Lightbulb moment

‘How many bureaucrats does it take to change a light bulb — or does it depend on whether they work in Brussels or Westminster?’

Tim Congdon

Saving the planet? Incandescent (left) and fluorescent lightbulbs (Marcello Casal Jr/Agência Brasil CC BY 3.0 BR)

How many bureaucrats does it take to change a light bulb? Does the answer depend on whether the bureaucrats work in Brussels or Westminster? And has the productivity of bureaucrats in this activity declined, stagnated or increased in the last 20 years?

These may seem to be cheap, snide and irrelevant questions to start a column in Standpoint. My excuse is that the answers are not entirely cheap, snide and irrelevant to a part of our culture that matters to Standpoint readers, namely, drama production in live theatre. The European Union is pushing through new regulations on lighting, with the traditional tungsten sources to be replaced from 2020 with light-emitting diode (or “LED”) successors. LED lighting has the advantage, according to the EU, that it uses less energy and helps to “save the planet” from global warming.

Unfortunately, it has the disadvantage that the bulbs and other equipment are far more expensive than the existing tungsten systems. Moreover, a range of lighting effects that are possible with tungsten fixtures would break the laws of physics if attempted with LED alternatives. The Association of Lighting Designers is so angry that it has prepared a protest letter for well-wishers to fire off to MPs and MEPs. The Stage, the UK theatre industry’s trade magazine, has recently reported that nationally the increase in cost from switching to LED will be £1 billion. Some theatres, facing extra bills running into the hundreds of thousands of pounds, may be forced to close.

These sums of money — and indeed the costs of numerous other EU regulations — were overlooked in the notoriously bad and wrong Project Fear calculations made by the Treasury before the June 2016 referendum. A loud complaint in the UK economic policy debate is that in the last decade, for the first time since the Industrial Revolution, productivity growth has stopped. Does it have to be pointed out that the imposition of LED lighting on the theatre industry is an obvious example of an EU regulation that adds to costs and reduces productivity? If the European Commission has concocted, say, 50 such regulations in the last decade, the total loss to the UK would be £50 billion, or 2.5 per cent of gross domestic product.

One of the many scandals about Project Fear is that it failed to quantify the damage from the burden of EU regulation. The theatre industry ought to be effective in lobbying and is likely to secure an exemption from the EU regulation. Since the UK is to leave the EU next March anyhow, the fuss may appear unnecessary. But the present British government has shown itself supine and gutless in its dealings with the EU. There has to be a risk that EU regulations will be replicated here even after Brexit, so that sensible, low-cost arrangements of UK origin cannot emerge.
After all, in 2018 the government has not prevented —or even tried to prevent — the implementation in the UK of the General Data Protection Regulation and MiFID II. While its supporters commend the GDPR as setting a global standard for maintaining personal privacy in the era of digital data, its detractors mock it as a solution in search of a problem. Its introduction has undoubtedly taken up a huge amount of high-level professional time. Sia Partners, the management consultants, have estimated that the average cost for a FTSE 100 company of complying with the GDPR is £15 million. By implication, the cost for the FTSE 100 group as a whole is £1.5 billion ­— and that takes no account of the thousands of smaller businesses, charities and universities where memos are being written, meetings held, phone calls placed and so on.

MiFID II (or “Markets in Financial Instruments Directive 2014/65/EU”, to give it its full name) is supposed to give greater protection to investors and to increase the transparency of the investment process. Again the question is begged of exactly what was wrong beforehand. IHS Markit and Expand, a company affiliated to the Boston Consulting Group, have together published a report estimating that the cost of meeting the new rules to top firms in the financial sector has been $2.1 billion. Not all of these firms would be in the UK, but a high proportion must have operated out of London.

An increase in productivity occurs when output per unit of input rises. It is the essence of economic progress. The writing of memos, the holding of meetings and the placing of phone calls are all examples of labour input. With the GDPR and MiFID II, no measurable extra output will appear. The message in short is, “Labour input up, output unchanged, productivity down.” Like the proposed regulations to ban tungsten lighting in the theatre, the GDPR and MiFID II are EC edicts that will reduce productivity growth. More brutally, they will make Europeans — or anyhow people living in the EU — poorer. That is the wider macroeconomic meaning of the cost assessments of three topical instances of EU legislation; the assessments were made by reputable sources close to the industries affected.

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