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UK should introduce an innovation principle, insists IEA

06:37, 23 September 2021

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Innovation in the UK is under threat due to the overapplication of the precautionary principle. This is the argument from a new paper published today by the Institute of Economic Affairs (IEA) think tank.  

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.

According to the IEA paper, 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 IEA 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.

Commitment to innovation

Consequently, it is calling for a review of existing regulation and a commitment to innovation going forward.

The IEA suggests that 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 were 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, the IEA insists, should not be to encourage or pursue favoured sectors, technologies or policies, but to avoid unnecessarily restricting innovation – which prevents or stalls the development of safe and useful products and services, from agriculture to digital.

Potential changes

The IEA paper points to three possible reforms:

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.

Statutory duty on regulators

The paper does not recommend an innovation principle as a general, legal binding duty on ministers in formulating policy and legislation but suggests a British innovation principle could be applied as a statutory duty on regulators.

Victoria Hewson, IEA head of regulatory affairs, commented: “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.”

She added: “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.”

Read more: FCA chief outlines UK authority’s strategies

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