The UK needs growth. Undue regulation is a burden the UK can ill afford – either in substance or as an energy-sapping narrative about how the country works. But changes to regulators or regulations cannot make growth happen: at best they can enable growth, or avoid getting in its way.
Previous “two/three out, one in” initiatives to cut regulation have disincentivised even protections that are acutely necessary (as the Grenfell Inquiry found). Thankfully, the government is taking three different steps to align regulation with its growth agenda – as set out in an update on its regulatory action plan, published last month.
First, it is reviewing the landscape of regulators. Regulatory duties are being clarified and some mergers have already been announced – for example in water, where a single regulator will combine responsibilities currently shared between Ofwat, the Environment Agency and the Drinking Water Inspectorate. Selective streamlining is welcome, but reducing the number of regulators for its own sake in other areas would be a mistake: mergers can bring significant operational challenges.
Second, the government aims to reduce the administrative burden of regulation on business by 25%. This is not the same as reducing regulatory protections – the idea being, instead, to make the existing body of regulation easier to comply with. The quantitative target will help to drive progress, and lots is happening already, but it omits burdens in three key areas:
- The public sector: the impact of red tape on nurses, teachers and the police matters as much as that on private businesses.
- Tax compliance: businesses experience tax compliance as an administrative burden alongside other requirements.
- Devolved and local regulation: the 25% target should be adopted beyond Westminster too.
Third, the government aims to make regulators more supportive of innovation and growth. The Regulatory Innovation Office has reported good progress alongside the government’s update, but its sectoral focus is narrow, at least for now. There is work to do, too, on the proposed growth duty for regulators, particularly on how regulators should prioritise it relative to other objectives and on the feedback loops from regulators to government (in cases where growth-constricting regulation may be in statute rather than at regulators’ discretion, for example). The government will also need to map its growth strategy to the activities regulators oversee to ensure the drive for growth reflects a coherent theory of change in specific sectors.
The government is right both to focus on quick wins and to crowdsource more ideas through consultation, but the update is light on proposals to address the underlying cross-cutting complexity of regulatory structures and legislation. For example, the government could seek to:
- Standardise data collection and improve data sharing
- Combine functions and platforms across regulators
- Reduce the number of hand-offs between regulators and align “customer journeys” to activities rather than risks
- Standardise accountability and duties in a way that makes regulation easier to navigate and oversee
- Develop more consistent complaints processes across the regulatory landscape
- Routinise the way in which UK legislation is kept up to date as international standards change.
In these areas, neither the public nor those regulated are well placed to offer up suggestions from scratch. The government needs to do the initial thinking itself and then consult on the options.
This is an important missing piece in an otherwise potentially impactful package. But it is complex and diffuse work that would be hard to make politically attractive, and for DBT and Treasury ministers, who currently lead on regulation policy, it is not a core focus. The government should therefore explore how these gaps could be addressed outside central government – for example through broadening the catalytic remit of RIO, resourcing groups of regulators to co-develop solutions themselves, or by other means.
There is logic to the Department for Business and Trade and HM Treasury leading the current work, given its emphasis on growth. But some of the gaps – as well as the focus on business interests – reflect these departments’ wider priorities. If they retain responsibility for regulatory policy in the longer term, DBT and the Treasury must ensure their approach is comprehensive.
Matthew Gill is a programme director at the Institute for Government, where a longer version of this article first appeared. He leads the IfG's work on public bodies and regulation