Regulation and public oversight of our economy is a good thing, despite a consensus in this country that for the past thirty years or more suggests the opposite. When I say consensus, I mean across all political parties, including my own under Tony Blair and Gordon Brown.
Fortunately, the political winds are starting to blow in the other direction, and you can see why. So many instances of free market failure are coming home to roost.
Here’s just one example. A constituent in Derby approached me after buying a house only to find that it was subject to ‘ground rent.’ An obscure clause in the contract meant that the cost of the ground rent doubled every ten years. The charge started at a low monthly amount, but is now on course to becoming more expensive than a rented property.
After looking into this issue, I found that profiteering from spiralling ground rent costs isn’t unusual, and in recent years has become a way by which property developers can generate additional revenue. To make matters worse, in exchange for a discount, many buyers were advised by developers to use their choice of solicitor to complete the deal. The victims of this questionable practice allege that these solicitors often failed to point out the implications of this clause.
Now that the punitive nature of these contracts is becoming more widely understood, people living in these properties are struggling to sell them and banks are unwilling to offer loans to would-be buyers. Public oversight to prevent people falling victim to dubious schemes like these is plain common sense, or it should be.
But this ground rent chicanery is just one of many examples where inadequate regulation has enabled sharp practices to develop, made possible by successive governments backing ‘light-touch’ regulation, or in many cases, no regulation at all.
We heard the former Prime Minister, David Cameron, saying he wanted to make a bonfire of the regulations when he launched the so-called Red Tape Challenge back in April 2011. In a letter that same month to all government Ministers he said he wanted his government: “…to be the first in modern history to leave office having reduced the overall burden of regulation, rather than increasing it.”
This cavalier approach by the former Prime Minister was supported by his successor, Theresa May, who has backed the deregulation agenda in its entirety, from deregulating financial services to cutting health and safety regulations. But in the aftermath of the Grenfell Tower fire, safety professionals have called on the government to end its obsession with deregulating health and safety, although I don’t think this government is listening.
Deregulation has also meant that at least 2 million British workers are being short-changed. The scale of wages theft is estimated to be more than £3bn according to a report by researchers at Middlesex University entitled ‘Unpaid Britain’ that was published yesterday. This abuse by rogue employers has only been made possible by deregulating the workplace and repeatedly legislating to restrict trade unions.
The evidence that deregulation is a licence to rip-off consumers and exploit workers in order to shovel money into the offshore bank accounts of super-rich elites and faceless corporations is overwhelming.
That is why Labour is offering a new approach to regulate in the interests of the many instead of deregulating to benefit the few.
This article originally appeared in the Derby Telegraph