The case for a British Innovation Principle
The PP is not a general principle of policy, but is mostly applied in the context of environmental or climate policy. Although these days both have a wide effect, so the PP indirectly impacts on many other areas like housing, education, and health. It underpins questions about whether any activity can be considered sustainable.
Sustainability in turn is poorly understood. It does not mean ‘the most environmentally friendly decision is the best one’. It is instead a framework for considering the trade-offs between environmental, economic and social goods. Part of the issue with abuse of the precautionary principle stems from denying that such trade-offs exist, and insisting instead that presumption of harm in one area alone must lead to a ban.
For example, if just one old tree must be cut down or one newt-breeding site moved to construct a link road, a billion-pound investment may be stopped. If fracking can hypothetically cause trace pollution in deep water reserves, then there can be no fracking. If coal contributes more to climate change than gas, then no new coal mines must be opened in Britain.
These reactions, regardless of any plan for mitigation of risks, employment opportunities, wealth creation, or risk of greater environmental damage from substitution behaviours, are not precautionary. They are instead zero harm decisions that cause harm.
Nature can adapt, helped by sensible environmental stewardship. But isolated communities without adequate transport links are poorer for their isolation. Stopping fracking in environmentally sensitive jurisdictions can mean gas imports from less cautious regimes. Steel mills still need coking coal regardless as to where it is dug up. There is no gain for the climate or environment in overcaution, only less wealth to invest in incrementally improving these activities, until they are replaced entirely by better technology.
One of the reasons electric vehicles are taking so long for example is that petrol cars and hybrids have got better, cheaper, and less environmentally damaging, far faster than was thought possible. But that is a good thing. It means less polluting technologies on the roads, whichever drivetrain eventually wins the sustainable mobility race. That all this competing innovation has been allowed to happen has raised all boats.
‘Ban then plan’, picking winners and over-regulation, meanwhile, do not work. Europe, and more importantly, the world’s hungry, have not benefited from leaving tranches of GMO crop technology to others. Bioplastics development, which promises the elimination of microplastics from the oceans, is likely to be retarded by the demonisation of all plastics. Digital innovation is not helped by trying to make cyberspace a safe space.
Fundamentally, the greatest costs of over-caution are the ‘silent springs’ of industry that is not there. If you cannot build a business through trial and error, you do not get investment, you cannot support research, or provide jobs. These problems with abuse of the PP are well understood.
The Innovation Principle was one attempt at a solution. The original formulation by the European Risk Forum in 2013 was:
“Whenever policy or regulatory decisions are under consideration the impact on innovation as a driver for jobs and growth should be assessed and addressed.”
It makes sense, but it is technocratic and light on the detail as to how it could be implemented, let alone enforced. It was hoped it would improve the way the EU did impact assessments. It would require policymakers to consult those most impacted by their ideas, notably in relation to investment pipelines, blue-skies research, and current areas of development. It would help them understand activities that were happening, and crucially those that were not yet happening, but that might change the world.
However, gathering more impact data may not be the issue. It can just add cost without benefit. But the most frequent complaint from heavily regulated EU industries was one of political bodies overriding scientific advice, and those political bodies being either indifferent to or too remote from the impacts of their decisions. The problem was less insufficient data, and more that the data was ignored. It is unclear how the original IP would address that, and in the end, it didnot get a chance.
The Mazzucato-inspired EU Innovation Principle that came into use around 2016 went much further down the technocratic path and threw in a good measure of central planning. It signalled that regulation in itself is a necessary good to help ‘innovation flourish’ and that the only innovation that apparently matters is that which helps the EU achieve its preferred social and environmental objectives. It was explicitly hostile to deregulation regardless as to any evidence that overregulation is the problem:
“The Commission should clarify in official documents that the innovation principle does not entail a de-regulatory approach, as has sometimes been misunderstood”.
This can be rewritten as “The Commission should clarify that whatever else is said, it is never prepared to accept that the problem is the Commission.”
This defensiveness and politicisation of the IP turns the EU version from a check and balance on the PP into a self-referential tool of industrial policy. A modern industrial policy perhaps, picking ‘themes and teams’, rather than ‘winners and whiners’ (or national champions and zombie industries with good lobbyists). But it is still industrial policy rather than an innovation principle.
EU politicians will decide what innovation should matter, and encourage it through regulation and stimulus spending on R&D and commercialisation. That approach is likely to distort outcomes that would otherwise be determined by consumer choice and entrepreneurial risk taking.
Further, by signalling that only socially acceptable innovation is supported, it biases investment decisions towards what is already understood and approved of, not the unknown. This is followership, not a culture in which innovation will flourish. It is hard to see how the EU has done anything useful or good here. Rather than deal with the problem of regulatory abuse from hyper-caution and politicisation, it has turned its own solution into an endorsement of further caution, led by politics.
A British Innovation Principle, having left the EU, can avoid this approach.
There are four ways a BIP could be introduced in practice: focused primary legislation, inclusion in another bill, secondary legislation from existing powers, or changes in practice. An Innovation Bill at the current time seems unlikely. The most likely donor Bill would be the current Environment Bill, which considers environmental principles. But that has nearly concluded. It contains within it however the means to implement the BIP through executive decision, a National Policy Statement on how the precautionary principle should be interpreted. This in turn would define practice.
Such a statement could start from assessment that innovation, through the decisions and interactions of millions of people, happens regardless of Government policy. It happens globally and cannot be controlled or centrally planned, other than in very limited circumstances, that are only a small part of the overall picture of human progress. It should note that nearly all of this is a thoroughly good thing. Innovation in free societies, through our own endeavours and trade, has delivered the health, happiness, prosperity and the superior environmental outcomes we all enjoy today, in growing numbers. This is the stance of rational optimism (Ridley).
It can reinforce that positive message by noting any precautionary intervention in the UK will follow evidence of harm, not its assumption. This is the soft interpretation of the precautionary principle, or responding to concerns proportionate to evidence of their risk and scale of the likely hazard. In practice, this means in-market testing of issues and their solutions, not the automatic removal of products from markets while working out what to do.
The BIP, as in the original construct of the IP, would require the Government to take the impact of policy on social, economic, and environmental outcomes, and their trade-offs seriously. It would need to demonstrate that their policy remedies are proportionate to the evidence of risk provided, at the time provided, not hyperbolic expediency in response to media-driven panic.
Such an approach further is entirely aligned with environmentalism and sustainable development. The bridge between the two is surely that human progress is in itself a social good, and that innovation requires an ecosystem not a grand plan. Any policy impact assessment requiring precaution that did not also consider the impact of a proposal on the advancement of science, technology and practice, would not, by definition, be sustainable.
A British Innovation Principle can also avoid conflating innovation policy with industrial policy. Innovation does not need to exist for a specific purpose to be useful. We simply do not know where our future comparative advantage will lie. We do not know what accidents of science will produce the next penicillin, nor what will transpire ‘when ideas have sex’ (Ridley). It is a caricature, but a useful one, that British common law presumes that which is not prohibited is permitted. The BIP should reflect this, not the reverse caricature of the Napoleonic code.
Nor does this foundation conflict with the exceptions to this rule. During the recent pandemic crisis, the Government explicitly intervened, with both successes and failures, to accelerate PPE and vaccine deployment. Successive Governments have intervened in energy policy on the pretext of tackling climate change. These are political choices. The role of the BIP like the PP is to encourage thinking through the consequences, not to deny such choices exist, nor that the elected Government can make them.
The BIP then could then operate perfectly well with a Government more predisposed to the Ridley view of innovation (non-intervention is generally better) or one more in favour of Mazzucato (heavy intervention to support moonshots for a social purpose). Or more likely the messy reality of tensions in both directions, and policy inconsistency.
Finally, to address the issues of politicisation and disassociation between the regulators and regulated, the BIP could level the playing field by enabling the tools of judicial review already available to environmental groups for those impacted by abuse of the PP. National Policy Statements already exist in a number of areas, such as Planning and Energy. It is not uncommon for environmental groups to use them as the basis of challenge to Government decisions, generally encouraging them in a more interventionist direction.
It could then be explicit that if the Government fails to consider the impact of a precautionary intervention on innovation, it can be subject to judicial review. Interventions could also be open to challenge on grounds of the proportionality of their impact on innovation or other tests built into the Government’s analysis of where the balance should lie. For example, their impact on market concentration, international research cooperation, or connected industries.
At which point industry and the NGOs can contest these matters directly, contesting the detailed evidence in public, rather than behind closed doors. That threat in turn should improve the quality of any precautionary action before it gets to that stage, requiring the civil service to consult widely and deeply before implementing tough action that might cause significant harm.
Finally, that the BIP would be implemented through an NPS not primary legislation would enable it to be adapted. This limits the validity of any complaint NGOs might have that the innovation principle is hardcoding recklessness in law (a disingenuous complaint made by some about the original concept). It will instead test it, in the field, and improve it in light of practice, which is rather the point of innovation, and getting the balance right, more widely.
If it succeeds, the UK should start attracting investment in cutting-edge industries that are being put off EU investment by excessive caution, without a noticeable difference in environmental or social outcomes. Or rather better outcomes in both, due to the positive benefits to the environment and social harmony from increased prosperity, driven by innovation.
If it does not, the policy will be adapted or scrapped. The British Innovation Principle is then a policy risk worth taking.