Written by Martin Stanley

The fear driving increased regulation

Martin Stanley explores the regulatory state and how an increasingly fearful electorate is fueling its growth.

Photo by Eutah Mizushima on Unsplash

Regulation is hardly a new activity. The Romans saw the importance of water quality and what we would now call trading standards. But what can explain the size and impact of the modern regulatory state which intrudes so much into markets such as energy and financial services, as well as into relatively new areas such as travel, medicines availability, supermarkets, communications – and even higher education?

Part of the answer is politicians’ keenness to delegate unpopular decision making to technocrats. It is much better, they believe, to have such decisions taken by apolitical experts who are willing to think long term and well beyond the electoral cycle. And they are probably right.  But there is something else going on. We have lost the intermediaries that used to help us organise our lives, and we cannot trust the massive suppliers on whom we are forced to depend.  So we turn to regulators to protect us.

Those of us born in the 1950s and 60s entered a cosy, easily understandable little world. Energy, transport, education, telephony and health care were provided by UK-based monopolies. Bank customers - even large ones - had only current and deposit accounts. No-one could draw money from a bank account without presenting a cheque, which would take several days to ‘clear’. Our longest food supply chain was a French onion man on his bicycle. And motor cars, for instance, could easily be maintained by anyone willing to wield a spanner and screwdriver.

We now live in a globalised world in which competition has brought us bewildering choice, delivered anonymously by technology which most of us can only dimly understand, and which is controlled by huge multinational companies. As a result, although we live in an otherwise increasingly safe and secure world, many of us have good cause to be nervous - fearful even - when undertaking what ought to be pleasant and routine transactions:

  • Our bank accounts can be emptied in seconds if someone knows the right key strokes. (And the card details of 10 million of us were recently hacked via Dixons/Currys/PC World.)
  • The drive for public and private sector ‘efficiency gains’ means that we are all now responsible for many tasks that were previously carried out on our behalf, including saving for retirement, calculating our income tax liabilities, and organising holidays. (Ryanair then charges us £120 to correct typos in passenger names!)
  • We spend a small fortune on utilities and communications, entering into bewildering contracts with expensive termination provisions, whilst constantly being nagged to ‘switch to better deals’.
  • We have to choose schools for our children, and care homes for our elderly – and maybe choose surgeons for ourselves.
  • Other life changing decisions are increasingly made by AI running secret software.
  • There may never have been a totally trustworthy source of information, but there has never before been such an almost inescapable tsunami of vile aggression mixed with vile lies, misinformation and disinformation.

And we are bound to feel nervous when we remember that:

  • Quants employed by financial services companies continue to risk our money trading huge quantities of obscure financial instruments - whilst their own managers do not appreciate the risks that they are taking.
  • Aircraft and road vehicles are controlled by complex algorithms - and will soon be self-driving.
  • Our food now arrives via highly complex supply chains, so that most retailers do not know where the food was originally sourced beyond their immediate supplier.
  • We are massively dependent on information services based in the USA, and so large as to be oblivious to concerns (and fines) that would sink a smaller entity.

So we are now pretty much totally reliant on the expertise, organisation and good faith of others. This lack of control, this powerlessness, can be stressful.  We therefore call for help from regulators of all shapes and sizes, and ask them to:

  • help us choose the most appropriate school and hospital,
  • protect us from those who might cause us significant harm, and
  • protect society from potentially damaging technologies.  

Here, for instance, are two examples of now-necessary regulation that would have seemed absurd to my parents:

  • There was no question of ‘United’ refunding my 1960s bus fare on the rare occasion that it failed to transport me home from Newcastle. But it is vital that we get help if our once-a-day 99p Ryanair flight doesn’t turn up at the end of our holiday.
  • University grants etc. meant that the 5% of young people that entered HE in the 60s spent almost none of their own or their parents’ money during their studies. It’s a bit different when the figures are approaching 50% and £20k pa. Hence TEFs (Teaching Excellence and Student Outcomes Framework) and OFFA (The Office for Fair Access).

And there are many more. But the regulatory state has grown so quickly that it has developed inevitable gaps and weaknesses.  What are these flaws and what questions can we ask to fix them? This is the subject of my next blog: The imperfect regulatory state.

  • About the author

    Martin Stanley

    Martin Stanley is the editor of Understanding Regulation - – a website written for legislators, journalists, academics and others who wish to understand the recent rapid growth of the regulatory state, and how regulation should best be designed and enforced. Martin was previously a senior civil servant, and Chief Executive of (what is now) the Better Regulation Executive, the Postal Services Commission and the Competition Commission.

    Martin Stanley