Labour red tape will cost British business billions

Sir Keir Starmer, Labour leader, and Rachel Reeves, shadow chancellor of the exchequer - Christopher Furlong/Getty

Labour is planning more than 60 increases to regulation which would saddle businesses with tens of billions of additional costs, an analysis suggests.

The Institute for Economic Affairs (IEA) said Labour would increase red tape across a swathe of areas from accelerating the ban on petrol cars to imposing energy efficiency standards in rented homes,

In a briefing shared with The Telegraph, the IEA said that the manifestos of the two main parties propose “expansive regulatory measures”.

But while there has been “significant public discussion” about each party’s tax and spending measures, it said there had been “a lack of scrutiny regarding the business impact of proposed regulatory changes”.

According to the think tank’s analysis, Labour has proposed 62 policies that would increase the regulatory burden on businesses and 13 that decrease it.

The IEA said Labour’s regulatory measures would “likely have more significant cost and potential benefits” than the party’s five tax raising measures, which Labour has costed at £8.5 billion a year.

Labour’s new fossil fuel cars ban

The think tank meanwhile counted 29 measures in the Tory manifesto to increase regulation and 20 that would decrease the regulatory burden.

While the IEA said it was “impossible to fully analyse the various proposals’ and benefits”, not least because many of the measures “lack detail”, it said the cost was likely to be considerable.

For example, the Centre for Economics and Business Research has estimated that Labour’s policy of restoring the 2030 ban on the sale of new petrol and diesel cars will cost an estimated extra £1,000 per household per year from 2022 until 2050.

For Labour’s policy of requiring privately rented homes to meet minimum energy standards by 2030, an impact assessment by the government found that the measure would cost £12.2 billion.

Another government impact assessment for the Renters (Reform) Bill – the legislation banning “no fault” evictions which both Labour and the Tories are committed to – suggested it would cost businesses £1 billion.

The IEA said its list of new regulations covered business costs rather than “how the government manages itself”, meaning for example that the Tories’ ban on mobile phones in school during the day does not appear in the lists. The list also omits measures relating to individual criminal law or tax proposals.

Caffeine drink ban for youths

New regulatory burdens in the Labour manifesto include banning high-caffeine energy drinks for under-16s, banning fire and rehire, applying the minimum wage to all age bands and introducing disability and ethnicity pay gap reporting requirements.

The new regulations would create costs in a variety of different ways, with some requiring companies to spend more on new buildings or adding to labour costs while others would involve additional paperwork.

Tory regulations include the party’s plan for a “Pumpwatch” scheme requiring petrol retailers to share live information on prices and banning new waste incinerators.

Matthew Lesh, the IEA’s director of public policy and communications, who authored the analysis, said: “We have heard much about taxation and spending promises in this election campaign, with an expectation that fiscal policies are fully costed.

“However, no party has made any attempt to calculate the impact of their far more numerous regulatory proposals. Britain’s prosperity hinges not just on how the state taxes and spends but also on the myriad ways it controls our lives and restricts business activity.

“There are some commendable proposals from both major parties, particularly on reforming the planning system to enable housebuilding and expedite infrastructure delivery.

Terrorist prevention for night-time venues

“However, the manifestos released last week also contain dozens of policies that taken together impose tens of billions of pounds in costs. This will inevitably lead to higher prices for families, stifle entrepreneurial innovation, and lower wages for workers.

“Despite Labour’s new moderate and sensible image, their manifesto is laden with significant new regulatory proposals, ranging from a permanent ban on fracking to extended equal pay duties and stringent energy efficiency standards for rentals.

“These policies, while well-intentioned, carry substantial burdens that cannot be overlooked.

He added: “The Conservatives, relative to Labour, have proposed fewer measures. Yet some, like compulsory terrorist prevention plans for night-time venues, will impose significant new hassle.”

A Conservative spokesman said: “Our Smarter Regulation programme – launched just over a year ago – has already saved 50 million hours of administrative time for business, saving them an estimated £1 billion.

“We have scrapped or reformed 2,000 EU laws since Brexit and are on track to repeal or reform over half of the 6,000 laws we had inherited in the 47 years we were in the EU.

“And we will go further – abolishing the legacy EU ‘nutrient neutrality’ rules to immediately unlock the building of 100,000 new homes, taking more companies out of the scope of burdensome reporting requirements and building highly attractive business environments through the creation of more Freeports.”

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