Freedom Upsets Patterns: The Deregulation Argument Westminster Will Not Have

Freedom upsets patterns the deregulation argument

Westminster will not have by Elias Sanchez.

The United Kingdom's economic deceleration

is conventionally attributed to fiscal consolidation,

anemic productivity growth, and the supply side dislocations

that followed Russia's invasion of Ukraine.

These are real constraints.

But treating them as primary causes rather than downstream

symptoms is a misdiagnosis, and an increasingly costly one.

The deeper pathology is regulatory density,

an accumulated architecture of formal constraints

that suppresses entrepreneurial discovery, crowds out

new entrants, and reduces the adaptive capacity

of institutions.

It is this environment, not fiscal tightness alone,

that arrests the spontaneous bottom-up processes of coordination

upon which market economies depend for long-run resilience.

The human cost of this misdiagnosis is not abstract.

In 2024, approximately 12.2 million households in England

were spending more than 10% of their income on domestic energy,

according to data from the in-fuel poverty coalition

and the Department for Energy Security and Net Zero.

Fuel taxation and green levies embedded in energy bills

function as a regressive flat charge,

falling proportionally hardest, on those least able

to absorb them.

The regulatory architecture that produced those costs

was not designed around the subjective circumstances

of the poorest households.

It was designed around policy targets, statistical projections,

and the administrative convenience of large established suppliers.

The same logic crushes new entrants from the other end.

As OVO energy disclosed in testimony

to the competition and market's authority,

crossing the threshold of 250,000 customers,

triggers obligations under the energy company's obligation

worth millions of pounds, not merely in direct compliance costs,

but in the specialist staff and systems required to meet them.

The result is a regulatory structure

that penalizes growth and trenches

incumbents and systematically destroys

the incentive for entrepreneurial discovery

precisely at the moment it becomes viable.

These are not accidental policy failures.

They are the predictable consequences

of a planning logic that substitutes

the regulator's statistical model of reality

for the dispersed living judgment of individuals.

Regulation of this kind does not merely produce bad outcomes.

It commits a prior offence.

By designing policy around aggregate patterns,

it treats human beings not as creative, self-determined agents,

but as variables to be managed.

It presumes an effect that human capacity

is best expressed within a constrained

and coercively assigned set of actions.

This is not governance.

It is in a tradition of economic thought

running from Friedrich Hayek

through to more recent scholars of entrepreneurship,

a form of epistemic violence,

a systematic assault on the spontaneous,

inalienable capacity of individuals to discover,

combine and act on knowledge that no central authority

can fully observe or anticipate.

D-regulation in this context is not an ideological preference

for a minimal government.

It is a functional and moral imperative.

The institutional failure of offgem

and what should replace it.

The case for deregulating the UK energy market

is not at its core a case against regulation in the abstract.

It is a case against a specific institutional logic,

one that offgem embodies completely.

Offgem is not staffed by incompetent people.

The problem is structural.

As a public body whose mandate is shaped

by political objective determined in Westminster,

net zero targets, price cap mechanisms,

consumer protection metrics,

it is constitutionally incapable of enabling

the kind of entrepreneurial discovery

the energy market requires.

Its compliance architecture,

as the OVO case demonstrated,

does not create a level playing field.

It creates a cliff edge that punishes growth in trenches

incumbents and eliminates the middle tier of firms

that would otherwise be scaling alternatives

to oil and gas.

Reforming offgem's threshold rules would change

the clothes without changing the body.

The institutional DNA optimizing for political goals

rather than entrepreneurial freedom

would remain intact.

The question then is not whether to dismantle

this architecture,

but how to do so without exposing in the most vulnerable households

to the transitional costs that inevitably accompany structural reform.

Argentina offers an instructive, if imperfect, precedent.

When Javier Miele established the ministry of deregulation

and state transformation under Federico Sturzenegger,

he created an institution whose explicit mandate

was its own progressive redundancy.

Abolishing regulations at a rate that,

according to Miele's own account of the program's pace,

reached 3.5 per day at its height.

One early result was rent decontrol,

which according to analysis published by the Library

of Economics and Liberty,

caused the supply of available apartments to nearly triple

with real prices falling by as much as 40%.

Entrepreneurial discovery, once unshackled,

moved faster than any quota target could have anticipated.

The UK is not Argentina.

There is no hyperinflation to stabilize.

No currency controls to lift.

No parallel exchange rate to close.

The macroeconomic starting conditions are different in degree,

if not entirely in kind,

but the institutional logic is transferable.

What the UK requires is a body modeled,

not on of Jim's regulatory mission,

but on Sturzenegger's deregulatory one.

Centralized initially to manage the macroeconomic stabilization,

that precedes liberalization,

but with decentralization,

written into its constitutional mandate.

Authorities should devolve progressively

to local and community-level bodies,

so that the administrative logic never scales

into the dense regulatory architecture

it was created to dismantle.

Of Jim's supply side functions,

its oversight of production,

entry thresholds and compliance obligations

on energy suppliers should be the first to go.

Its consumer protection role,

particularly for low-income households,

still exposed to regressive energy pricing,

should be ring-fenced temporarily as a transitional floor.

The precise institutional design of that transition

is a matter for further analysis.

What is not a matter for further analysis

is the direction of travel.

A deregulation body that measures its own success

by its own diminishment is the only institutional form

consistent with the argument being made here.

The wrong question.

The entire British policy debate about energy

has been asking the wrong question.

From net zero frameworks to hydrogen strategies,

from offshore wind targets to nuclear commissioning timelines,

the political class has proceeded on a single

unexamined assumption that a state can know in advance

which energy technology will define the future

and that the function of policy is to back that technology

with subsidies, mandates and regulatory architecture.

This assumption is not merely inefficient,

it is epistemically presumptuous,

and a tradition of economic thought

stretching across most of the 20th century

has explained precisely why.

The core insight developed by Friedrich Hayek

and later extended by economists working in the same tradition

is that knowledge in a society is not concentrated

in any single mind or institution.

It is dispersed, tacit and irreducibly personal.

No central authority can aggregate it without fatal loss.

From this follows a further argument developed by

Israel Kirsner, the economist who first formalized

the theory of entrepreneurial alertness.

The entrepreneur is not a planner, but a discoverer,

someone who notices opportunities

that no model predicted and no committee commissioned.

Hesu Swerta de Soto, the Spanish economist

whose 2010 work socialism, economic calculation

and entrepreneurship radicalized these insights,

grounds entrepreneurship not merely in market function,

but in human subjectivity itself

in the inalienable creative capacity of individuals

to combine and recombine ideas in ways that formal systems

cannot anticipate, replicate or substitute.

Whether the energy technology that liberates the UK

from oil dependency will be lithium,

tidal, nuclear, solar,

or something no government white paper has yet named,

we cannot know.

That unknowability is not a policy problem to be solved.

It is the very condition that makes entrepreneurial discovery

possible.

Every formal framework that picks a winner,

every subsidy architecture, every regulatory mandate,

every net zero target, backed by compliance obligations,

does not accelerate that discovery.

It forecloses it.

It substitutes the state's necessarily limited model of reality

for the anarchic, iterative, recombinative,

creativity of human minds operating outside the parameters

of formal legibility.

This is the indictment.

Westminster has not merely made inefficient policy choices.

It has, through the accumulated weight of regulatory density,

committed a sustained act of epistemic presumption,

substituting its own patterns for the spontaneous order

that only free human subjectivity can generate.

The cost is not measured only in GDP points

or productivity gaps.

It is measured in the energy firms that never scaled

the technologies that were never discovered,

the entrepreneurs who were regulated into stillness

before their ideas could compound into something transformative.

It is measured in the 12.2 million households

identified by the infuel poverty coalition

and confirmed by the Department for Energy Security and net zero,

spending more than a tenth of their income keeping the lights on.

Not because energy is inherently scarce,

but because the regulatory architecture has made it so.

The urgency is real.

Every year this architecture remains intact

is another year of suppressed discovery,

compounding dependency, and preventable poverty.

The transitional costs of reform are real, too.

Argentina's experience makes that plain.

But the transitional costs of inaction

are invisible only because they are diffuse, chronic,

and fall most heavily on those with the least political voice.

Robert Nosek, the philosopher who argued that freedom inevitably

disrupts any pattern, a state attempts to impose,

wrote that freedom upsets patterns.

It does, and that is precisely the point.

The pattern Westminster has imposed on the UK energy market

and on the human subjectivity that should be its most productive force

is not a feature of good governance.

It is the problem.

Deregulate that freedom and what emerges cannot be predicted.

But that unpredictability is not chaos.

It is the precondition for every discovery that has ever mattered.

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