Responsibility for regulatory reform policy should return to the Cabinet Office as part of a sweeping overhaul of the state's approach to regulation, a new report argues.
The Re:State think tank report, The Law of Rule: Fixing how Britain regulates, warns that regulation is “too often the default response to policy problems, with limited consideration of alternatives”.
It says Whitehall is often characterised as slow, bureaucratic and process-driven but argues that the opposite is true when it comes to policy development.
“Regulation is often an easy option for governments to implement, compared to other levers at their disposal, including primary legislation, investment and spending, or reprioritising capacity within public sector workforces,” the report says. “Indeed, regulation may be over-used compared to other instruments precisely because of how comparatively easy it is to implement.”
Re:State said interviewees for the paper told the think tank that options assessments, produced to determine the best course of action, are often produced retrospectively to justify a decision to regulate.
The think tank also noted that since 2022, a quarter of all departmental impact assessments, used to lay out detailed analysis of regulatory policies, have been rated "weak" or "very weak" by the Regulatory Policy Committee, with "no repercussions".
The report says the UK’s regulatory system is “neither irreparably broken nor at the frontier of best practice”.
“It is the product of decades of incremental change and reactive reform, shaped more by political urgency than by a coherent theory of how regulation should be made, maintained and retired,” Re:State says. “The result is a system that performs poorly where it matters most: in making trade-offs, learning from failure, and adapting to changing economic and social conditions.”
The report says successive governments have sought to address these problems through periodic reform drives and deregulatory exercises, but “none have reversed the long-term tendency for regulatory burdens to accumulate”.
“Without changes to leadership, accountability and process, such initiatives are destined to fade, leaving the underlying dynamics unchanged,” the report argues.
Re:State says the answer is not another “bonfire of red tape” but instead “the UK needs a stronger and more focused centre for regulatory reform, alongside a more powerful better regulation watchdog with a broader remit and stronger powers”.
To re-establish clear ownership of regulatory policy at the centre of government, the report recommends returning responsibility for regulatory reform policy to the Cabinet Office.
It says relevant responsibilities and headcount would move from the Department for Business and Trade (the Regulation Directorate; the Regulatory Policy Committee and its secretariat) and the Department for Science, Innovation and Technology (the Regulatory Innovation Office), with regulatory reform led by a dedicated Cabinet Office minister.
Following this transition, it says the Cabinet Office should lead a cross-government process of establishing regulatory budgets for each sector, and require departments to stick to agreed budgets.
The report also calls for permanent secretaries to submit annual letters to the RPC setting out how departments have addressed issues raised by the committee and how the quality of regulatory analysis has improved.
“Persistent underperformance, against standards agreed by the RPC and the Cabinet Office, should trigger a formal improvement plan subject to RPC comment and central oversight,” the report adds.
To bolster the RPC’s powers, the report says the government should legislate to put the watchdog on a statutory footing, which would include a requirement for the government to consult the RPC on regulatory provisions, and for their resulting independent appraisal of impact assessments to be laid before parliament.
The report makes 19 recommendations in total to “shift the UK from a reactive, accumulation-prone regulatory state to one that is disciplined, transparent and self-correcting”.
It says these reforms would see regulatory policy treated as “core economic infrastructure, subject to serious trade-offs and long-term planning”.
“Regulation would remain a powerful and legitimate tool of government, but one deployed with greater clarity of purpose and accountability for outcomes,” the report says.
The report includes forewords from Treasury Committee chair and Labour MP Meg Hillier, shadow chancellor Mel Stride, and Daisy Cooper and Richard Tice, the respective deputy leaders of the Liberal Democrats and Reform UK.
Hillier says the reforms set out in the report "chime" with her experience of the "haphazard way many regulations are introduced" and offer a "manageable programme for the government to deliver". Stride calls the report "a vital contribution to improving regulation for business and consumers". Cooper says it is "extremely well-timed and thoughtful, and offers a compelling diagnosis of many of the deep-seated problems that limit British regulation’s effectiveness". And Tice says the report "rightly focuses attention on how we can build a system that enables growth rather than holding it back".
Re:State director of strategy and report co-author Joe Hill said: “The regulatory ratchet is holding back business, destroying growth and standing in the way of public priorities like house building and job creation. Successive governments promise to reduce the burden, but while red tape challenges are a useful spring clean, they do nothing to curb the Whitehall instinct to reach for regulation as an easy option.
“The bar for introducing regulation must be higher, with a full analysis of costs, an understanding of the cumulative impact on sectors, and serious scrutiny. Regulation should protect businesses and consumers, yet it’s plain to see that right now it's acting against the interests of both.”
CSW has approached DBT for comment.