Labour Unveils ‘Radical’ Regulatory Overhaul to Boost Investment

Reforms to regulatory landscape aim to boost Britain’s global competitive leadership.

Chancellor of the Exchequer Rachel Reeves during a press conference following her statement to the House of Commons on the findings of the Treasury audit into the state of the public finances in London, on July 29, 2024. Lucy North/PA Wire

The government has announced a “radical” overhaul of UK industry regulation, to include scrapping some regulators, easing some environmental planning restrictions and streamlining funding applications for entrepreneurs.

Currently there are over 100 regulatory bodies in the UK. Official data shows that in 2023-2024, 17 regulators has a gross annual expenditure of £5.4 billion.

Labour wants to simplify regulation and cut administrative costs for business by 25 percent by the end of Parliament. According to Chancellor Rachel Reeves, red tape reforms will boost to economy and “put more money into working people’s pockets.”

“Today we are taking further action to free businesses from the shackles of regulation,” Reeves said in a statement, ahead of her meeting with eight watchdogs at Downing Street on Monday.

New Measures

In addition to scrapping NHS England, the government’s action plan includes the move to merge the Payment Systems Regulator (PSR) into the FCA to simplify regulation. This is meant to address business concerns about dealing with multiple regulators, which they say adds unnecessary costs and delays.

Following weeks of negotiations, the FCA alongside other regulators, have agreed to implement a series of new measures to boost growth.

The FCA will assess whether the current £100 limit on contactless payments should be revised and will make it easier for homeowners to remortgage with new lenders, reducing mortgage terms. It will also simplify funding applications for entrepreneurs.

Other measures include fast-tracking new medicines, a new ‘concierge service’ to help overseas investors navigate UK regulations and delivery drone trials.

The Civil Aviation Authority will greenlight at least two large-scale drone trials to reduce medical sample transport times.

Ministers also seek to simplify environmental regulations for major projects like the Lower Thames Crossing and potentially Heathrow expansion. The new system will provide a single point of contact, eliminating the need for developers to seek approvals from multiple authorities.

Friends of the Earth campaigner Sienna Somers said it would be “incredibly short-sighted, and also rather desperate, for the Chancellor to weaken environmental rules.” She added that the move will deepen the “environmental harms seen across the UK.”

However, Business Secretary Jonathan Reynolds said the overhaul will remove “unnecessary regulation” that chokes competition and stifles business.

Among those summoned to meet with Reeves and discuss cuts to regulation costs are the Financial Conduct Authority (FCA), the Environment Agency and Medicines and Healthcare products Regulatory Agency (MHRA).

The meeting follows the abolition of NHS England last week and ahead of her Spring Statement on March 26. With less than ten days until the Spring Statement, the government is keen to “turn around the poor performance of more than a decade.”

It comes as January figures showed a 0.1 percent fall in GDP, amid a sharp decline in the manufacturing sector. The Treasury suggested that red-tape costs could be as high as 3-4 percent of GDP, or around £70 billion.

Business Chiefs React

Business leaders welcomed the government’s latest announcement on regulatory reforms, praising efforts to cut red tape and boost investment.

Shevaun Haviland, director general of the British Chambers of Commerce, called the reforms a “real potential” game-changer for businesses.

She particularly welcomed plans to fast-track the Lower Thames Crossing and Heathrow expansion. With firms facing rising costs, she noted that a 25 percent reduction in regulatory expenses would provide much-needed relief, she said.

Rain Newton-Smith, CEO of the Confederation of British Industry, described the UK’s regulatory framework as a “Gordian knot” hindering investment. She stressed the need for smart regulation to restore the UK’s global competitiveness.

In its latest forecast, the Organisation for Economic Co-operation and Development (OECD) cut its predictions for UK growth in 2025 from 1.7 to 1.4 percent, and from 1.3 to 1.2 percent in 2026.

Commenting on the figures, shadow chancellor Mel Stride said that Labour’s taxes and trade union red tape were preventing businesses from focusing on growth.

“The Chancellor has 9-days until her emergency Budget. An absolutely critical opportunity for her to recognise her mistakes, put the country first and undo the damage of her making,” he said.

“For as long as businesses remain under the strain of Labour’s taxes and trade union red tape, they will be unable to focus on the priority of growth,” he added.

Cabinet ministers are due to report back to Reeves this summer with further proposals to simplify the regulatory landscape.

PA Media contributed to this report.