. The authorities' figures will show that large numbers of properties are running on renewable energy, while in reality most of those properties carry on being as dependent on fossil fuels as ever. The figures for numbers of properties where renewable boilers were installed will no doubt be presented as a tremendous success, and the authorities will be mystified when our fossil-fuel consumption figures once again don't fall in proportion to the displacement that has supposedly been achieved (just as for EEC/CERT/CESP). There will be more head-scratching, and then someone will come up with an even more complex and perverse scheme to encourage displacement of fossil fuels whilst keeping the costs of those fossil fuels as low as possible. And so the cycle continues...

It's very simple. If you want people to use less of something, you need to make it more expensive. If you try to make them use less of it by pushing efficiency-improvements at them whilst keeping the price cheap, demand will rebound - it's an effect well-known to economists as the Rebound Effect. The purpose of these policies is to get us to reduce our fossil-fuel dependence, whether for environmental, economic, social or energy-security reasons. And yet the Government persists in trying to keep domestic energy prices as low as possible while promoting these policies aiming to reduce our consumption, and all the opposition parties and most of the commentariat support them. We really are cursed with one of the dumbest intellectual classes of any nation on earth.

I have just received the following invitation from AEA Technologies (energy bureaucrats who have separated but not divorced from the greater bureaucracy, and who are "managing" this aspect of the "Market Transformation Programme" for DEFRA). Truly, the EU, the Labour government and its client consultancies have perfected the art of combining menace with incomprehensible language in pursuit of illiberal and bureaucratic objectives in every nook and cranny of our lives:

Dear Stakeholder,

We wish to inform you that Defra has just launched a consultation on Implementation of the Market Surveillance and Enforcement Requirements of the EU Eco-design of Energy Using Products and Energy Labeling Framework Directives and seeks your views and comments.

It's hard to wrap your brain around so many (upper-cased) nouns in short succession in one sentence. Nevertheless, you get the drift without reading the consultation documents that this is something to do with the application of authority in pursuit of standardization and homogenization, with the (supposedly unintentional) outcome that choice, innovation, and flexibility to circumstance will be limited.

Market Transformation indeed. Our markets are being transformed into non-markets - places where we exchange what the Government thinks is the appropriate proportion of the income that the Government thinks we are entitled to, for those goods that the Government thinks we ought to want, designed in the way that the Government thinks is best for us.

Orwell wrote about it, the Soviets implemented it, and now Western governments are following suit. Corruption of language and inversion or elimination of meaning are a sure sign of a bureaucracy that is looking to intervene in every aspect of our lives.

The press seem determined to ignore a crucial aspect of Peter Mandelson's accumulation of power. They are very interested in the symbolic and honorary aspects, such as the award of the titles of First Secretary of State and Lord President of the Council. But most of them are reporting that he remains in charge of BERR. He does not. BERR no longer exists.

The Department for Innovation, Universities and Skills has been merged into the Department for Business, Enterprise and Regulatory Reform to form the Department for Business, Innovation and Skills. I am all for reducing the number of departments. But the nature of the merged departments indicates something more important: the revival of industrial policy continues apace, and this department will be its powerhouse.

This government knows nothing about entrepreneurial innovation. Its only contribution to the field is the negative one of providing perpetual competitive advantage to corporate incumbents, who have vested interests in maintaining the status quo and disadvantaging innovative new entrants. This government couldn't distinguish a real entrepreneur (not the fiction-peddlers in the City, nor the publicity-hunting media-darlings, but the iconoclasts who try to build real, innovative businesses) from a trades-unionist.

Hence the appointment of Suralan (soon to be Lordsugar) as Enterprise Czar. This was presumably inspired by the huge success of Lorddigby (most recently seen marching in support of protectionism for our car industry). If the Government and Suralan understood entrepreneurialism, they would know that entrepreneurs do not want or need a Czar to represent them in government. They need the Government to stop meddling, micro-managing and picking winners, so we can have genuine competitive markets in which innovative ideas thrive or fail according to their merits, and not according to how well they fit with the Government's latest ideas of what the outcome of the market should be.

A department that combines responsibility for businesses with responsibility for the least commercial group in the world (academics), run by people (ministers and civil servants) who have absolutely no commercial experience themselves, will end up rewarding those who try to implement academic cloud-cuckoo schemes and punishing those who are more interested in commercial reality. This has been the effect of the various grant schemes in the energy sector (and probably elsewhere) since time immemorial, and yet these efforts to sponsor white elephants are about to be re-doubled, at a time when we can afford them even less than usual. The new department will throw money at grandiose schemes dreamed up by academics who promise the earth without the responsibility of having to put their money and reputations where their mouths are. And because these grandiose schemes will require enormous amounts of finance, the big corporations will be invited to participate, in exchange for providing that part of the funding that is not provided by taxpayers. The commercial advantage this will provide to big businesses, and ideas that would be uncompetitive without the public funding, will crowd out private efforts, genuine innovation, and the smaller businesses that have usually been responsible for real innovation.

On the other side of the equation, industrial policy will appear to create jobs, and profits for those businesses favoured by involvement in government-approved enterprises. It will create the illusion of economic recovery, which is exactly what the government is reckoning on, whilst embedding uncompetitiveness and corporate influence further into our economy. Eventually, many years down the line, we will discover that we have created our own General Motors, just as we did with our nationalized industries.

Economic development is only sustainable and real where it allows genuine competition undistorted by government intervention, favour and planning. But a lot of people can be fooled otherwise for a long time, especially when they have forgotten or misunderstood their history. It wasn't public ownership that was the big problem in the seventies, but the protected position of favoured, and consequently lazy and ossified, enterprises. There are many ways to achieve that without full public ownership, but with just as negative long-term implications for innovation, competitiveness and the economy. The Government has been driving in this direction for many years in the energy sector, and probably many others. It is about to get worse.

The opposition parties do not have a significantly different attitude, as Tory policy on STEM (Science, Technology, Engineering and Maths) demonstrates. It is past time for entrepreneurs to get out of the country.

Spent the morning at a Regen SW workshop on the Heat and Energy Saving consultation. Before we got to the main course (a presentation by the DECC civil servant responsible for the consultation), we were treated to an hors d'oeuvre from another DECC civil servant on the Community Energy Saving Programme (CESP).

For those not familiar with CESP, it is the successor to CERT (the Carbon Emission Reduction Target), which itself was the successor to EEC (the Energy-Efficiency Commitment). All of these mechanisms place obligations on energy suppliers (and now, under CESP, on generators too, as though generators have any influence on the following) to improve the theoretical energy-efficiency of a (small) defined proportion of their customers' properties, with particular emphasis on social housing. The VILE companies' main response to this obligation under the current scheme (CERT) has been to give away 120 million low-energy lightbulbs to no one in particular. This is the effect of trying to encourage people to use less of something while keeping its cost low, through supply push (rather than demand pull) intermediated by companies who have vested interests in preserving the status quo.

But CERT, we learnt today, is not dumb enough. The government set themselves the difficult task, with CESP, of devising something even dumber. It seems that under CERT, people have ignorantly been choosing the cheapest options to meet their obligations. This does not suit the Government, for whom a job is never done until it has encouraged us to do it as expensively as possible. So, under CESP, the incentive will be weighted to encourage people to implement expensive and ineffective options, and to discourage people from implementing cheap, efficient options.

The example that was given was that loft insulation, which is a relatively cheap and effective way of making homes efficient, would be credited with only half the carbon that it is assumed to save (i.e. half the contribution towards the obligation). On the other hand, air-source heat pumps, which the Government's figures (correctly) suggest don't contribute much to carbon savings relative to their cost, will be attributed three times their potential savings for the purpose of calculating their contribution to meeting the obligation.The Government hopes in this way to encourage the VILE companies to put in as many air-source heat pumps and as little loft-insulation as possible, thereby ensuring that we save as little carbon for our money as possible.

But this is not complicated enough for them. The Government has decided that it makes most sense to install multiple technologies at once, regardless of whether the same teams would install (say) insulation, a new boiler and photovoltaic panels on the roof. They wouldn't, of course, but when has the Government ever let reality stand in the way of opportunities to complicate things to perverse effect and increased cost? They have therefore devised a mechanism whereby the contribution of a simultaneous installation of multiple technologies will be assumed to be worth more than the sum of its parts. A new boiler may contribute X (nominal carbon-savings according to the warped scale described above, and accordingly to the obligation) and cavity-wall insulation may contribute Y, but putting them both in at the same time will be deemed to contribute (say) 120% of X + Y.

These rules were introduced, the civil servant explained, because the previous versions of the obligation had failed to deliver what the (all-seeing, all-knowing) government had intended, and had produced unintended consequences (such as the stocking of many people's cupboards with free lightbulbs). With this new, more complex version, they believe it will be sufficiently well micro-managed that unintended consequences will be minimized. And what sort of cynic, indeed, would suggest that there is just a hint of a possibility of perverse outcomes in such a scheme?

At the end of the presentation, the Chief Executive of Regen SW (the "sustainability" arm of the Regional Development Agency) invited questions. Not any old questions, though, such as those areas that the audience might have decided for themselves were of concern. The audience clearly were not capable of identifying the key points. So he set out the two areas that he thought might be open to question (woolly issues regarding the relationship between the "community", i.e. local authorities and voluntary bodies, and the VILE companies in the implementation of this scheme), and invited questions on those topics. Only with a couple of minutes to go before the next session did he allow people to ask their own questions.

Despite this effort at control, one of the participants managed to question what value there was in encouraging improved insulation (which is covered by the mechanism) if doors and windows (which are not covered) were not also to be improved (analogous in its effectiveness to fixing one of three leaks in a boat). The civil servant explained patiently, to what he obviously regarded as a rather ignorant question, that doors and windows were covered by Building Regulations, and would therefore be improved anyway. The questioner raised the frivolous point that a homeowner could avoid the effect of Building Regs by the cunning expedient of not applying to modify his doors and windows, but the civil servant swatted this objection away. Clearly the questioner did not understand the system. Could he not see that black was white?

Following the main presentation (also utterly irrational, but that should be taken as read by now), we went on to group discussion sessions. Employees of Regen SW kept notes of the points and presented conclusions at the end. By the time I had finished with them, I believe that my group was broadly persuaded that the British approach was back-to-front and irrational: that instead of micro-management and price-suppression, we should use rational price signals (i.e. a carbon tax) and leave the rest to the market. You wouldn't know it from the quangocrats' summaries, though. These listed dozens of abortive suggestions for how the complexity could be increased to little or negative effect.

It was a perfect snapshot of the roles and relationship of the Government's bloated bureaucracy and the supportive superstructure of the quangocracy. They exist to reinforce and protect each other's delusions.

There is clearly only one solution: sack them and scrap them.

Privatisation became the totem of the 1980s efforts to move our economies away from the disastrous, increasing socialism of the previous century and more.

I propose that the equivalent focus of policy that is needed today should be christened "disintegration".

Bishop Hill has a shocking exposure of how local government in the fire-hit regions of Australia prevented locals from taking actions that would have reduced the risk to their properties and lives.

The Times is reporting that town halls would be forced to take action over petitions with more than 200 signatures under new proposals to devolve power to voters. This is Hazel Blears' big idea for making councils act on demand of the power of the people. This is straight out of "The Big Book of Stupid Political Ideas" (foreword by some unknown Lib Dem - probably their leader). Blears has obviously given this "giving democracy back to the people" idea a lot of thought. Even the figure of 200 signatures isn't entirely arbitrary.

The first casualties of the HIPs fiasco have already fallen.  It is being reported that many of the first packs have to be scrapped because they have been deemed invalid.  It is also reported that other packs are being held up because local councils are obstructing people conducting land surveys - a crucial part of the packs.  And to make matters worse for the government next week, both the Royal Institute of Chartered Surveyors as well as the National Association of Estate Agents are expected to report that the housing market has suffered a substantial slowdown as a result of the scheme. 

What better way for our council workers to spend our council tax than to clock up 200,000 miles around the world to pick up tips on increasing bills for homeowners!  At least the trip will pay for itself - though I think I'd rather they'd just stayed at home.  The fact that they have visited Europe, North America, Asia and Australia not only suggest there are a disproportionate amount of bureaucrats with free suntans lying around our council buildings this summer but also that we should expect some pretty hefty and sneaky tax increasing in the coming months or years. 

The latest HIPs calamity is reported today.  It is becoming apparent that some mortgage lenders are refusing to accept a crucial part of the reports.  Solicitors, mortgage lenders and even some HIPs providers warned that many homebuyers would have to pay at least another £200 for their own local authority searches because those provided in the home sellers' pack cannot be trusted.  That is addition to the cost of getting the pack in the first place.  Now, obviously it is the seller that pays for the pack (CA.

Not for the first time, I have been scattering observations on an issue, in comments dotted around the place, rather than pulling the strands together for a piece on here. This time, the topic is the rising cost of the quangocracy. As a subject particularly close to my heart, I thought I'd pull the comments together before I forget where they are.

Dan Lewis, of the Economic Research Council (and some time of the Centre for Policy Studies), has produced an analysis of the increasing size and cost of our quangocracy. (It will be available on the ERC's site from Thursday 23rd August.) The Sunday Telegraph produced a piece on this analysis, in which the overall cost of the quangos ("nearly £170bn a year") was highlighted and compared with the budget of the Ministry of Defence (£32bn). Tim Worstall picked up on this article, and posted a brief comment arguing for the complete abolition of the quangos and the use of the savings to abolish income and corporation tax. Nothing wrong with the principle, but there is a bit of a problem with the calculations, as I commented on Tim's site (though rather too late to be helpful, as it turned out):

No one could be more opposed to quangos and determined to see most of them shut down than me. But a couple of things to bear in mind on the cost:

1. Around two-thirds of that total cost is attributable to quangos associated with one department of government - the Department of Health. Effectively, the NHS is a giant set of quangos, amongst which are the Primary Care Trusts and the NHS Trusts (which as a pair make up over £100bn of that sum).

2. Of the executive NDPBs (the busy-body, rather than funding quangos, which is what we usually have in mind when we rage against them), over half of the total cost of around £36.8bn lay within another department - the Department for Education and Skills. But the lion's share of this cost is also attributable to two quangos - The Learning and Skills Council (responsible for post-16 education and training) and the Higher Education Funding Council for England. It turns out, then, that although they calls these NDPBs "executive", most of their cost lies (like the NHS quangos) in the allocation of public funds.

This shouldn't diminish the attacks on the wastefulness of our quangocracy, but we should bear in mind that it is the sclerosis induced by bureaucracy that is their really harmful aspect. They cost and waste money, but only a fraction of that headline figure. We can probably save several billion pounds by scrapping most of them, and that's money worth saving, but we can't save anywhere near £167bn.

The government has announced that HIPs will now apply to all three bedroom houses earlier than expected - September 10th.  This has meant that anyone who thought they had bit of time before any October deadline has, once again, been shafted by the government and actually only have 15 days to beat the pointless "tax" kicks in.  So it now seems the majority house sellers will be caught up in read tape and unnecessary financial pay out - it also seems the scheme will be extended to all home by October.  The saving grace for the government on this one is that the markets have been pre

George Osborne has welcomed the report of John Redwood's Economic Competitiveness Policy Group, which identifies £14 billion that could be saved by cutting red tape and bureaucracy and recommends tax cuts of £10 billion, as "the most impressive and comprehensive analysis of the state of the British economy produced by any political party in recent times".

There is a very amusing story in the Times today about the Health & Safety nutters.  It concerns Lancashire County Council and its efforts to improve road safety.

The Adam Smith Institute blog pointed to the new publication on Regulatory Impact Assessments (RIAs) from the Centre for Policy Studies (CPS) a couple of days ago, but this is a sufficiently important issue that I didn't want to simply let it go past because I hadn't had time to comment immediately.

All proposed legislation and regulation nowadays comes with an RIA attached. They are supposed to weigh up the costs and benefits of the proposals, to ensure that those proposals are not unduly burdensome.

The CPS publication entitled "RIAs: why don't they work?", prepared by Keith Boyfield for submission to the new Business Council for Britain, assesses RIAs and finds that they have failed in their objective. This will be no surprise to those who have suffered the effects of most legislation and regulation enacted since RIAs were introduced. It would be hard to argue that the burden of the state has fallen more lightly on the shoulders of its citizens in recent years.

Mr Boyfield provides an accurate diagnosis of many of the causes of the ineffectiveness of RIAs. They could be summarised as "no one in government wants anything more from them than a fig-leaf behind which to hide any flaws in a pre-determined set of measures". They are exercises in self-justification, not critical analysis.

Sadly, Mr Boyfield's prescription is to try to improve the process by which RIAs are prepared, rather than simply to scrap them. My objection is not that efficiency in government isn't important - it is vital - but that asking government (or its sub-contractors) to measure in advance the effectiveness of its own proposals is bound to end up with skewed results, however many refinements you introduce. Better to aim for clarity on the actual (rather than predicted) costs and impacts of government, and then let voters judge every five years or so whether they are getting value for money.*

From "News in Brief", The Times, July 12:

Idle civil servants

Government procurement is controlled and restricted by bureaucratic and lengthy procedures that have been passed down from the EU to ensure a level playing field across Europe when competing for business and also to ensure corruption is stamped out.  Unfortunately, these procedures are so lengthy and arduous; they just end up adding costs to the contract rather than saving money.  The Commons public accounts committee believes that the public sector wasted £400m on unnecessary procurement costs last year - though I suspect this is a very conservative estimate.