This article was posted on Global Competition Review. You can find it here.
The UK has traditionally been one of the best places in the world to invest and do business. We do well in international rankings on the ease of doing business or wealth-creation, and our strong and independent economic regulators reduce regulatory risks and political interventions, so business leaders can focus on pleasing their customers rather than lobbying their legislators. More certainty and less risk make the UK a more attractive destination for investment, and also means investors need lower returns, which cuts costs and makes our firms more productive too.
Without independent regulators, the risks of damaging short-term political interventions, which distort competition, are much higher. Distortions push investment towards less productive parts of the economy, cost citizen-consumers more through extra taxes and higher prices, and tilt the playing field away from creative entrepreneurs in favour of deep-pocketed incumbent firms with good lobbyists.
But on the upside, stronger competition and consumer choices mean more jobs, make exporting firms more likely to win contracts, and give UK consumers and business customers a wider range of high-quality goods and services at more competitive prices. Societies, where firms have to compete hard to attract and retain customers, are fairer, with less injustice, because rip-offs can’t become as serious, or last as long, and because people are confident that the system is on their side.
At the moment, the UK’s competition and consumer regime has a good reputation, but not a great one. International rankings put the UK behind USA, France, Germany, the EU and Australia. Some sector regulators intervene heavily, making big and important industries more ponderous and less focused on their customers than they should be. Meanwhile, competitive pressures have got weaker in the last 20 years and citizen-consumers feel ripped off when they buy things like energy or car insurance.
Our system needs to be updated, improved and refreshed. How do we put things right? By updating our competition and consumer rules so they’re the best in the world at giving citizens more choices, and making firms try harder. The last time we looked at these rules was back in 1998, when the planet didn’t have email, Facebook, Twitter, Uber, Google or Apple. They’re analogue and out of date in a digital world, and they won’t do.
Today sees the launch of a review that offers some of the answers. It’s called ‘Power To The People’ because improving customer choice through stronger competition is what will fix the problem fastest and most effectively. Having more firms constantly jostling and jockeying to offer something that’s better, or cheaper, or more organic, or greener is one of the best and most reliable ways to drive up post-Brexit, post-pandemic living standards for everybody, every year. Even better, it would sharpen up UK firms, making our entire economy more competitive on the global stage, which is the only real long-term guarantee of secure and well-paid British jobs and properly-funded public services too. And it would make our society fairer, with less injustice, because rip-offs couldn’t become as serious, or last as long, than if firms know they can take their customers for granted.
So ‘Power To The People’ is a recipe-book of changes to make post-Brexit, post-pandemic Britain into a free-trading, global powerhouse so our businesses, exporters and investors can become more competitive, creative, successful, digital and agile too.
What are the recipes? The core is stronger powers for consumer watchdogs like local Trading Standards teams or the Competition and Markets Authority to crack down on rip-offs, so we know the system will be on our side if something goes wrong. And there are new ‘Country Competition Courts’, so entrepreneurial start-ups can fight back if bigger and longer-established local rivals gang up on them unfairly.
There’s a stronger anti-red-tape regime, with much sharper claws and teeth to make sure we don’t cut or dilute the quality of everything from food standards to workers rights or animal welfare, but that we deliver them much more cheaply, digitally and less bureaucratically than before. And there are updated rules to make each digital online shopping trip just as safe and fair as walking down your local High Street or shopping mall.
There’s a new and bigger public role for the CMA to become a micro-economic sibling for the Bank of England’s well-established public macro-economic role, responsible for tracking and reporting on the progress of our competition regime, consumer detriment, supply-side reforms and productivity improvements. In return, they will hand over responsibility for companies appealing against decisions by the sector regulators to the Competition Appeal Tribunal. Both of these two vital, central institutions will be challenged to work together faster, matching the higher tempo and pace of today’s digital economy by reforming their end-to-end processes, whether they’re set in statute or internal governance, so they decide all but a few of the most complicated cases, enquiries and appeals in weeks or months, rather than years. This crucial process redesign will be independently chaired and will put users first by including input from big and small businesses, entrepreneurs, investors and sector regulators too.
The sector regulators will face a few challenges as well, because they will be subject to the sharper-clawed, better-regulation regime for the first time. But we need them to go further still because, outside the network monopolies with their regulated assets, there is no inherent reason why a lot of the rest of each of their sectors shouldn’t become a normally-competitive industry, with high standards, strong competition and consumer powers, and low regulatory and political risks. Some of them are already moving in this direction, while others have more to do. So, to give certainty to business leaders and investors alike, we should require each economic regulator to publish and execute a multi-year project plan, to turn as much of their sector into a ‘normal’ pro-consumer, high-standards competitive market as possible. As the plan progresses, each sector regulator should formally hand over responsibility for more and more of its sector to CMA, creating a risk-reduction ratchet of milestone moments for business leaders and investors, when political and regulatory uncertainties are permanently reduced as the changes are locked in forever
With any luck, government ministers will think these recipes are tasty. They asked for them, after all: ‘Power To The People’ isn’t government policy, but it was commissioned by the Chancellor of the Exchequer and the Business Secretary. It proves they are on the lookout for fresh new ideas. At a time when ministers are besieged with multi-billion-pound pleas for help from struggling industries everywhere, the proposals in this review will be some of the cheapest, best value for money and strongest economic medicine they can buy. It’s time for the Conservative Party to renew its supply-side reformer vows, and I hope ministers will welcome these ideas with open arms.