Gordon Brown and the age of irresponsibility

Gordon Brown, aided by the Labour party's pet broadcaster the BBC, are trying to persuade us that Gordon Brown always recognised that tighter regulation of the financial markets was required. Rather than swallow the propaganda let's look at the evidence. First there is 2005's Better Regulation Action Plan; here are some extracts from Gordon Brown's speech launching the plan (my emphasis):

"Today Alan Johnson, John Hutton and I are announcing details of a risk based approach to regulation to break down barriers holding enterprise back.

The modern enterprise challenge is to enhance the flexibility needed for a successful economy and tackle the regulatory concerns we know all industrial economies face without sacrificing the standards a good society needs.
In the old regulatory model – which started in Victorian times – the implicit regulatory principle has been 100 per cent inspection of premises, procedures and practices irrespective of known risks or past results. The theory has been to inspect everyone continuously, demand information wholesale, and require forms to be filled in at all times, the only barrier to the blanket approach a lack of resources.

The new model we propose is quite different. In a risk based approach there is no inspection without justification, no form filling without justification, and no information requirements without justification. Not just a light touch but a limited touch. Instead of routine regulation attempting to cover all, we adopt a risk based approach which targets only the necessary few.

A risk based approach helps move us a million miles away from the old assumption - the assumption since the first legislation of Victorian times - that business, unregulated, will invariably act irresponsibly. The better view is that businesses want to act responsibly. Reputation with customers and investors is more important to behaviour than regulation, and transparency - backed up by the light touch - can be more effective than the heavy hand.

So a new trust between business and government is possible, founded on the responsible company, the engaged employee, the educated consumer - and government concentrating its energies on dealing not with every trader but with the rogue trader, the bad trader who should not be allowed to undercut the good. And the risk based approach has wide application from environmental health, to financial services and even taxation.

But what does this mean in practice? How will we ensure a million fewer inspections every year, a reduction in inspections of one third, and a 25 per cent reduction in form filling?

That is why today we want to share with you our action plan which sets out the timetable and milestones for delivering the benefits of our agenda. Specific measures we are taking, the details of how we will be driving forward this agenda.

As announced in the Queen’s Speech and following the Hampton Review we will legislate in the new year to reduce 29 regulators to just seven, embed the risk based approach at the heart of regulators’ statutory duties, make it quicker and easier to remove unnecessary regulations and reform the penalty regime, doing more to help companies comply with the rules but creating tougher penalties for persistent offenders.

And in the next session we will introduce a second bill removing outmoded and unnecessary regulations. We will begin a widespread consultation with businesses to identify regulations that should be removed or simplified."

Read the rest and remember it the next time a Labour government mouthpiece declares that they always wanted more regulation.