If businesses were ethical and responsible, we wouldn’t need detailed regulations, but that’s not the case.

Prem Sikka is Emeritus Professor of Accounting at the University of Essex and the University of Sheffield, a Labor member of the House of Lords and editor of Left Foot Forward..

Under the influence of corporate gifts, hospitality, political donations and lucrative consultant contracts for lawmakers, Britain’s main parties are competing to see who can most undermine citizens’ rights and protections. This deadly game is called deregulation, and its goal is to increase corporate power and profits.

Many social tragedies are rooted in deregulation and corporate power that pay no attention to the human consequences. Around 30,000 NHS patients have received blood transfusions or treatment with blood products contaminated with hepatitis C or HIV. Since then, more than 3,000 people have died and thousands more are suffering from health problems. Was the lack of regulation worth it? 72 people died in the Grenfell fire tragedy because the government was content to allow housebuilders to use combustible foam insulation. 97 people died and 766 were seriously injured in the Hillsborough Stadium disaster. Left to their own devices, most entrepreneurs do nothing or as little as possible. This is why in democratic societies people expect the state to intervene.

Regulations are created for good reasons. Would you drive a car, board an airplane, visit a restaurant, and consume food, medicine, and water without being assured that they meet certain safety standards? Wouldn’t you want environmental laws that prevent pollution of the air, rivers, seas and lakes and prevent disease? No one wants to be subjected to gangster capitalism that denies staff decent wages and working conditions. No one would hand over their savings and pensions to third parties without the assurance that they can be trusted. No one wants to be subjected to age, racial, gender, religious or other forms of discrimination and prevented from living a fulfilling life. People expect protection from monopolies that extort excessive profits.

Good regulation, when enforced, breeds trust, an essential ingredient in managing day-to-day transactions with public companies. It sets benchmarks for business and individual practices. It protects people from exploitation and discrimination. It regulates behavior and minimizes transaction costs. It addresses market failures and encourages innovation – for example, foods lower in salt and sugar, safer transport and lower carbon emissions. Yet corporations are making a concerted effort to eliminate regulations and hard-won social rights. Google CEO says red tape is ‘killing Britain’ as he seeks to dilute social media platforms’ social responsibility. Prime Minister Sir Keir Starmer misled big business by saying he wanted a “bonfire of bureaucracy”, while remaining silent on the social costs.

The Labor government is diluting financial regulation. Chancellor Reeves said she supported the Conservatives’ decision to introduce a secondary target for the Financial Conduct Authority and the Prudential Regulatory Authority. This states that regulators must “facilitate the international competitiveness of the UK economy… and its growth in the medium and long term”. Protecting customers and the financial system is no longer the sole responsibility of regulators.

Separating speculative banking from retail banking was a major step in controlling the contagion effects of the 2007-2008 financial crash. The government will allow banks to amass £35 billion, up from £25 billion, in customer deposits before having to insulate retail banks from riskier investment operations. The maximum amount banks will have to pay back to victims of fraud will be reduced from £415,000 to £85,000. The shadow banking sector, estimated at $63.2 trillion, is already unregulated and hedge funds and private equity funds are running amok. Banks and insurance companies are pushing to lower capital requirements. After the 2007-2008 crash, the state provided £1.162 billion in liquidity and guarantees (£133 billion in cash + £1.029 billion in guarantees) to bail out ailing banks. An additional £895 billion of quantitative easing was put in place to support the corporate bond and securities market. The post-crash cap on bankers’ bonuses, which was intended to limit reckless risk-taking, has been removed and bankers are free to act recklessly to enrich themselves, knowing full well that they will be bailed out.

The government will destroy planning rules to allow builders to build new houses. Environmental laws are particularly targeted at local objections. How many more will end up in floodplains? People will have a hard time opposing the construction of toxic incinerators or electricity pylons in their neighborhood. It will be a boom time for builders and homeowners, as with a median annual pre-tax salary of £28,764, few people will be able to afford to buy a house. Letting local councils build affordable housing remains a taboo. We have already seen a deregulation of real estate construction. In 2013, the Conservative and Liberal Democrat coalition government extended “permitted development rights” to make it easier to convert empty offices, shops, agricultural buildings and warehouses into residential properties without full planning permission. Councils could not force developers to provide affordable housing. A study carried out for the London Assembly found that many homes are smaller than minimum space standards and of poor quality.

The wealthiest councils have used the law for social cleansing purposes. They bought properties in the poorest areas and left out the low-wage, elderly and unemployed in those areas. Social dumping has put additional pressure on transport, traffic jams and pollution. Many newcomers have difficulty finding a family doctor. Local schools are left with higher staff-to-student ratios and hospitals are struggling like barley. Yet none of these aspects are being addressed in the rush toward deregulation.

In opposition, Labor has promised significant improvements to workers’ and union rights, but the Employment Rights Bill retains much of the Conservatives’ oppressive fire and rehires with lower pay and zero-hours contracts. This allows employers to violate laws. In March 2022, P&O Ferries laid off 800 workers and replaced them with cheaper agency workers. Its CEO told a parliamentary committee that the company knowingly broke UK employment law because it was profitable to do so. The Prime Minister said the government would “take them to court”, but did nothing. Under the Employment Rights Bill, employers will remain free “to contravene the law on dismissals or dismissal and rehiring consultations or to refuse to reinstate an unfairly dismissed worker.” Employers will remain free to choose whether or not to obey the law and to get out of trouble if they decide not to.

The Conservatives have long targeted workers and aimed for further deregulation. Conservative Kemi Badenoch says the legal minimum wage harms businesses and also wants to roll back women’s right to maternity pay, even though some 12 million people, including 4.3 million children, live in the poverty. Other senior conservatives want to fire strikers and lengthen the work week; ending workers’ rights to paid holidays, breaks and the right to leave if you have children and your children are unwell and lower pay in areas outside London and the South East ‘England.

The government panders to businesses who always welcome regulations that benefit them. They welcome the bailout of banks and energy companies, billions in subsidies and tax breaks. They like regulations that create monopolies and erect barriers to entry. Take the case of external audits. It is a state-created market that requires businesses, universities, hospitals, unions, public agencies, local councils and others to undergo an annual audit. The market is reserved for members of a few selected professional accounting associations, even if they regularly carry out failed audits. Just four accounting firms Deloitte, KPMG, PwC and EY make 96% of the FTSE 350 and collect huge sums of fees. Between 2010 and 2022, some 250 listed companies collapsed. Despite public evidence of financial problems, auditors raised no “red flags.” It’s hard to think of a single case where auditors called attention to financial misconduct. At BHS, the PwC audit partner spent only two hours on the audit and thirty-one hours on consulting. To appease BHS executives, the audit report was backdated. When regulators began investigating KPMG’s failed audits of Carillion, the company submitted false records and documents. However, no large company is closed and none ever calls for deregulation of its territory or stricter regulations.

The headlong rush towards deregulation will create more social problems. It seeks to appease businesses that have no loyalty to any place, person, product or country. This eliminates the rights of peoples guaranteed after decades of struggles. The absence of public regulation does not mean that the regulatory space remains vacant. Instead, it is filled by private actors who set unfair rules. Note how private parking operators exploit motorists. Insurance and credit card contracts written in obscure language confuse people and the law is always catching up. If businesses were ethical and responsible, we wouldn’t need detailed regulations, but that’s not the case.