Ten years ago, Tony Blair’s Government introduced a system of analysing costs and benefits for all the most significant pieces of legislation, recognising the clear need to get a grip on the flow of regulation.
And in 2005, the Government introduced its ‘Regulatory Reform Agenda’, hoping to bring down the cost of red-tape affecting businesses.
But our research, which uses the Government’s own figures for the cost of legislation, reveals that instead of decreasing, both the flow of regulations and their cost impact have in fact skyrocketed. Since the launch of the reform agenda in 2005, the annual cost of regulation in this country has gone from £16.5 billion to £28.7 billion – an enormous increase of 74%.
Counted cumulatively, regulations introduced in the last ten years have cost the UK economy £148.2 billion – the equivalent of 10% of GDP, and enough to abolish income tax for a year, or cut the national debt by 24%.
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We are continually told at present – which is somewhat more than usual – how government spending had created, or will create, so many jobs. Therefore, the immense expansion of the British State since 1997 has created three hundred thousand jobs or whatever. Some deplore this because most of those employed can be expected to vote Labour. Hardly anyone denies there has been a net addition to the number of employed. The same reasoning underlies all discussion of how we are to get through the recession on which we have now started.
The truth is, however, that government spending does not so much create as displace employment. Every pound spent by the Government must first be taken from the people, who cannot then spend it for themselves. If the money is taken is taken through taxes, it exactly reduces the ability of the people to spend or invest it for themselves as they wish, or to save it for transfer, via the banking system, for others to spend or invest as they wish. If the money is borrowed, it again exactly reduces the amount of money that the people can borrow to spend or invest. 
