Regulators will face twice-yearly performance reviews from ministers, aimed at forcing them to be more growth-friendly, as the chancellor warned that “too much bureaucracy” is holding back the economy.
Rachel Reeves met financial, environmental and health regulators in Downing Street on Monday and urged them to continue to streamline their approach, to make it more pro-business.
“There are a number of things over the last decade or so that have held back growth, and one of them – if we are honest and you know better than anyone – is the regulatory landscape,” said Reeves. “Too much overlapping regulation, too much bureaucracy, too slow to get things done.”
Treasury officials said regulators would now be asked to submit “key performance indicators” by June, and would then be hauled in for twice-yearly appraisal meetings with the relevant secretary of state to assess their progress.
As Reeves battles to kickstart growth after a string of disappointing economic data, the chancellor may also legislate to allow the competition watchdog to scrutinise fewer mergers.
The Competition and Markets Authority (CMA), whose chair the government forced out in January, is considering changing the threshold at which it would intervene in proposed takeovers.
This could mean increasing the market share that the merged companies would need to have to trigger CMA involvement from a current level of 25%.
George Dibb, associate director for economic policy at the IPPR thinktank, said: “Nobody’s disputing that we need companies to come and invest in the UK, and the way the CMA works is part of that. Where I think reforms are risky is if they start to affect the CMA’s ability to maintain competition in the economy.”
A spokesperson for the watchdog said: “The CMA continues to work closely with government to ensure the UK merger control regime is effective and proportionate.”
Speaking after her gathering with regulators on Monday, Reeves said she was pleased with the progress that City regulators the Prudential Regulatory Authority (PRA) and Financial Conduct Authority (FCA) have made in shifting the focus towards growth.
At her Mansion House speech in November, the chancellor suggested City regulation had gone too far after the 2008 global financial crisis and was stifling risk.
The government also said last week it would abolish another financial watchdog, the Payments Systems Regulator, folding it into the FCA.
As well as culling regulators, Labour is committed to reducing the number of arms-length bodies that implement government decisions, in an attempt to cut costs and improve accountability.
As well as big business, conservationists who want to rewild their land are also likely to benefit from the government’s drive to cut regulations.
Reeves and the environment secretary, Steve Reed, will remove the need for trusted partners – conservationists who have been working on nature schemes for some time – to apply to Natural England or the Environment Agency for permission to restore nature.
At the moment, conservationists who want to restore rivers or dig wetland areas have to apply to multiple regulators for approval, in what can be a time-consuming and costly process.
The Department for Environment Food and Rural Affairs (Defra) said the new plan will allow trusted nature conservation and environmental partners “to move fast on restoring nature without applying to multiple regulators for permissions”.
Jake Fiennes, director of conservation at the Holkham estate in north Norfolk said the current system makes it far too difficult to restore the rare chalk stream running through the national nature reserve, or to dig wetland areas for the many endangered wading birds which call the estate their home.
He said: “The flood risk activity permits are currently a disaster. Those of us helping deliver the government’s environmental targets are regulated to death while those committing freshwater ecocide do so with near impunity. It’s an opt-in policing system that penalises compliance and desperately needs reform.”
A Natural England source agreed that the system needed reform “The present regulations slow down good things as well as potentially harmful things. The fact is that our regulatory frameworks were designed to stop bad stuff happening (very important), but now we need approaches that are more about encouraging good things.”
