Regulation by result

Too many regulators are obsessed by process, telling businesses and individuals precisely what they must do. The concern should be with the results, not the process. It is process regulation to require that all motor vehicles be fitted with a particular type of catalytic converter. It is result regulation to specify the maximum output of various pollutants that will be permitted.

The former approach limits the technology to that which is known and approved, whereas the latter leaves space for ingenuity and creativity to devise different ways of achieving the stipulated result.

The UK’s forthcoming departure from the European Union gives us an opportunity to move away from the process regulation which has largely been favoured by the EU, and into result regulation to achieve equivalent outcomes.

The Prime Minister’s Mansion House speech referred to the possibility of the UK, post-Brexit, using other means to secure similar ends. In effect she was saying that the UK will not simply replicate EU rules in future, but will often use different methods to bring about similar intended outcomes.

We want the UK to be a hive of inventiveness and entrepreneurship in future, and one way of encouraging this is to allow creative minds space in which to produce and test new ideas. By specifying the results we want regulations to achieve, we are allowing innovators to experiment with novel and unknown ways of bringing those results about. These new ideas might be more efficient or less costly, and they might help create some of tomorrow’s new jobs.