Why Rules Must Sing with Rhyme and Reason

Article excerpt

Byline: CHRISTOPHER HUHNE

COULD business regulation be more rational? This is a key question for Brussels, since the European Union sets many of the rules that govern what may be sold by a business, how it sells it and what safeguards must be incorporated to protect consumers or investors. Yet there are still far too many examples of loopy regulation.

For a start, such rules are often based more on the perceived threat than reality. There are tough regulations in every member state on lifts and escalator manufacturers and on installations, yet far more people die falling down stairs every year.

Among EU regulations, some horror stories are home grown. In the late 1990s, our former Ministry of Agriculture insisted on applying the EU directive on regular veterinary inspections of abattoirs with officious force and the Treasury asked each abattoir to meet the full cost of visits.

The result was small abattoirs without the scale to justify continuous veterinary attendance just collapsed.

Yet no such phenomenon occurred in other member states, where a flat veterinary charge is often levied per head. Small abattoirs continue to thrive. Far from helping promote health, this UK gold-plating of an EU directive lengthened the times that animals are transported before they are killed, providing a new means for BSE to spread rapidly across the country.

In regulation, the law of unintended consequences is alive and well.

But Brussels is also quite capable of offending against common sense. Last week's vote in the European Parliament on the directive on vitamins was a classic case.

The pharmaceuticals industry successfully lobbied to have vitamin supplements (and other such health food products) undergo the same sort of testing regime as medicines. Never mind that the chances of problems arising from ginseng tablets are about as great as problems from eating broccoli.

"Safety first" is a powerful political argument, particularly when the costs are on someone else's budget.

In another case, the European Parliament required offshore oil rig operators to apply the same emission control equipment on their turbines as is applied to onshore power plants.

The cost of modifying 150 turbines on 100 North Sea oil platforms is estimated by the industry at e430 million ([pound]270 million). …