- Innovation is essential for economic growth and improvements
in living standards.
- However, “vital” innovation risks being choked by the
precautionary principle, which is being incorporated from the EU
into domestic law.
- This affects a far wider range of fields than many assume,
and has diminished our competitiveness and innovativeness.
- Without reforms, the UK will import the burdens of the
precautionary principle without the protections for innovation
(however inadequate) from the EU legal system.
- A British Innovation Principle would allow the precautionary
principle to be applied more proportionately and help create a
more supportive regulatory environment for innovation in
post-Brexit Britain.
A new
paper released by the Institute of Economic Affairs (IEA) and
authored by IEA Head of Regulatory Affairs Victoria Hewson argues
that innovation is under threat due to the over-application of
the precautionary principle.
Post Brexit, the UK is implementing the EU’s precautionary
principle into domestic law. It already applies in numerous
instances concerning planning, the environment and climate policy
and informally pervades regulatory and legislative
decision-making even when not explicit.
It is widely recognised that the misapplication of the
precautionary principle has led to a decline in competitiveness
and innovativeness in various sectors of the economy.
The author warns that there is now a danger that the UK will
incorporate the precautionary principle into domestic law without
the explicit and implicit protections for innovation in the EU
regulatory framework. It is essential, therefore, that there is
review of existing regulation and a commitment to innovation
going forward.
In areas where the application of the precautionary principle is
a binding commitment (such as climate, planning and energy
policy), an innovation principle could be added to applicable
policy statements. This would ensure that the effects of a
proposed measure on innovation are properly accounted for in the
context of all available information.
In other fields where there are no such binding commitments,
innovation should still be considered with more prominence, both
at a strategic level and in impact assessments.
The objective should not be to encourage or pursue favoured
sectors, technologies or policies, but should be to avoid
unnecessarily restricting innovation – which can prevent or stall
the development of safe and useful products and services, from
agriculture to digital.
The author acknowledges that it would be politically difficult in
the short term to remove the precautionary principle as a legal
commitment altogether. Instead, the paper outlines three
possible reforms that would improve the regulatory process
and foster innovation:
- Implement a binding innovation principle to apply alongside,
and with equivalent weight to, the precautionary principle.
- Invest in training and resources for ministers and officials
to use the existing regulatory framework (in particular, impact
assessments) more effectively.
- Consolidate innovation considerations into a toolkit that
ensures due weight is given to innovation, including practical
steps and guidance for officials.
The paper does not recommend an innovation principle as a
general, legal binding duty on ministers in formulating policy
and legislation, rather, the author makes the following
recommendations:
- A British Innovation Principle could be applied as a
statutory duty on regulators.
- In Britain, areas of regulation where the precautionary
principle applies formally have National Policy Statements. In
the same way, there should be a formal National Policy Statement
defining how the British Innovation Principle is to be
interpreted.
- A more focused treatment of innovation effects in the UK
Better Regulation Framework would improve the quality of
cost-benefit analysis in impact assessments.
- A British Innovation Principle should be deployed early and
at a strategic level in order to have a meaningful effect on
innovation and innovativeness.
Victoria Hewson, IEA Head of Regulatory Affairs and
author of A British Innovation Principle: Do we need one, and
how might it work? said:
“The government is consulting on reforms to our regulatory
system. This is a great opportunity to improve how cost-benefit
analysis is carried out and ensure that we are not losing out on
innovations because of an excessively precautionary
approach.
“Impact assessments should look not just at possible risks
from an activity, but the potential gains to prosperity and the
environment from new and better products and services.”
