Operation chainsaw or clear-eyed surgery: What is in the government’s plan to make regulation pro-growth?

Recent public discourse around regulation – red tape, chainsaws, and so on – has not been helpful. To some extent, the government is still playing to this: a press release ²⁶ HM Treasury, ‘Radical action plan to cut red tape and kickstart growth’, GOV.UK,17 March 2025, www.gov.uk/government/news/radical-action-plan-to-cut-red-tape-and-kickstart-growth  launching a new policy paper trumpets plans to “cut costly red tape” by “cracking down on complexity” as “more regulators are axed.” ²⁷ Ibid.  Thankfully, the substance of the paper is more thoughtful.

The paper, called a New approach to ensure regulators and regulation support growth, ²⁸ HM Treasury, ‘A new approach to ensure regulators and regulation support growth’, GOV.UK, 17 March 2025, www.gov.uk/government/publications/a-new-approach-to-ensure-regulators-and-regulation-support-growth  sets out plans to tackle the complexity and burden of regulation, clarify responsibilities across the regulatory system and reduce risk aversion among regulators. 

Its aims are both ambitious and familiar – and as successive governments have found, they are not easy to achieve. Citizens and businesses want both freedoms and protections. When regulators succeed, the absence of harm often goes unseen, but their failures are newsworthy. Add to this a constrained economic context and a public debate that too often frames regulation as impeding rather than enabling growth, and navigating a sensible path becomes fraught. But the government has made a thoughtful and substantial attempt.

A 25% burden reduction should be a yardstick of ambition, not a measure of success

The government has opted for a quantitative target to cut administrative costs for business by 25% in this parliament. Cutting “red tape” in this sense is not the same as cutting the overall regulatory burden, or the overall stock of regulation, by 25%. It should therefore avoid the pitfalls of one-in-two-out, which undermined the protections afforded to citizens – most notoriously in the case of high-rise cladding. ²⁹ Stanley M, ‘Grenfell tower: the role of civil servants before the fire’, civilservant.org, 2022, www.civilservant.org.uk/library/2022-Stanley-MHCLG_and_Grenfell.pdf, pp. 13ff  As the government recognises, there is no current measure of the administrative cost of UK regulation against which a 25% reduction can be measured. The baselining exercise itself therefore risks becoming burdensome and its outcome will surely be contested and imprecise. ³⁰ Shapiro S, ‘Counting regulations and measuring regulatory impact: a call for nuance’, Humanities and social sciences communications 11 (1463), 3 November 2024, https://doi.org/10.1057/s41599-024-03982-7

It will be important not to get lost in the calculations. ³¹ Reland J, ‘Less is more when it comes to cutting red tape’, UK in a Changing Europe, 19 March 2025, https://ukandeu.ac.uk/less-is-more-when-it-comes-to-cutting-red-tape/  What matters is that this target – which should include the tax administration that is many businesses’ main interaction with state bureaucracy – should provide a catalyst and incentives to achieve tangible improvements that the government can point to at the end of the parliament. Driving this change will require clear leadership across government, and potentially an independent check on progress. ³² Kingman J, ‘Better regulation depends on quality as well as quantity’, Financial Times, 24 March 2025, www.ft.com/content/d4563457-730d-4389-9b65-d5eb410f4736

As well as removing redundant or marginal regulatory protections, the target might be achieved by:

• better data sharing and use of AI to make regulation easier to comply with
• improving citizens’ and businesses’ experience of regulatory compliance; and
• simplifying rules in a way that achieves similar protections.

A cautious approach to structural change is right

Following the abolition of NHS England it is welcome that no major regulators have yet been culled. Large scale structural change is sometimes warranted, but it saps resource and management attention and does not always improve outcomes. It should be done very selectively.

In that light, the structural changes announced here are sensible consolidations in the spheres of financial services (the Payment Systems Regulator) company registration (the Regulator of Community Interest Companies) and labour standards regulation (the merger of various bodies to create the Fair Work Agency, as trailed before the election).

The government proposes to streamline environmental and planning regulation, measures which include identifying a lead regulator for major projects and reviewing how efficiently Natural England, the Environment Agency and others can then work together. 

There has been ongoing debate about the agencies in this area  and they will be in no doubt that more radical change could follow if these steps do not lead to faster construction of housing and infrastructure.

Many problems stem from legislation, not regulators

The government rightly identifies older prescriptive legislation as a constraint on health and safety regulators, but the problem is more general. The government should review the role of legislation for regulators more broadly, both to update it – regulators from the Financial Reporting Council to the Human Tissue Authority are governed by legislation that has not kept pace – and to identify where less prescription could enable regulators to maintain a flexible and up to date approach on an ongoing basis. Doing so requires political drive and a willingness to use scarce parliamentary time to implement reforms.

Recognising international approvals of chemical products to speed up their access to the UK market is also a strategy that could apply in other sectors – and should be considered case by case. But it is likely to only work one way: particularly since Brexit, manufacturers operating in international markets are less willing to adopt a bespoke approach to reflect divergent UK regulatory requirements (as was seen recently with Apple’s “advanced data protection” feature ).

Streamlining regulators’ duties could correct years of proliferation

The government is right to seek to streamline duties, objectives and quasi-objectives in utilities regulation. Institute for Government research has shown that clear duties make public bodies easier to manage, and that they can lose their way when objectives are unclear. 

But proliferation has occurred because government wants regulators to achieve more – net zero, growth, innovation – alongside their core missions. As duties are simplified, the government will need to think clearly about how these trade-offs, which will remain, are to be thought through, and who will be accountable for decisions. ³⁵ Kleinman Z, ‘Apple pulls data protection tool after UK government security row’, BBC, 21 February 2025, www.bbc.co.uk/news/articles/cgj54eq4vejo

Measures aiming to speed up regulatory decisions may also have unintended consequences. Will aspects of performance that have public targets be prioritised over aspects that do not? Will fast lanes, even if charged for, result in slower service for everyone else.

Innovators will welcome a less risk averse approach

To achieve the promise of AI, digital healthcare, biotech, quantum, and so on, the government identifies a need to avoid excessive risk aversion. That is a legitimate policy choice, and the approaches the government suggests, such as sandboxing, process acceleration and digital pathways, make sense. 

Nonetheless, the risks in some of these areas are real and must be kept under careful review. Regulatory decisions made – or not made – now will shape the future of AI in ways that may be hard to unwind. And experience shows that some innovations in the financial sector can lead to significant harms. 

But innovation can benefit the public too – despite occasional high-profile failures. Maintaining public trust even when things seem to be going wrong more frequently is a challenge that both politicians and regulators must be ready to face.

Some regulators have made specific pledges

The paper concludes with a list of specific pledges from individual regulators. They primarily relate to improving processes, increasing transparency and supporting users, including by digital means. But there are some potential reductions in protection too, including a review of contactless payment limits (FCA), increased reliance on self-regulation (Natural England) and flexibility to encourage new market entrants (Ofgem). The list builds on other work already announced by some regulators, for instance the CMA’s programme of work around what it calls the “4Ps” – pace, proportionality, predictability and process. ³⁶ Cardell S, ‘New CMA proposals to drive growth, investment and business confidence’, Competition and Markets Authority, 13 February 2025, https://competitionandmarkets.blog.gov.uk/2025/02/13/new-cma-proposals-to-drive-growth-investment-and-business-confidence/

This is a worthwhile package – but regulatory changes can only facilitate growth, they cannot deliver it. Expectations should not be artificially inflated. The government will need other ideas too. And it should remember that good and stable regulation can make doing business in the UK more attractive, not less: it enables fair and competitive markets and protects citizens against risk and harm.