This blog post was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

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Peter Millett

Ambassador to Libya, Tripoli

Part of FCDO Human Rights

20th November 2013

Cut the Red Tape!

Laws are good. They help to prevent murder, theft and violence. But sometimes they suffocate, stifle and smother growth. In these cases, governments need to get out of the way of business.

The private sector is the main driver of economic growth. Jobs that are productive, encourage innovation and unleash creativity will only be generated by business, not by governments. The role of government is to enhance a country’s competiveness by passing better regulation and removing unnecessary and burdensome rules.

Such rules are often well-meaning. Many new laws and regulations have been introduced world-wide to promote health and safety, to protect consumers, to preserve the environment, to push equal opportunities and prevent discrimination. But bureaucrats tend to go into overdrive and gold-plate the new rules with elements that are Nice-To-Have rather than Absolutely Essential.

Such laws and regulations can impose time-consuming, heavy-handed, paper-churning demands that cost companies large amounts of money and inhibit investment. They can also have an impact on the public sector, tying up and slowing down services like schools and hospitals and hinder individuals in their daily lives.

Health and safety rules are a good example. No-one could disagree with the fact that workers in a dangerous workplace need strong measures to protect them. But are such rules appropriate in industries that handle low-risk products and services, especially small companies which are struggling to start up? Exempting such companies can save time and money without increasing the risks to workers.

Simplifying rules for new companies is an essential area for promoting growth, especially when a government is implementing austerity measures. For example, many countries claim that they have set up a one-stop shop to organise all the different arrangements needed by new investors who want to establish a business. But are such institutions really one stop shops? Or are they one-stop letter boxes: toothless offices that simply take an application and still have to go through countless procedures with different offices before a new company can start operating?

In the United Kingdom, the government has addressed the frequent complaints from businesses by establishing the Red Tape Challenge. Since 2010, government action to cut red tape has saved businesses more than £3 billion. It is no coincidence that over the same period, the private sector has created over 1 million new jobs.

Examples of good practice include changing the tax system to encourage small companies to invest in innovative technologies that give them a cutting edge. Or creating new regional Enterprise Zones with simplified planning regulations and low local tax rates. Or removing bureaucratic obstacles to installing and extending superfast broadband to the whole country so that businesses can communicate with customers quickly.

Steps like this help to enhance a country’s competitiveness. The key issue is whether an investor will choose one country over another for a new factory or office. Being competitive is about more than the level of labour costs. It is about the whole ecosystem within which businesses operate: transport links, the level of education and the cost of land and energy are key factors.

But another crucial aspect is the operating environment: the ease with which a company can set up shop, the flexibility of the labour market and the bureaucratic hurdles they have to confront. The UK is ranked number 1 in Europe for attracting foreign investment but we are always looking at ways to improve and enhance the offer to private sector business as the engine of growth.

One of the key lessons from the Red Tape Challenge is the importance of dialogue: governments have to listen to business, to understand the obstacles they are facing and discuss the best ways to remove them. There will sometimes be a balance to be struck between the drive to create jobs and the need to protect workers and consumers. But without an active and collaborative engagement with businesses, governments will not be able to generate the growth that their people need. So all countries need to look at how to cut the red tape.

3 comments on “Cut the Red Tape!

  1. Many government institutions claim that they have applied one-stop shop or one window as they call it. That may attract more FDI into the country but with investment law as primary factor and tax exemptions or incentives whether for foreign or local investments, but the questions remains: will the government or in wider context the jordanian economy bear the reduction in tax revenues that in my opinions is the main factor that drive the economic indicators to look like the economy is recovering from the recession, until those investments start to actually payback and start delivering results?

  2. The road to success in business initiatives passes through landmark stations; (1) good planning (2) proper preparation and (3) professional execution, while this road is bound by the capabilities on one side and the limitations/constraints on the other side.
    Success itself is the net result of the small and accumulating achievements along this road, while the ultimate destination is more tied to the purpose or overall goal of this journey.
    Along this journey, there are couple very important things to consider and take into account, governance rules and risk assessment/management to maintain a safe and enjoyable journey !

  3. You hit the point.The main problem with our governments that the governments expecting from the private sector to pay taxes only and not allowed to them to participate in any decision and also the jordanian government they need to take serious action against corruption in the government department that responsible for investment issues and who dealing with foreign investors

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About Peter Millett

Peter arrived in Tunis on 23 June 2015 to take up his post as Ambassador to Libya. Previously he was British Ambassador to Jordan from February 2011 to June 2015. He was High Commissioner to…

Peter arrived in Tunis on 23 June 2015 to take up his post as
Ambassador to Libya.
Previously he was British Ambassador to Jordan from February 2011 to June 2015.
He was High Commissioner to Cyprus from 2005 – 2010.
He was Director of Security in the Foreign and Commonwealth Office
from 2002-2005, dealing with all aspects of security for British
diplomatic missions overseas.
From 1997-2001 he served as Deputy Head of Mission in Athens.
From 1993-96 Mr Millett was Head of Personnel Policy in the FCO.
From 1989-93 he held the post of First Secretary (Energy) in the UK
Representative Office to the European Union in Brussels, representing
the UK on all energy and nuclear issues.
From 1981-1985 he served as Second Secretary (Political) in Doha.
Peter was born in 1955 in London.  He is married to June Millett and
has three daughters, born in 1984, 1987 and 1991.  
His interests include his family, tennis and travel.