Government to unveil action plan to cut regulation

Chancellor, Rachel Reeves is set to announce 60 measures aimed at reducing regulatory burdens and stimulating economic. With between 100 and 130 regulatory bodies currently in the UK, the Government plans to significantly cut this number.  The new ‘radical action plan’ will be published following consultations with regulators, as the Government seeks to address deteriorating economic forecasts.

Regulators will be summoned for performance reviews twice a year from the relevant Secretary of State and will be judged against a set of targets agreed with the businesses they affect, which could include how quickly they make decisions on planning applications and new licenses for businesses and products. The regulators will immediately begin discussing these targets with businesses and publish them by June.

Following the decision to primarily consolidate the Payment Systems Regulator into the Financial Conduct Authority, the Regulator for Community Interest Companies will be folded into Companies House to avoid duplicative disclosure requirements for companies which provide a benefit to their community. Cabinet ministers will report back to the Chancellor by the summer with further suggestions to cut numbers and create a more effective system.

Major regulators will also have their legal duties slimmed down, so that they do not waste time satisfying redundant duties that do not align with their core purpose or the public’s priorities. This work will begin with the financial services regulators, energy watchdog Ofgem, water regulator Ofwat and the Office for Road and Rail.

The Treasury will also explore ways to streamline financial services regulators’ ‘have regards’ to improve predictability and business confidence. The role of the Financial Ombudsman Service will also be reviewed to ensure that it is acting as an impartial service that provides quick and predictable resolutions to disputes – not as a quasi-regulator.

Chancellor of the Exchequer Rachel Reeves said “The world is changing and that’s why we must go further and faster to deliver on our Plan for Change to kickstart economic growth. Today we are taking further action to free businesses from the shackles of regulation. By cutting red tape and creating a more effective system, we will boost investment, create jobs and put more money into working people’s pockets.”

Business and Trade Secretary Jonathan Reynolds said “Unnecessary regulation chokes competition and stifles business – that’s why we’re taking action to unleash industry right across the UK to go for growth.

“With a regulatory system that encourages innovation and economic growth combined with our Industrial Strategy, our Plan for Change can make the UK the best place to startup, invest and thrive.”

Rain Newton-Smith, CEO of the CBI, said “The UK’s Gordian knot of regulations hinders investment with compliance costs that are too high, leaving us trailing the international competition. Today’s announcement signals a shift towards a more proportionate, outcomes based approach that should deliver more sustainable growth and investment.

“Smart, proportionate regulation could be the UK’s international calling card once more, bringing confidence and easing the burden on many sectors.

“This announcement builds on the welcome commitment from the Prime Minister to reduce the thicket of regulation, and it is critical that this approach is reflected across the board including finding a landing zone for the Employment Rights Bill that supports growth, investment, and jobs.”

David Postings, Chief Executive of UK Finance, said “We need a regulatory environment that supports investment and is internationally competitive. I’ve been delighted to see the progress already made by government and regulators, who are listening to the ideas put forward by UK Finance and industry and taking bold action. Today’s announcement builds on that progress, most notably reviewing how the Financial Ombudsman Service operates. It currently acts as a quasi-regulator, which was not the original intention, and addressing this issue is a key one for our sector. I look forward to continuing to work with the government to ensure financial services helps deliver growth up and down the country.”

Debbie Crosbie, CEO of Nationwide, said “I welcome the government’s decisive action to deliver better regulation. Clear and predictable rules will help firms focus on growth and innovation for the benefit of consumers. The target to reduce the administrative cost of regulation by 25% could make a meaningful difference to the regulatory burden and economic growth.”

Craig Beaumont, Executive Director of the Federation of Small Businesses, said “Today’s announcement shows the Chancellor is willing to put in the hard yards to let businesses do what they do best. Business owners are not bureaucrats. The delays, time wasting and sheer stress from having to handle layers of poorly designed regulation makes it harder and harder for small businesses to grow, generate jobs and provide for their customers.

“Every month a project might be delayed makes it harder to go ahead, and every second wasted on unnecessary forms is time away from business, staff and family. We have made clear recommendations to CEOs of the regulators visiting No.10 today, to transform regulation so they help, not hinder, small business growth and investment.  This is a necessary pre-condition for increasing living standards, building a stronger economy and creating new jobs.”

Shevaun Haviland, Director General of the British Chambers of Commerce, said “This is an eye-catching package of measures which has a real potential to speed up decision-making and give businesses more certainty.

“Changes that would fast-track major infrastructure projects, such as the Lower Thames Crossing and Heathrow expansion, are especially welcome.

“Over half of firms tell us they are planning to raise prices, and with fresh uncertainty around tariffs, a 25 percent cut in the cost of regulation would be very welcome.”

Dr. Roger Barker, Director of Policy at the Institute of Directors, said “The Government’s Better Regulation Action Plan is a welcome shift to a more growth friendly approach.

“Compliance with burdensome regulation is frequently cited by IoD members as one of the top factors having a negative effect on their businesses. Although well-designed and proportionate regulation has a valuable role to play in a modern economy, the current UK framework does not sufficiently prioritise growth and innovation. It is hence appropriate for the government to rebalance its approach with a pro-business orientation at its core.

“In our Spending Review submission in February, the IoD called on the government to reinstate a Business Impact Target for new regulation over the life of the Parliament. We are therefore delighted that the government has listened to this recommendation and is now committed to reducing the administrative costs of regulation on business by 25% through this Plan. Meaningful progress against this target will be crucial for supporting businesses and growing the economy.

“In addition to the measures announced today, we would also like to see the government apply more rigorous and timely impact assessment procedures when considering new regulation. Non-regulatory solutions should always be considered, and the business case for new regulation should be subject to proper independent scrutiny by the Regulatory Policy Committee. There should also be a commitment to reviewing the ongoing effectiveness of existing regulation at regular intervals.”