Treasury issues Action Plan to push regulators to support growth

HM Treasury has published an Action Plan, setting out a new approach to ensure regulations and regulators support growth.

Chancellor Rachel Reeves said the vision is to overhaul the 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.”

To achieve the vision, Reeves said 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.”