The Next VW Scandal
Buried in the minutes of an obscure new quango is evidence of vast corporate capture of the UK government.
By Christine Berry /

The VW factory, Wolfsburg: Wikimedia CC 2.0

Revelations that VW has been systematically cheating the rules which keep us safe from polluted air have put corporate irresponsibility back on the agenda.

Air pollution causes around 60,000 deaths a year, and the New York Times has estimated that around 106 deaths can be directly attributed to the extra pollution from test-cheating VW cars.

It’s now more obvious than ever that corporations can’t be trusted to write their own rules, or to police their compliance with those rules – and that real people suffer when regulators are too hands-off.

And yet, incredibly, the UK government wants us to hand over more power, not less, to corporations.

Selling off our rights

New NEF (New Economics Foundation) research reveals how the entire machinery of government is being reshaped with the express purpose of making it harder to impose new rules on companies. Largely behind the backs of parliament and civil society, this is happening under the cover of a little-known and innocent-sounding initiative called ‘Better Regulation’.

In the words of Michael Fallon, then business minister, “Whitehall is increasingly putting the needs of businesses centre stage”, aggressively pursuing “reforms to environmental regulation, employment law and consumer law” to save them money.

This has profound consequences for our ability to protect the things we all value: not just clean air, but also our rights at work, the safety of our food, and the natural world.

Since 2013, government departments have been subject to a rule of ‘one-in, two-out regulation’: they cannot introduce new rules which will cost business money – for instance, caps on vehicle emissions – unless they scrap existing ones worth at least twice that cost.

It’s rumoured that, under the new Conservative government, this has been upped to ‘one-in, three-out’ – an alarming acceleration of the assault on our social and environmental protections.

The policy has no regard for the costs and benefits of these rules for the wider public: the direct cost to business is the sole arbiter of whether departments can act. By this logic, reducing the ‘red tape’ associated with vehicle emissions inspections would have gained a big tick for saving VW money: the 106 dead would not even enter the equation. That a supposedly advanced democracy finds this an acceptable way to make policy is simply mind boggling.

The parallels with the VW scandal do not stop here.

Who makes the rules?

The so-called ‘Focus on Enforcement’ initiative is actively trying to reduce the ‘burden’ of regulatory inspections, putting business in the driving seat when it comes to deciding how and when they want to be inspected. Its website proudly proclaims that it “puts scrutiny of the way the law is enforced or implemented into the hands of business”.

Rather than closing the kind of loopholes which allowed VW to manipulate test results, we are busily opening more.

And it gets worse. Departments’ adherence to ‘one-in, two-out regulation’ is policed by an unelected quango called the Regulatory Policy Committee – which may sound technocratic, but is actually stuffed with business representatives, including from the energy industry and the City of London. They boast that their scrutiny has provided a “very real brake” on the ability of departments to regulate.

While most in civil society do not even know this body exists, our analysis of their minutes finds that they have regularly invited corporate lobbyists into their meetings to complain about everything from the ‘burden’ of having to offer their employees a pension to the ‘burden’ of voluntary codes of conduct. This is not evidence-based policymaking: this is corporate capture writ large. The message of ‘Better Regulation’ is clear: lawmakers should be accountable to business, and no-one else.

Privilege to the cowboys

This slash-and-burn approach is not just socially and environmentally unjust – it is also economically short-sighted.

Effective regulation is vital to address economic threats like climate change, where what is privately rational is collectively disastrous. It also protects responsible businesses from unfair competition by cowboys: after all, the victims of VW’s fraud include manufacturers who played by the rules and didn’t put their bottom line above our right to clean air.

‘Better Regulation’ actively privileges the cowboys. The most bizarre example of this we unearthed was a consultation on speed limits for Heavy Goods Vehicles which reasoned that, since some drivers were breaking the existing speed limits, we should let them all drive faster to ‘level the playing field’. Like VW’s polluting cars, the consultation acknowledged that this would result in more deaths on our roads – but the change went ahead regardless.

The result of all this is to systematically surrender our right to set the rules of the game to those with a vested interest in cutting corners. Indeed, we are being told that the top priority of policymakers must be to make these people’s lives easier.

The CEO of General Motors once famously implied that “What’s good for GM is good for America.” It should now be crystal clear, even to the zealots intent on stripping away our rights, that what’s good for VW is not necessarily good for Britain.

Christine Berry is a researcher at New Economics Foundation's Centre for Well-being. Her current research focusses on new measures of progress and how they can be moved into the political and policymaking mainstream.
This article is published under a Creative Commons Attribution-NonCommercial 4.0 International licence.


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The Next VW Scandal