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Chancellor Rachel Reeves will this week step up pressure on UK regulators to scrap anti-growth rules, amid renewed criticism from businesses that the government is only making the situation worse.
CBI chairman Rupert Soames said on Monday that businesses were being “bruised” by government policies and that new employment regulations would hamper growth and lead to job losses.
Labour’s election platform contained promises to regulate a range of areas from the workplace to football. The government’s impact assessment of its workers’ rights program estimates it will cost businesses £5 billion a year.
Downing Street insists that there is no contradiction between its desire for deregulation and its determination to introduce new rules in certain sectors.
“There needs to be a balance when it comes to regulation,” Number 10 said, arguing that legislating for better rights in the workplace would help create a more productive workforce.
But a spokesperson for Prime Minister Sir Keir Starmer added: “The Government will unapologetically take a pro-growth approach. We will work with regulators to eliminate rules that unnecessarily inhibit growth.
Reeves’ allies say the chancellor will “call on” some of Britain’s top regulators to get that message across on Thursday, as she tries to prove she has an agenda to shake Britain out of its growth lethargy.
Some business leaders aren’t convinced. Soames told the BBC that the government’s reforms to “make work pay” would force companies to lay off workers and create “an adventure field for employment rights lawyers”.
“I think not only will they not hire, I think they will let people go,” he said. “I think there could be a pretty horrible rush before some of these things come into effect.”
Business groups accuse ministers of introducing excessive bureaucracy as government bans exploitative zero-hours contracts, ends ‘fire and rehire’ tactics, introduces fundamental rights from day one and protects workers from unfair dismissals.
Labor’s manifesto also included “increased registration and reporting requirements” for businesses, and pledged to introduce “binding regulation” for companies developing artificial intelligence.
Ministers pledged to “take decisive action to improve building safety, including through regulation”, following the Grenfell Tower fire.
The Starmer government is creating a new independent regulator to ensure the financial viability of football clubs. The Treasury said new regulation of “buy now, pay later” businesses would support growth in the sector and protect consumers.
Reeves says that while Labor will not hesitate to adopt necessary new rules, it believes regulators need to review existing rules and adopt a whole new culture around risk.
In her Mansion House Speech In November, the Chancellor told watchdogs: “The UK has regulated for risk, but not for growth. »
Starmer, Reeves and Jonathan Reynolds, the business secretary, wrote to 17 watchdogs on Christmas Eve asking them to identify pro-growth proposals. Thursday’s meeting at Treasury aims to assess progress.
The first tranche of regulators to come through the door will include Ofwat, Ofcom, Ofgem, the Environment Agency and the Office for Rail and Roads, as well as the Competition Authority and markets.
The CMA is particularly in the sights of Reeves and Starmer. “They are the ones who often come up in discussions with businesses,” said an ally of the Chancellor.
The CMA published its annual plan on Monday, which used the word “growth” 111 times, as the regulator attempted to show the government it was delivering on its mandate.
The agency has been at pains to emphasize that this is not a new approach, specifying in the plan that this is the “third year” it has pursued such a strategy.
The watchdog also announced it had set up a “growth and investment council” with bodies including the CBI and the British Chamber of Commerce “to help identify competition opportunities to unlock growth and investment”.
In October, Starmer told around 200 senior leaders that the government “will ensure that all regulators in this country, particularly our economic and competition regulators, take growth as seriously as this room”.
That attention stems in part from the CMA’s handling of Microsoft’s $75 billion acquisition of Activision Blizzard, which the agency ultimately approved in 2023 after initially controversially blocking the deal.
The pressure comes as the new competition regime for digital markets comes into full force this month, which will affect large technology companies seen as having an outsized impact in certain digital activities.
Reeves’ allies say she wants to work with watchdogs, including encouraging them to challenge an entrenched culture where ministers “call for more regulation every time something goes wrong”.
“Rachel wants them to turn around and say ‘this isn’t our problem, it’s a political problem – it’s up to you to fix it,'” one person said. “She wants a challenge from regulators.”
