New Approach to Ensure Regulations and Regulators Support Growth

Rachel Reeves Excerpts

Monday 17th March 2025 Written Statements

[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.

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