Westminster, not Brussels, is to blame for UK over-regulation – Telegraph.co.uk

8 months ago Comments Off on Westminster, not Brussels, is to blame for UK over-regulation – Telegraph.co.uk

Why is the tax system so complex for businesses and individuals? This is nothing to do with Europe. The EU requires that we set VAT within defined bands and in line with agreed rules. There are also some regulations affecting other specific excise duties on petrol, tobacco and alcohol. But the big taxes we pay – such as income tax and national insurance – have nothing to do with Europe. And the complexity of these taxes has increased because successive chancellors have muddled and meddled so much for so many years.

You get the drift. The government is the main culprit when it comes to the regulatory burden on business. The three areas I have cited already are those that hold back our economy most significantly – housing, planning and tax complexity. EU regulations on lawnmowers or anything else come a long way down the list. If there is a problem with EU regulation, it is because our Parliament makes it more onerous than it needs to be.

Another area where the UK government has been very keen to introduce new regulations recently is in setting minimum wages. We have had a national minimum wage since the late 1990s, but now George Osborne has introduced a national living wage. No European directive or regulation required him to do that. He did it off his own bat.

We have also seen the introduction of an apprenticeship levy, which will add to the national insurance burden for many businesses. That is purely driven by UK government policy – there is no requirement from Europe to impose this additional cost.

So, where is the big regulatory burden which Europe imposes on UK businesses and consumers? Frankly, it is very hard to identify. If we left the EU, it is not clear regulations could easily be reduced. Bananas may be more curved or straighter. We could change our lawnmower regulations, but we would still want safe and environmentally friendly products – much in line with current regulation.

The Leave campaign has not been able to identify any obvious regulatory burdens either. All UK households have recently received a document which summarises the positions of the two sides in the EU referendum debate. The Leave campaign statement contains no references to specific EU regulations which are holding back the UK economy.

Excessive business regulation from Europe is a not a big issue. There is a lot of regulation holding back UK business, but most of it comes from Westminster or local councils, not Brussels. It is not Angela Merkel or any other European leader who is preventing us expanding our housing supply or building new airport capacity. It is the actions of the UK government, voted for by the British people.

Business does feel that it faces a higher burden of regulation than it did in the 1980s or 1990s. But all the key decisions that have added to that regulatory burden have been supported by the UK Parliament. The UK promoted the single market, because it would be good for British business – and that means our product standards are now generally set at the European level. Tony Blair’s Labour government reversed John Major’s opt-out on the social chapter. And there has been a raft of other legislation and tax complexity introduced in Westminster since we joined the EU over which business has no control.

Voting Leave or Remain will not address the root cause of excessive regulation in the UK. It is Westminster and local councils, not Brussels, which are over-regulating the UK economy.

Andrew Sentance is senior economic adviser at PwC and a former member of the Bank of England’s MPC

Westminster, not Brussels, is to blame for UK over-regulation – Telegraph.co.uk