Chancellor hints at scrapping regulatory bodies to boost economic growth

During her discussions at the World Economic Forum in Davos, she highlighted that the current regulatory framework imposes "overlapping burdens" on businesses, which she argues detracts from their capacity to foster growth.

Reeves stated, “Every regulator, no matter what sector, has a part to play by tearing down the regulatory barriers that hold back growth. I want to see this mission woven into the very fabric of our regulators through a cultural shift from excessively focusing on risk to helping drive growth.”

She underscored the need to balance consumer protection with the encouragement of risk-taking in business.

The government has recently appointed Doug Gurr, a former Amazon executive, as the interim chairman of the Competition and Markets Authority (CMA), following the resignation of Marcus Bokkerink. Reeves noted that Gurr aligns with the government’s strategic direction regarding economic growth.

She remarked, “He recognised that this government has a different strategic approach when it comes to regulation.”

Labour has reached out to over 100 regulators, asking them to develop plans that support the government’s main objective of stimulating economic growth. At a recent meeting, key regulatory figures were instructed to eliminate regulatory barriers hindering progress in various sectors, including rail, water, energy, and aviation.

Commenting on the proposed changes, Andrew Griffith, the Conservative shadow business secretary, voiced skepticism, equating the idea of regulators spearheading growth to "asking the village Speedwatch to organise the next British Grand Prix."

The UK currently hosts more than 116 regulatory authorities, which include well-known bodies such as the Environment Agency and the Financial Conduct Authority (FCA). These organisations operate with dual funding from industry levies and public finances and collectively employ over 20,000 individuals.

Concerns regarding the impact of relaxing regulations were echoed by Nikhil Rathi, FCA chief executive. He warned that loosening financial regulations to spur growth could lead to increased risks, including a rise in home repossessions and issues related to money laundering.

Rathi emphasised the necessity for political coherence on what level of risk is deemed acceptable, noting the complexities involved in balancing regulatory compliance and economic flexibility.

Ashley Alder, chairman of the FCA, acknowledged the historical challenges faced by the authority in responding to conflicting external expectations and expressed hope for a constructive debate that could clarify the FCA’s role and operations going forward.