A Perilous Gap: UK Regulators Weaken Public Safeguards by Showing Leniency Toward Corporations

UK lags US when it comes to regulatory penalties

May 3, 2024

Maia Kirby maia@goodjobsfirst.org

Siobhan Standaert [email protected]

Bratton, Wiltshire, UK – An Environment Agency Van in England. Source: Shutterstock

London, England and Washington, DCRegulators in the United Kingdom are falling short when it comes to holding wrong-doing companies accountable for their actions. Enforcement in key areas such as the labour standards, competition, government procurement oversight and the environment has weakened, especially in comparison to the United States.

Total penalties issued by US regulators since 2010 are substantially higher than those issued by their counterparts in the UK, where a ‘warning’ is usually all a company receives.

Those are the bottom-line findings of an analysis of the regulatory landscape as detailed by a comparison of the fines, fees, penalties, settlements, and warnings issued by regulators in the United States and in the United Kingdom.

The analysis was done by Good Jobs First, a non-governmental organization that created and maintains two comprehensive databases tracking corporate regulatory infringements, one on each side of the pond.

In Violation Tracker UK, 57% of the entries have no monetary penalties and another 24% have amounts below £5,000. In the US, enforcement actions without monetary penalties are so uncommon that Violation Tracker does not include them and fines below $5,000 are also excluded.

The report, ‘A Perilous Gap: Government Regulatory Enforcement in the United Kingdom vs the United States,’ focuses on four areas of regulation – labour market, government contracting, price-fixing and anti-competitive practices, and the environment.

‘Our research shows the UK is lagging behind the US on enforcement in every area examined. Lack of enforcement of the rules leaves the general public, workers and the environment unprotected from rogue companies, driving down our living standards’,  said Maia Kirby, a UK-based outreach coordinator with Good Jobs First and the report’s lead author.

Among the report’s findings:

  • In the UK, there are far fewer cases against large companies, particularly when it comes to price-fixing.
  • In areas like government contracting, the US has a far more robust system of safeguards against procurement fraud.
  • Private litigation in all areas is more prevalent in the US than in the UK, mainly due to the widespread use of class action lawsuits.
  • When it comes to worker protection, the UK is missing the central enforcing body that exists in the US, the Department of Labor. UK individuals are by and large left to take on rogue employers themselves through the Employment Tribunals.

Since 2010, the UK government has trended toward deregulation and instituted large-scale cuts to agency budgets. One result of these changes is the high number of enforcement actions with small monetary penalties – or none at all.

Regulation in the UK has been highly influenced by the idea of responsive regulation. And if the company falls short, it should be given the chance to improve before receiving monetary penalties.

‘Companies have a long track record of failing to self-regulate’, said Siobhan Standaert, a research analyst with Good Jobs First and one of the report’s authors. ‘Issuing warnings instead of fines doesn’t appear to be improving outcomes.’

The report recommends the UK adopt a cohesive regulatory body to help address widespread labor non-compliance and remove pressure from workers who take this responsibility on instead. The UK should consider also raising the floor for penalty amounts to further ensure compliance and lessen recidivism.

Read the full report.