There’s been a lot of stuff said recently along the lines that Jersey is being strangled by red tape and therefore we need to reduce regulation – whether that’s regulations that affect business or civil society. Cutting red tape is one of the government’s priorities in their “Common Strategic Policy” and ministers frequently talk about the need to reduce the regulatory “burden”. There was a piece in the JEP recently by Sir Mark Boleat that also made the case for cutting regulation. But it is the argument put forward by the government’s Chief Executive Andrew McClaughlin that I want to look at in this post, because it is perhaps the most well developed theory about why we might want to cut regulation.
The Chief Executive made a very interesting speech at the Chamber of Commerce on the theme of “Jersey’s biggest policy challenges” (and he repeated it recently for States members who weren’t able to attend the Chamber). It was a wide ranging address, but I’m going to concentrate on the arguments relating to regulation in this blog.
The Chief Executive’s contention is that Jersey’s greatest success came in the seventies, eighties and nineties when economic output grew rapidly, and the island became substantially wealthier, because we were fiscally prudent, taxes were low and simple, and regulation was light touch. The business environment was permissive and public safety relied substantially on social capital and the natural checks and balances of island life. When you add it up, we built our reputation on being what he termed a “safe harbour”; a safe harbour for capital and a safe harbour for citizens. This was a safe place to live, a safe place to do business.
In a very uncertain world beset by crises, by endless pressure for government spending and regulatory intervention, maybe we should recommit to the thing that we were best at, which was to be a small state with light touch regulation, offering safety and security at the core of our identity. A safe harbour.
It’s a compelling idea. There’s a lot of mileage to the idea of a “safe harbour”, particularly in the current political climate.
But there’s a problem at the heart of this analysis. The idea that Jersey was a “safe harbour” in the 70’s, 80’s and 90’s just isn’t true. Those weren’t the “glory days” for Jersey as a “safe harbour”. We know this from the Jersey Care Inquiry with its appalling revelations of child abuse, and we know it in the world of business because it is acknowledged that this was a time when you could turn up with a suitcase of cash and there were no questions asked. The truth is that Jersey only became a “safe harbour” because we made a choice to regulate. We chose to regulate much more actively in social policy (for example, child protection), and we also chose to regulate business – and particularly finance – much more rigorously. It paid off. That’s why we boast about Jersey being such a well regulated finance centre. So the reason we’re a safe harbour is precisely because we have made such determined regulatory interventions.
An example of this extension of regulation of which I’m proud is that when I was minister for the Environment I introduced the Licensing of Rented Dwellings: a regulatory measure to ensure we could regulate the safety of property that is let to tenants. It is a “burden”, in that it requires an application, a small fee and compliance with legal minimum standards. If you’re a good landlord that is maybe a pain and feels unnecessary. But it helps us tackle the appalling state of housing for some of the least well off people in our island. It responds to a strong social need for protection of vulnerable people.
So the architecture of regulation that’s built up is the architecture that was created in order to to build the safe harbour status of which we are rightly proud. That’s a really important point when it comes to thinking about what comes next, because I would say rather than thinking of less regulation on principle, we should be thinking of regulation as, in principle, a good thing. Regulation is what gives us a level playing field for business. It what protects citizens from pollution or from bad health outcomes or from environmental degradation. I don’t detect much desire on the part of citizens to lessen any of that. If anything, the opposite. Grenfell taught us some very hard lessons about where a mindless drive to deregulate can end up.
So when I hear the champions of cutting regulation say that we need to canvas opinion from business about what regulations to cut, I think of the asymmetry in that call to action. What about asking citizens what regulations they think about regulation? What would they like to cut? And indeed, where might they like to see stronger regulation?
I am not against taking a hard look at how we regulate and what we regulate. I’m sure we can regulate better, reduce the complexity of regulation and reduce the overly bureaucratic processes that have been created in some instances. And we absolutely should do that. But trying to improve regulation within a frame that says – implicitly or explicitly – that regulation is bad, risks the very “safe harbour” status on which we have built our reputation. Ironically, at a time of what looks like wild and reckless de-regulation in some other jurisdictions, being a well regulated jurisdiction could indeed be a major point of difference. But that makes it all the more important that we build it on good regulation rather than deregulation, because it is regulation that plays a large part in making us that safe harbour that we all so desire.
Jonathan Renouf 