Making Smarter Regulation a Reality

By Jenna Tudor

“Brighter than expected” is how the Chancellor has described the UK economy in recent months. Ever since the Chancellor laid out his growth ambitions in the Autumn Statement, the UK has managed to narrowly avoid falling into recession.?This fact alone however provides little comfort to businesses seeking stability and long-term economic growth.

As businesses across key growth sectors have argued, and already recognised?within the Chancellor’s Edinburgh Reforms, we urgently need to create a regulatory environment that encourages investment if we are to truly kick-start economic growth.

In recent?years, the regulators and the regulated market in the UK have become increasingly fractured, whilst businesses are expected to generate growth, enable innovation, and protect consumers.?Many businesses are instead hampered by the competing?objectives of numerous regulators and arms-length bodies. Increasingly, regulators who have?considerable influence over vital economic and social?outcomes, from housebuilding to energy affordability, are?precluding rather than incentivising a healthy economy.?

Most business activities fall under more than one regulatory remit, and currently, there is a significant gap in how we hold regulators accountable, and scrutinise how these remits interact and often overlap with each other. Regulators often act in?silos, and lack the?strategic direction to take into account how regulatory decisions impact the wider economic lifecycle.

However, leaving?the EU provides a prime opportunity to create?a?more proportionate and democratically accountable regulatory system that equips the UK for the long-term challenges?ahead, and creates better outcomes for all. This week, the Regulatory Reform Group of Conservative parliamentarians launched its inaugural report, calling for a systematic evolution of the regulatory system to one that is focused on consumer outcomes and has democratic accountability at its heart.?

The group, supported by a business advisory council, has set out to identify the key issues impacting the wider regulatory system from?strained regulatory relationships between industry and regulators to?the need to build up greater skills and knowledge within regulators, whilst also?recommending mechanisms to?improve parliamentary oversight our regulators and?scrutiny of regulatory performance.

The group’s first report The Purpose of Regulation, which includes the input of business leads across key growth sectors, some of our major economic regulators and government, makes a series of recommendations, broadly supported by the Chief Secretary to the Treasury John Glen, and Economic Secretary Andrew Griffith, on how we can uphold the market-based principles that originally underpinned our regulatory framework and generate a more proportionate, smarter and more transparent regulatory system.

As Chair of the group's Business Advisory council, Tracy Blackwell, argued, “we need to be smarter about how our regulatory regime can best benefit the economy, communities,?households, and individuals across the country. As businesses, we really do need to ensure stability and growth?across the?entire economic cycle. This does not mean unwarranted criticism of individual regulators, or deregulation?for the sake of deregulation. But it also does not mean avoiding doing the right thing because of a culture in which?risk is seen as something to avoid, rather than manage.”

WPI Strategy acts as the secretariat for the group, and the full report can be read here.?