Industry focus
Deregulation Nation
From Brexit to Boats and Borders—How the Bonfire of Bureaucracy Lit the Touchpaper of Britain’s Broken Economy
Britain’s liberal and libertarian democracy has always seen red over “red tape”. This is arguably why—from the “gig economy” to gig tickets, the Grenfell disaster, and growing civil disorder in the streets—Britain’s light touch, low consequence regulatory frameworks have played a pivotal role in making the UK an attractive proposition for legitimised commercial sharp practice and organised criminality.
In terms of loss prevention and organised retail crime, the UK’s light touch level of policing and prosecution of store theft has made the high street an easy target for domestic and overseas travelling gangs who have operated with seeming impunity. But the issues of control go beyond the retail sector, as widespread and often opaque commercial activities, unhindered by the firm hand of regulation, are seen to have encouraged the worst of corporate behaviours.
In simple terms, regulation costs money to implement and enforce, and criticisms of the so-called “nanny states” or “health and safety gone mad” form part of the national narrative, until, that is, something goes wrong, and the conversation then turns to what lessons need to be learned.
Light touch libertarian economics to incentivise innovation has been the “go-to” position of successive Governments, but the idea that the market will somehow manage the inevitable health and safety and legal fallout of this approach by bolting on safeguards “on the hoof”, as unsavoury behaviours rise to the surface has set a dangerous precedent.
The so far unpunished discharge of raw sewage into rivers by privatised water companies, the Post Office, and contaminated blood scandals, not to mention the finger-pointing highlighted in the final Grenfell report with no prosecutions expected until at least a decade after fire ripped through the lethally clad building, highlight the painful lessons time and time again.
Similarly, the recent row over the new phenomenon of “dynamic pricing” around inflated price Oasis concert tickets highlighted the need for greater intervention from the Competition and Markets Authority (CMA) to control unbridled free market profiteering during a cost-of-living crisis. The CMA is now reviewing this inflated pricing where hard-pressed consumers are out-of-pocket because regulation is having to play catch up. Although not illegal, the practice has been compared to the kind of racketeering experienced during wartime where high demand for scarce resources led to an illegal, free-for-all economy.
While retrospectively trying to legislate to stop bad practice, it has literally taken rioting in the streets to show that the rapid dispensation of tough justice can send an unequivocal message. The long sentences handed down to those involved may have prevented further unrest, but the lawlessness also highlighted the symptoms and underlying causes.
Immigration
Immigration has been a totemic issue across Europe, but according to The Royal United Services Institute (RUSI), the world’s oldest security think tank, the UK’s unregulated marketplace offers “unique opportunities for labour and sexual exploitation”, and Britain’s soft underbelly has proved to be an attractive proposition for those attempting to cash in.
The previous Government’s Rwanda programme may have been scrapped, but many argue that the real deterrent to people smugglers has always lay in creating a climate and culture of stronger and fairer regulation, making the UK less attractive to the unscrupulous, something that has been systematically stripped away in recent years.
Indeed, it can be argued that the spark of the summer 2024 riots from the far right owes much to a sense of stoked-up tension around economic disadvantage created by reduced job opportunities and the very lack of employment regulation commentators have described.
History
This, in part was down to the Coalition Government of 2010 which made a virtue of its desire to create a “bonfire of red tape” which in effect swept away swathes of safeguards, from building controls to workers’ rights, while at the same time creating the culture of austerity where thousands of police officers—20 per cent of the total workforce—were removed from front line duties to save money, and where the thin blue line became even thinner, itself an issue for wider policing.
Hire and fire employment culture filled the vacuum left by the peeling-back of employment rights, while “democratizing” disruptor technology platforms which ostensibly provided flexible working arrangements for thousands of self-employed people gave birth to the low regulation zero-hour contracts gig economy, much of which has particularly dominated the hospitality sector.
The same disruptor businesses that were providing everything from hail and hire taxis to aggregated food delivery services insulated themselves against outdated industrial relations laws by continuing to successfully claim that they were exclusively technology platforms facilitating public access to self-employed drivers and couriers rather than directly employing them.
The laws surrounding such practice are about to be challenged by the new Government, a long-term opponent of zero hours and zero rights arrangements. But this comes after the practice has established the UK as an attractive proposition for economic migrants, both legal and illegal—those arriving under their own steam or people trafficked—who can simply disappear into the underworld of the undocumented where lip service is paid to background checking and vetting.
According to Agnieszka Piansa and Wouten Zwysen’s academic paper Migrant labour in the ‘gig’ economy: progress or trap?, “platform work” as it is called, is often presented as a stepping-stone for migrant workers, but it has also come under increasing scrutiny in the EU, of which the UK is no longer a member, for its precarious and sometimes exploitative working conditions and limited social-security coverage.
With the recent agreement on the platform work directive, an EU-wide consensus has been reached on a common framework for classifying the employment status of platform workers. But the issue of poor working conditions remains unaddressed, according to the study.
“Despite unquestionable policy progress, we still do not know much about the scale of platform work and the characteristics of workers engaged in it. This has opened the way for the claim that it can act as a stepping-stone for vulnerable workers, such as migrants, to enter the labour market, according to the findings of Agnieszka Piansa and Wouten Zwysen’s report.
A recent study by the European Trade Union Institute analyses the role of the platform economy in providing employment opportunities for migrant workers. Much has been asserted about the positive role labour platforms could play in this respect, due to relatively low barriers to entry, administrative burdens, and requirements for formal recognition of qualifications. Platforms could, in other words, provide an easy way to start earning a living after arrival.
Individuals without the right to work and those who have recently arrived seem particularly visible in the more precarious segments of the platform economy, such as care and cleaning, ride-hailing, and food delivery.
According to the Migrants in the UK Labour Market study published in June 2024, non-EU migrants are over-represented in hospitality, transport, and distribution, with one in 5 workers originating from outside of the EU post-Brexit, and with up to 10 per cent working in the retail and hospitality sectors.
Analysis of representative EU data confirms that foreign-born people are about 13 per cent more likely to resort to platform work to make a living.
Migrants may face regulatory hurdles or be at a disadvantage when it comes to social networks in the receiving country, making it more difficult to find work on the regular labour market. Non-EU migrants in particular may experience discrimination too.
While all migrants are more likely to engage in platform work than the native-born population, the entry of these more vulnerable groups into a segment of generally low-quality jobs poses serious concerns about potential exploitation and longer-term, negative effects on labour-market integration and prospects.
Moreover, migrant platform workers are on average 10 per cent more likely to work via multiple platforms, at the same time suggesting that migrants are more economically dependent on them. This, according to research, illustrates the potential risk of platforms trapping migrants in work that is relatively easy to obtain but may offer few chances of further integration and advancement.
Calls for regulation are prone to be dismissed on grounds of the purportedly positive function of platform work as an entry point and stepping-stone for migrants when they have fewer other options. Platform work thus appears to be a symptom of labour-market integration problems for migrants who are unable to find suitable—or any—employment in the traditional economy, in addition to the challenges it poses for sustaining the quality of jobs in traditional labour markets.
Experts warn that the key consideration should therefore be to ensure that platforms do not circumvent existing regulation and do not enable or reproduce conditions for the exploitation of vulnerable migrant workers.
Dark Kitchens
The emergence of so-called dark kitchens in the restaurant industry is a contemporary phenomenon, arising most recently in the context of the so-called gig economy.
According to research from Bournemouth University—Worker Exploitation in the Gig Economy, the case for Dark Kitchens—this new business model flourished during the pandemic. Despite dark kitchens’ popularity, considerable negative publicity exists in the news related to poor working conditions.
The study’s review of hospitality and tourism databases generated 1,430 articles relating to the growth of dark kitchens in an unregulated market where they dramatically reduce operational costs and increase productivity while the working conditions and contractual agreements of the gig workers raised several questions from operational, legal, and ethical perspectives. These included worker exploitation and further damage to the sector’s image.
Bodies including the Chartered Institute of Personnel and Development (CIPD)—which has estimated that the gig economy represents 1.4 per cent of the UK’s total employment—have made strong representations to tackle the loose arrangements around the industry, and recommend a series of measures including the strengthening of employment rights and the creation of a single enforcement body with a focus on supporting and improving employer compliance with the law and raising overall employment standards.
New Deal
The Labour Party in opposition set out its stall on the gig economy when it said: “The gig economy has been growing rapidly in recent years, as technology has enabled more people to access and offer services online, and as more people seek alternative or supplementary sources of income, flexibility, and autonomy in their work”.
“As a result, more organisations are looking to offer the necessary platforms or apps, and the gig economy represents an important element in the technology sector. However, the gig economy also poses many challenges and risks for workers, such as lack of job security and typical benefits. In addition, and of concern to many, the gig economy raises many legal, ethical, and social questions about the nature, quality, and regulation of work in the 21st century”, it continued.
“Whilst Labour’s plans are clearly designed to protect those working in the gig economy who can be vulnerable to exploitation, the proposals present a serious challenge to organisations that rely on flexible and low-cost labour. By reducing the worker status options to either employee or self-employed, abolishing zero-hours contracts, and granting unfair dismissal protection from day one, the New Deal would likely require a radical overhaul of the current business models and practices of many employers. The New Deal aims to provide more security and fairness for workers, but it also raises questions about the viability and sustainability of the gig economy in the future”.
ID Cards
But could more be done to prevent some of the worst aspects and behaviours generated out of the gig economy? Lord Blunkett, the former Labour Home Secretary under Tony Blair’s premiership, thinks so. He has gone one stage further in looking further downstream in terms of transparency of who is working in the gig economy and their right to do so through the tightening of regulations and the introduction of ID cards, a measure he was poised to introduce more than twenty years ago in his ministerial role.
At that time, Lord Blunkett argues, people smuggling was just starting to become a serious problem.
In an essay written for the Daily Mail he says, “Identity cards are a simple, practical, and affordable answer, one that would shatter the business model of organised international gangs making billions from human trafficking”.
He bases that on his experience as Home Secretary in the early noughties when he introduced an experimental ID scheme that “produced dramatic results”.
“If Britain had kept that system and developed it, the small boats scandal might never have happened. If migrants needed an ID card to work in Britain or claim benefits or get non-emergency treatment on the NHS, they would be less inclined to come here. It is, he says, a “no brainer”.
“But, of course, we did not keep the scheme—partly because debit cards and credit cards had become commonplace, and both were seen to act as a form of identification. The problem with them is that they can easily be stolen. ID cards would be far more secure because they incorporate biometric technology that cannot easily be faked or misused.”
Lord Blunkett acknowledges that he had not fully anticipated the strength of opposition from a vocal minority who accused him of “attempting to mastermind some sort of Orwellian deep state surveillance”.
His scheme was depicted as insidious as well as unworkable and, although there was a prototype experimental roll-out, it was abandoned with only 15,000 cards ever issued.
In one widely reported stunt, they burnt a fake card with his face on it. But he insists that only a small minority—fewer than 20 per cent of voters—were actually opposed to the plan.
With hindsight, he believes, he should have enlisted teenagers first, offering them free passports at sixteen with an ID card alongside. By now those teens would be in their mid-thirties. All those renewing passports would have automatically been enrolled into the system.
How ironic, he notes, that many of the same people who protested at the very notion of ID cards because they would have exposed us to deep surveillance by analysing our online activity were “cheerfully signing up to social media within a few years”.
“Companies such as Facebook and Elon Musk’s X really can track our physical movements via global positioning satellites”, he continued.
“The worst predictions for my ID cards seem utterly innocuous compared with the everyday monitoring of our lives today”.
“We also, of course, use our smartphones as ID devices in many different ways. Many of us have debit and credit card information on them and some have an NHS app with personal health information too”.
He insists that his embryonic scheme was starting to make a difference. Back in 2002 migrants were being smuggled into this country in lorries and through the Channel Tunnel, but when ID cards were released, the numbers fell by about two-thirds.
He said: “The gangs realised it wasn’t worth their while to traffic people into the UK if migrants found they were unable to work or claim benefits without an ID card, and thus would be liable to deportation”.
The coalition Government came to power in 2010, and Nick Clegg’s Liberal Democrats were at the forefront of opposition to an ID card roll-out.
The latest figures show that the number of people who have arrived this year in Britain on small boats has passed five thousand, and more people are likely to make dangerous crossings with several deaths reported in late summer and early autumn 2024.
Lord Blunkett claims there are other advantages to ID cards. One is that they could reduce pressure on NHS waiting lists. That’s because many foreign nationals who need hospital treatment find it cheaper to fly to Britain and use ours for free than pay for healthcare in their home country.
And there’s a more sinister effect of uncontrolled immigration—modern-day slavery. He said: “Slavery is an abhorrent blight on our society—and it’s on the rise. ID cards could supply an effective weapon to combat it. As long as we have no means of establishing a person’s identity, organised criminals will find ways to circumvent all our safeguards. There’s little use in threatening to send immigrants to Rwanda for processing if the traffickers are able to put people to work in the subterranean economy and hide them from official view”.
Supporters of official ID cards reject the loss of freedom “Big Brother” argument by pointing out that we already have various forms of identification imposed by the state, such as driving licences and NHS ID numbers. In addition, most people carry vast amounts of personal data around with them on their smartphones every day and are happy to share it openly through social media platforms that brazenly use the data to target commercial opportunities.
Regulation have historically been seen as fetters to free economies, but they exist for a reason—to prevent the pursuit of profit dominating the narrative at the expense of legality, health, welfare, and individual human rights—the cornerstones of civilised societies. Every action creates a reaction and regulation is there, as the name suggests, to regulate any negative impact of a positive action and all so we no longer see red over red tape.
