The Grenfell report is a tombstone for neoliberalism

On the week that we see the tragic consequence of deregulation, Tory leadership candidates continue to praise it regardless.

Photo by the blowup on Unsplash

The silence is deafening. There's all this noise, but the most pressing thing, the most profound, lies in the silence.

The silence is about Grenfell. Not the criminal cases. Not the specific politicians and companies who were to blame. There's plenty of talk about that. But there's something which is resolutely not discussed by those who most need to learn it.

Grenfell tells us something crucial about deregulation and the state, about the terrible danger of unrestrained capitalism without government interference to temper it. It is a tombstone for neoliberalism. And yet the proponents of that view do not seem to have a damn thing to say about it. Not one word to acknowledge it. Not one utterance to defend against it. Just a mute, cynical silence, which betrays an indifference to the terrible reality of what we found this week.

Grenfell was fundamentally a regulatory failure. The risk of cladding fire was highlighted in 1992 after a fire in Merseyside, then again in 1999, 2001 and 2009. Nothing was done. Things got worse when the coalition government came to power in 2010. Deregulation was part of its core ideological mission. It was a necessary corollary of the austerity agenda. It was, in Cameron's words, something "profound" - a continuation of the project which began with Ludwig von Mises, Friedrich Hayek and Milton Friedman. It entailed the complete triumph of the market and the rolling back of the state from economic, social and political life. 

The Grenfell report found that cutting red tape "dominated the department’s thinking to such an extent that even matters affecting the safety of life were ignored, delayed or disregarded". The department had neither the "ability nor capacity to issue practical guidance to industry because its systems… had become obsolete". 

Eric Pickles, the relevant secretary of state at the time, claimed that fire safety could not be included in red tape initiatives. The report said his testimony was "flatly contradicted by that of his officials and the contemporaneous documents". The pressure was so strong that "civil servants felt the need to put it at the forefront of every decision". They did not recommend tougher regulations even when clearly necessary - the very idea was absurd, a political death sentence, a rebellion against the fundamental tenets of the era.

And what happened after that? Well, the private sector simply span out of control, as it so often does. Manufacturers behaved with "systematic dishonesty". Arconic, which made the cladding, "sought to exploit what it perceived to be a weak regulatory regime in the UK". Celotex, which made the insulation behind the cladding, was engaged in a "dishonest scheme to mislead its customers". 

This is why those materials were on that building. It is why people died. It ends with the fire. It begins with deregulation.

We've been here before. During the Reagan and Clinton eras in the US, there was an aggressive programme of banking deregulation, removing limits on growth and eradicating the separation between retail and investment banks. Hunting down and eradicating red tape was, in the words of Securities and Exchange Commission chairman Arthur Levitt, a "kind of blood sport". In the end, the regulatory framework simply collapsed. Tony Blair emulated this approach in the UK with the creation of a single streamlined light-touch regulator called the Financial Services Authority.

The result was a banking sector which swung totally out of control, packaging up mortgages into securities, then slicing them up, bundling them into new investment assets without any meaningful assessment of risk, and then using them as collateral to secure liquidity in the money markets. The only bodies with a meaningful role overseeing this were the credit rating agencies, who were literally paid by the banks whose products they were supposed to be assessing.

The result nearly destroyed the world economy in 2008. And yet in 2010, just two years later, the Coalition government was deregulating even harder, leading to the monstrous culture which allowed the Grenfell tragedy. Not only had it learned nothing, it had closed itself off to the evidence of what had taken place. It had pressed ahead regardless, utterly indifferent to the living refutation of its ideological creed.

And now here we are again, watching it happen once more. No lessons learned. No recognition. No intellectual introspection. No hint of self-criticism. "We used to have a one-in, one-out rule for regulation," James Cleverly said approvingly during a Tory leadership event on Monday. "The truth is, we strayed from the path of righteousness, so we need to get back on track. Maybe you can go further, having a one-in, two-out approach to regulation, because we must empower innovators and world creators". 

Before she fell out the race, Priti Patel was similarly stressing the need for "innovation over regulation". Rishi Sunak's response to the prime minister's statement on the report involved a brief mention of the need to update the "regulatory framework", but no meaningful attempt to grapple with its implications for his worldview. Last night on LBC, a day after the report was published, Steve Baker behaved as if nothing had happened at all. "I see a Conservative Party in parliament which needs to move to the free market right," he said, utterly oblivious to how the events of the previous 24 hours had made that statement so morally debilitating.

There are areas where deregulation has been largely beneficial, but the zealotry of free market ideology is not about assessing which areas are ripe for deregulation or the manner in which to do it. It is not about case-by-case evaluation. It is, if anything, a kind of religious conviction, demanding deregulation everywhere on everything. It is the corrosion of the mind when it refuses to engage with complexity. This is the slippery-slope argument, pioneered by Hayek. All state intervention leads to tyranny, so all state intervention must be wiped out.

Labour has nearly as many skeletons in its cupboard as the Conservatives do. It helped deregulate finance. Plenty of the early warnings in the Grenfell report fall during the New Labour period. But there is a significant distinction. Labour has moved away from a market-knows-best approach. In nearly every area of its activity, from labour markets to net zero, it recognises the limitation of the market and the need for state interference.

The Conservatives have gone through no such similar Damascene conversion. They still talk as if deregulation was equivalent to freedom. And it is: to businesses. But what about the freedom of the people in that fire? What about the liberties of the families in that tower? That simply didn't factor into the equation. Neoliberalism is an infantile form of liberalism. It is unable to comprehend anything but the most superficial and self-serving types of individual freedom.

This belief system has now lost any moral standing. It is a wreckage site where convictions used to be. And yet its adherents shamble mindlessly on, like ideological zombies. They're unable to process the implications of what they are hearing. They're unable, on some deep psychological level, to accept the moral culpability it entails. They are either indifferent or blind to the consequences of their political programmes. So all we get is silence, deafening silence, and within that silence the next tragedy will be born.