Policy paper

Smarter regulation: delivering a regulatory environment for innovation, investment and growth (HTML executive summary)

Published 16 May 2024

This is an executive summary. You can read the full smarter regulation: delivering a regulatory environment for innovation, investment and growth white paper in PDF format.

Presented to Parliament by the Secretary of State for Department for Business and Trade by Command of His Majesty.

May 2024

CP 1089

ISBN 978-1-5286-4924-7

© Crown copyright 2024

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The UK regulatory landscape requires improvement to encourage innovation, investment and growth

• the UK’s regulatory landscape is frequently held up as an example of international best practice. However, billions of pounds of regulatory costs have accumulated piecemeal on businesses, with some studies suggesting that the impact of red-tape costs could be as high as 3 to 4% of GDP, or £70 billion in 2023 prices.^{[footnote 1]} 45% of all businesses see regulation as a burden on their success.^{[footnote 2]} They are also increasingly telling us that the regulatory landscape is too complicated, slow and burdensome, with over 100 bodies involved in regulation and limited clarity on roles and responsibilities. This is not good enough

• if the UK economy is to grow and we are to create the technologies that will allow us to improve our productivity, we need to review how regulations are made and administered in the UK. We also have a unique opportunity, following our departure from the EU, to set our own rules and standards, and do it in a way which allows businesses to flourish, investment to grow, and innovation to thrive

• systemic reform is required; this is about instilling a culture of world-class service in how regulators operate, as well as improving guidance, duties, and accountability. It also requires greater collaboration between regulators and government, to deliver the best outcomes possible. Finally, it is up to the government to better assess its regulatory agenda, to try to understand the cost of its regulation on business and society. That is the purpose of this white paper – it is not about reducing regulatory safeguards, environmental standards or consumer protections, which are a core element of well-designed regulation

• for the first time, the government is defining what a regulator is. To ensure that regulators are transparent in how they are meeting the Growth Duty^{[footnote 3]}, we are also setting standards for regulators reporting on economic growth, introducing clearer measurements of the cost of regulation, and setting the tone for how all who are involved in regulation – be they government, regulators or other bodies – should adhere to the highest quality of service.^{[footnote 4]}

A culture of a world-class service

It is essential that regulators adopt a ‘service’ mindset in how they undertake their day-to-day activities. The government is introducing:

• 10 Principles of smarter regulation to achieve a world-class service
• clear monitoring by ministers of how regulators apply these principles and the outcomes delivered
• for the first time, a register of regulators that will be published, as part of our ambition for a ‘one stop shop’ of regulatory information
• a ‘Share Once Support Register’ to ensure extra help is available to consumers when they need it
• a holistic assessment of infrastructure investment needs in energy networks, water and telecoms

Getting the fundamentals right on guidance, duties, and accountability

• for the first time, the government is introducing a Growth Duty Performance Framework. This will encourage that regulators to be transparent about how they are encouraging innovation, investment and contributing to economic growth^{[footnote 5]}
• the government will launch a Regulators Council to improve strategic dialogue between regulators and government, alongside monitoring the effectiveness of policy and strategic guidance issued

Government leading by example, to further support regulators

• all government departments must adopt the 10 Principles of smarter regulation
• all government departmental annual reports must also set out the total costs and benefits of each significant regulation introduced that year
• we will further strengthen the role of the Regulatory Policy Committee and the Better Regulation Framework, improve the assessment and scrutiny of the costs of regulation, and encourage non-regulatory alternatives

1. Regulatory costs as a percentage of GDP from Better Regulation Task Force 2005 report ‘Regulation - Less is More’: Regulatory costs as a percentage of GDP, 2005 (accessed 7 May 2024). This report drew on studies from the Netherlands and the US, which suggested the total costs of regulation on the economy were 10 to 12% of GDP, with 30% of these costs being administrative - and assumed this relationship would hold for the UK. This study is 20 years old and there could be a high degree of variability between countries, including the UK. In the absence of a more recent study specifically looking at the UK, this is the best estimate available of this specific cost. The £70 billion figure is based on applying these percentages to 2023 GDP figures (ONS chained volume measures, seasonally adjusted) and therefore makes the additional assumption that this relationship, if correct, would still hold today ↩

2. Department for Business, Energy and Industrial Strategy, ‘Business Regulation: Business Perceptions Survey 2022’, 2023 (accessed 7 May 2024). Question C2: To what extent do you agree or disagree that the overall level of regulation in the UK is an obstacle to your business’s success? 45% agree, 25% disagree, 28% neither, 2% don’t know ↩

3. Statutory guidance on growth duty applies to regulators in scope of the Growth Duty ↩

4. In the context of a regulator of business activity, rather than wider forms of regulation. This is a bespoke definition for the purposes of this white paper. It is not a legal definition ↩

5. This applies to regulators in scope of the Growth Duty ↩