Regulatory reform: systemic thinking, not tinkering

The government seems genuinely to care about the state working well. And, it still has the time – and the parliamentary majority – to make real changes to help it do so. If there was ever a moment for a positive vision for regulatory reform that goes beyond a bonfire of the quangos or a chainsaw to red tape, it is now. 

The action plan ⁷ 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  is a positive start, and much is already happening. The upcoming industrial strategy and sector plans will move this agenda forward, as will industry-specific initiatives in utilities, environment, financial services and more. But as this policy landscape develops, the government should also take the opportunity to clarify – and simplify – how the various elements of the UK’s regulatory system can work together well.

Tinkering will deliver neither major burden reductions nor major cost savings

The catalyst for reform is the government’s target to reduce the administrative burden of regulation on business by 25%. ⁸ 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  It seeks cost efficiencies too. It is helpful to have a public target: individual regulators can achieve some of this and clear political pressure to meet the target can encourage them to do so. But many burdens of regulation have developed gradually as bespoke legislation, processes or even newly created regulators have responded to individual risks. 

Making this landscape more coherent, and so less burdensome and costly, will require co-ordinated action in such areas as:

• Data sharing and interoperability – making data transferrable between regulators in a form each can use – could reduce both the frequency with which businesses must provide the same information and the number of hand-offs between regulators.
• Standardised operations could enable back-office functions and regulatory platforms to be combined, particularly among smaller regulators or those in adjacent fields. This could make it easier for regulators to collaborate, benchmark performance against each other, and be reconfigured when necessary – as well as standardising the ways in which businesses experience their interactions with regulators.
• Guided “customer journeys” could help businesses to more easily determine which regulations apply to particular activities (for example setting up a restaurant could involve food safety, licensing and employment regulations and more). For more complex, high-value activities, government is already developing concierge services to help navigate the relevant rules (through the Regulatory Innovation Office, Office for Investment and some regulators).
• Standardising oversight and accountability – already planned in some areas – could make it clearer what government expects of regulators and how their duties, powers, objectives and strategic steers interrelate, driving a knock-on simplification of how businesses experience regulation too.
• Streamlining legislation could make it easier to keep regulation up to date as well as clarifying – and where appropriate standardising – duties and powers. Legislation is resource-intensive, so this would need to be done selectively and with a view to delegating future decisions where possible. Many regulators will have a ready knowledge of deficiencies to their own legislation that could inform this work.
• Overhauling complaints processes could help smaller businesses and individuals, in particular, to appeal regulatory decisions.

The government should set out options for systemic reform

Some of these options will be harder to implement than others. Their cross-cutting and technical nature also means that government itself may be best placed to set out a hypothesis, for public consultation, as to what might work. 

While many of these issues are specific to regulation, reforms to data sharing and standardised operations, in particular, could improve the operation of any public body, not just a regulator. It will therefore be important to triangulate proposals for regulatory reform with broader thinking about more general reform to the public bodies landscape.

The government’s vision for regulation should not merely focus on burden reduction and cost savings. That the protections each regulator achieves should remain its core focus goes without saying, but even from a growth perspective, burden reduction and efficiency is only part of the picture. Once the upcoming industrial strategy is published, government will need to connect the specifics of its growth priorities – such as around clean growth, regional growth, investment – to how regulation can help deliver them.

The government is not yet well organised to achieve its aims

The chancellor is currently driving the regulatory reform agenda, and civil servants are endeavouring to enable all departments to pull in the same direction. But the current structure doesn’t make this as easy as it could be.  

While there is a small but growing team at the Treasury, most civil servants working on regulation policy are in the Department for Business and Trade (DBT), where accounting officer responsibility formally sits. The Cabinet Office is largely absent from regulation but leads on public bodies policy – albeit with limited levers over delivery departments.

This is messy. At the very least, political decision making should be better aligned with civil service responsibilities and resource. This could be most simply achieved by either moving decision making to DBT – counterintuitive given the chancellor’s keen interest in growth – or moving more of the key policy civil servants working on regulation to the Treasury.

The Treasury has clout, and its growth mission is a top government priority. Regulation policy being in DBT has, however, tended to encourage a focus on economic regulation over, for example, safety or professional regulation, and a move to the Treasury would be unlikely to solve that.

If the Cabinet Office were to take on regulation policy – as it has in the past – that would not only ensure that the full regulatory universe was considered but would also enable better alignment and integration with public bodies policy. But the government rightly wants to reduce the Cabinet Office’s size, which sets a high bar for widening its remit. 

Ultimately change must be driven from the centre

This dilemma reflects a broader, unresolved question of how to drive and co-ordinate cross-cutting priorities from the centre of government. Whatever course is chosen in this case, effective cross-government alignment will be key. Experience of the many iterations of regulation policy teams in government has demonstrated that clear, sustained and co-ordinated ministerial drive, including from the centre, will be required to achieve change.

Without this, responsibilities could remain confused and a once in a generation opportunity for thoughtful reform – for which many of the building blocks are already being put in place – could still be fumbled.