Balanced Regulation over Deregulation
Regulation is a tool used to achieve social, political, environmental and economic outcomes. The ultimate goal of regulation is to ensure a smooth, fair and honest operation within society.
Government institutions are responsible for implementing and regulating policies. Such regulations are in place to ensure that the markets run effectively. They also aim to protect consumers through safety regulations. Regulations are needed because there are certain environmental, social and public goods and services that are not addressed within the market.
“Deregulation involves removing government legislation and laws in a particular industry. It often refers to removing barriers to competition. For example, in the UK, many industries used to be a state monopoly – BT, British Gas, British Rail, Buses, Royal Mail. However, deregulation allowed new firms to enter these markets and reduce the monopoly power of these state owned industries. This process of deregulation was often accompanied by privatisation.” – Economics Help
However, the levels of deregulation in the UK has meant that
- It has been difficult to create effective competition in key industries which is a natural monopoly – high barriers to entry. Deregulation may create a private firm with monopoly power.
- Deregulation has lead to a compromise of public services with poorer quality provision.
For a more equal and fair society a balanced regulatory environment is required – not too bureaucratic to increase costs on business and not too light to risk wellbeing of the public and environment.
Loose banking regulations and poor enforcement continue to be an issue in the UK – something Labour are determined to change.
Paul Mason, Journalist describes the consequences of poor regulation and enforcement.