Red meat and red tape

Tweet One of the important questions thrown up by the horsemeat scandal is the question of the extent to which the food industry should be regulated and monitored. In that sense, there's a parallel with the banking crisis; in both cases what happened was only able to happen because of a 'light-touch' approach to regulating and monitoring.

In both cases, the extent to which the government and its agencies actively monitored what was happening – and the resources available to do the monitoring – were scaled back as a deliberate act by government. Whilst those being regulated were only too glad to be rid of another 'burden' of red tape, and whilst government could argue that reducing that 'burden' was a good thing for enterprise, the effect, in both cases, was to open the door to the crooked and the unscrupulous.

And that's the problem that I always have when I hear politicians – of all parties – bemoaning the amount of red tape and regulation with which businesses have to conform. Whilst there are extreme examples of silly and petty interference, most of the regulation is there for a reason. It protects consumers, the workforce, or the environment.

Trusting businesses to follow the rules when they're not being watched has been demonstrated not to work. There will always be some who see an opportunity and take it. (And I wouldn't be at all surprised to find out, in a few years time, that some of the organisations being feted today as 'successes' are actually up to similar misdemeanours – after all, the UK's banking sector was a huge 'success' until they were caught out).

It probably looks very unfair to those businesses and organisations which follow the rules that they have to be regulated and monitored just in case someone else is cheating, but there isn't really much alternative. Businesses, and capitalism in general, have shown that we cannot trust them to behave, and if we cannot trust them all, we have to monitor them all. And actually, although it may be a pain for those honest people dealing with the regulations, it protects them as well – from unfair and dishonest competition.

The next time we hear anyone talking about cutting red tape and regulation, we need to demand to read the small print.