New Approach to Ensure Regulations and Regulators Support Growth
(3 days, 14 hours ago)
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The Chancellor of the Exchequer (Rachel Reeves)
The Government are today publishing an action plan, setting out a new approach to ensure regulations and regulators support growth.
Improving regulation in the UK, ensuring that it enables growth and does not unduly hold back investment, is an essential part of this Government’s growth mission and delivering on the plan for change.
When used effectively, regulation provides a mechanism to address economic, societal, and environmental risks and deliver positive outcomes in our communities, for example it safeguards employees from harm at work and it can uphold vital standards in building safety.
However, under our current system, businesses tell us that regulation can be too complex and duplicative, stifling progress and innovation. Businesses endure slow processes and a lack of predictability, and our regulatory approach has become too risk averse.
These challenges manifest themselves in costs on business, which means that they have less time and money to invest and create jobs. Over the last 20 years, billions of pounds of regulatory costs have contributed to our economy being less attractive for new investment. Previous studies suggested that the impact of red tape costs could be as high as 3% to 4% of GDP.
The Government will reform the regulatory system to ensure the UK’s position of global competitive leadership and go further and faster to secure and sustain growth, supporting the objectives of our new industrial strategy and the wider growth mission.
This action plan builds on the Prime Minister’s (Keir Starmer) commitment last week to cut bureaucracy for business, reducing administrative costs of regulation for business by a quarter by the end of the Parliament. It sets out a vision to overhaul our regulatory system so that it:
Supports growth. We want a regulatory system that not only protects consumers and supports competition, but also encourages new investment, innovation, and growth. When regulation is designed well, and when it is implemented well by regulators, it can protect consumers while supporting investment and growth.
Is targeted and proportionate. We should regulate only where necessary and allow space for discretion and good behaviour, in most cases, businesses operate in a responsible and sensible manner. The current system too often focuses on regulations and regulatory practices designed to prevent a few bad actors, or very low probability events, rather than trusting and helping most businesses that want to comply.
Is transparent and predictable. To foster the certainty essential for investment, it is vital that our regulatory regime is stable, predictable, and consistent. Regulation will need to change where it is not fit for purpose; but we must be clear about where that is the case and give business the necessary time to adapt to new rules.
Adapts to keep pace with innovation. Our approach to regulation must allow the UK to take advantage of new technologies and innovations, including artificial intelligence, digitalisation, decarbonisation, and increased automation. Effective regulation can create the environment and clarity for innovation to take place. Regulators attuned to the challenges facing business should also be able to adapt to new industries and to the challenges posed by new technologies and avoid disproportionate risk averse behaviour.
To reset the UK’s regulatory landscape and achieve this vision, the Government will implement a package of reforms over the Parliament that focus on:
Tackling complexity and reducing the burden of regulation, including that the Government will commit to reducing the administrative costs of regulation for businesses by 25% by the end of this Parliament; that the Payment Systems Regulator will be consolidated primarily within the Financial Conduct Authority; that the Government will work with regulators to improve areas where regulation is most complex starting with environmental and planning regulation.
Reducing uncertainty across our regulatory system, including that the Government will simplify the duties of key regulators including through the reviews of Ofgem and Ofwat; that it will work with regulators to strengthen transparency, so that business and the public can see how regulators are performing; and that the Government will bring forward packages of reform, including, if necessary, legislation to improve the effectiveness of environmental regulation.
Challenging and shifting excessive risk aversion in the system, including that the Government will overhaul accountability, formalising and strengthening performance reviews which will be conducted by all sponsoring Government Departments, and setting out the next stage of commitments secured by the Regulatory Innovation Office, working alongside Departments and regulators.
The reforms in the action plan are relevant to regulators across sectors such as business, finance, energy, and the environment. Though there is not currently a legal definition of a regulator, the reforms will apply to all bodies exercising regulatory powers and functions.
The Government have worked with a set of key regulators over the past few months to develop measures which will have a tangible effect on driving growth and investment and are implementable within the next 12 months, listed in the action plan. Some of them, such as the Competition and Markets Authority, have already taken substantial action such as taking forward applying the “4Ps” across its digital markets work.
The Government will continue working with industry, regulators, and Parliament to ensure that the regulatory system protects consumers and supports competition, but also encourages new investment, innovation, and growth.
The full action plan is available on gov.uk:
https://www.gov.uk/government/publications/a-new-approach-to-ensure-regulators-and-regulation-support-growth/new-approach-to-ensure-regulators-and-regulation-support-growth-html
A copy will also be placed in the Libraries of both Houses.
[HCWS528]
Terrorism Legislation: Codes of Practice
(3 days, 14 hours ago)
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The Minister for Security (Dan Jarvis)
Today the Government are launching a consultation on our revised codes of practice to schedule 7 to the Terrorism Act 2000 (TACT) and schedule 3 to the Counter-Terrorism and Border Security Act 2019 (CTBSA). These powers are key components of the UK’s national security infrastructure, providing examining officers—accredited constables and immigration and customs officers—with the power to stop, question and, when necessary, search and detain individuals who pass through the UK’s borders, for the purpose of determining, under schedule 7, whether that person is, or has been, involved in the commission, preparation or instigation of acts of terrorism and, under schedule 3, to determine if they are engaged in hostile activity. These powers are non-suspicion—officers may stop and question a person whether or not there are grounds for suspecting that the person is or has been concerned in terrorism or hostile state activity.
The codes of practice set out the processes and safeguards governing the exercise of schedule 7 and schedule 3 powers by examining officers. They provide detail on how the power should be used, including examples where relevant, and are intended to ensure the highest standards of professionalism and compliance with these important powers.
The Government are proposing several changes to the codes of practice to clarify use of the powers, clarify the rights and protections of individuals subject to the powers, and impose additional modest safeguards. These include responses to recommendations made by the independent reviewer of terrorism legislation.
The consultation will run for six weeks, until 27 April 2025. The Government will publish their response thereafter, and will then amend the codes through secondary legislation at the next available opportunity. A copy of the consultation will be placed in the Libraries of both Houses and made available on www.gov.uk.
[HCWS526]
Spelthorne Borough Council: Best Value Duty
(3 days, 14 hours ago)
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The Minister for Local Government and English Devolution (Jim McMahon)
All hon. Members will recognise the importance of having well-functioning local councils which provide essential statutory services local residents rely upon. Local councils must be fit, legal and decent and this Government are aiming to fix the foundations of local government. Today I am updating the House on the statutory inspection of Spelthorne borough council and the steps I am proposing to ensure a focus on reform and recovery, alongside and within the wider context of having invited proposals for unitary local government in Surrey.
Best value inspection report
It is a matter of public record that Spelthorne borough council has significant debt leverage. Spelthorne’s debt stands at nearly £1.069 billion—as of January 2025—which is 62.2 times its total service expenditure and is the second highest level of debt for a district authority in England, after Woking.
A capital review by the Chartered Institute of Public Finance and Accountancy (CIPFA) highlighted concerns around governance and decision making. Following this, on 8 May 2024 the then Secretary of State, the right hon. Michael Gove, commissioned an inspection of the council and its compliance with its best value duty. He appointed Lesley Seary as lead inspector, alongside Mervyn Greer, who were later joined by Peter Robinson and Deborah McLaughlin. Inspectors were asked to report their findings by 31 July 2024. The deadline was subsequently extended to 31 January 2025. The inspectors completed their inspection and submitted their report to the Secretary of State for Housing, Communities and Local Government, my right hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) and, as statute requires, provided a copy to the council. I am grateful to the inspection team for their thorough work, and to the council and all participants for their co-operation.
The report identifies some positive features at the council, such as strong resident engagement and positive local partnerships. The report also notes that the council has already taken positive steps to make improvements, including against recommendations made in the CIPFA review, such as the suspension of the planned housing developments and cessation of further borrowing for this initiative after determining it was no longer viable. However, the report documents serious concerns across a number of areas which I consider to be against its best value duty:
On Continuous Improvement: The report describes the council as having a “poor record” of adequately addressing recommendations from external reviews and the inspectors have no confidence in the council’s ability to make the changes “without significant external support”.
On Leadership: The report highlights that the council lacks consistent leadership, strategic direction, constructive challenge and a robust corporate plan. Optimism bias clouds officers’ awareness of risks, and to some degree the council has been “blindsided” by the financial situation.
On Governance: The report concludes that the council’s “poor, late and incomplete reporting, together with a lack of audit and a reluctance to accept and act on challenge” has “severely undermined informed decision-making” and there is a culture of secrecy.
On Culture: The report describes member and officer relationships as poor and deteriorating, with both sides describing a culture of mistrust and broken relationships which are “hindering constructive discussions” on key financial, housing and asset issues. Members and officers do not share an understanding of their respective roles. Inspectors consider the council to be insular and in denial of the situation it faces.
On Use of Resources: The report concludes that a lack of long-term planning, risk management and an “overly-optimistic reliance” on property markets has led to the authority’s financial strategy being unsustainable.
Compliance with the best value duty
I have carefully considered the report and other relevant material, including findings from the CIPFA review, recent reports from the council’s external auditors, and the corporate peer challenge conducted by the Local Government Association. I am satisfied that Spelthorne borough council is failing to comply with its best value duty in relation to continuous improvement, governance, leadership, culture, and use of resources. I am therefore minded to exercise powers of direction under section 15(5) and 15(6) of the Local Government Act 1999 to implement an intervention package that ensures the council’s compliance with its best value duty. The proposed intervention includes the appointment of commissioners to exercise certain and limited functions as required, for five years. The commissioner team, if appointed, would consist of a lead commissioner and commissioners with expertise in finance, commercial investment and governance. The council will be directed to prepare and agree an improvement and recovery plan to the satisfaction of the commissioners. I would like the commissioners to report on progress against this plan after the first six months, and then at six monthly intervals. I need to ensure the council’s compliance with its best value duty: the commissioners’ assessments will provide assurance to residents and strategic partners. The council will also be directed to actively engage with the commissioners while reviewing and implementing any proposals for unitary local government.
Representations
I am inviting representations from Spelthorne borough council on the respective inspection report and on the proposed intervention package by 28 March 2025. I want to provide the opportunity for members and officers of the council, and any other interested parties, especially the residents of Spelthorne, to make their views on the proposal known.
I made clear in my written statement of 5 February that potential proposals on unitary local government must demonstrate how local councils have sought to work together in coming to a view that best meets local needs and is informed by local views: given the potential implications for the proposals currently being developed by councils in Surrey for unitary local government, I have taken steps to ensure that this report will be seen by all relevant parties across the area. I will carefully consider all representations and any other evidence received, before deciding how to proceed with the council.
Conclusion
The proposal to intervene in Spelthorne borough council is not taken lightly. The proposed intervention package is designed to strengthen and accelerate the improvement work needed at the council. I am confident that the proposal will address the failings identified and is necessary to ensuring the council’s compliance with its best value duty. I hope that with focus and oversight, improvement will come at pace and that it will not be necessary for the commissioners to use their powers. However, they must be empowered to do so if they consider that the required improvement and reforms are not being delivered.
I am committed to working in partnership with the council to provide the necessary support to ensure its compliance with this duty and the high standards of governance local residents and service users expect.
I will deposit in the House Library a copy of the inspection report I have referred to, which is also being published on gov.uk today. I will update the House in due course.
[HCWS527]