Insights from Conference: The view from the fringe – a pro-business and pro-growth approach to regulation?

In her speech at the Conservative Party Conference, Prime Minister Liz Truss proclaimed that “by the end of next year, all EU-inspired red tape will be history.”[1] Instead, she said, the Government “will ensure that regulation is pro-business and pro-growth.”

The speech reiterated commitments made during her leadership campaign to move faster than the previous administration in repealing EU laws, by means of the Retained EU Law (Revocation and Reform) Bill. Speaking about the Bill in the main hall, newly appointed Business Secretary Jacob Rees-Mogg told the party faithful that it is a “fantastic piece of legislation” that would “prise the dead hand of the EU from our statute book once and for all”.

Rees-Mogg went on to reaffirm that the Government is committed to taking “even more businesses out of the clutches of overbearing regulation”, and, for Truss’s government, regulatory reform seems to have a twofold purpose. Firstly, it is hoped that deregulation can be used as an economic lever, acting to drive competition, support innovation, and contribute to the overarching aim of promoting economic growth. Secondly, there is a strong political desire to demonstrate the benefits of Brexit, and to show that the UK is moving away from EU-derived concepts of regulation.

Of course, Government promises to cut red tape are nothing new. From the Coalition’s ‘Red Tape Challenge’ to the 2019 Conservative manifesto, successive administrations have pledged to remove burdensome regulation. Truss’s Cabinet appear to want to go further than their predecessors, but, speaking at fringe events over the course of the four-day conference in Birmingham, politicians were divided over exactly how this would be achieved.

At an event entitled Levelling up or left behind: What role should regulators play?, panel members voiced anxiety about regulators being expected to help achieve political ambitions. Former Chair of Ofcom, Dame Patricia Hodgson, warned ministers against asking regulators to bring about policy aims such as levelling up or driving economic growth. She emphasized that regulation is, above all, for the protection of consumers, and this sentiment was echoed by Paul Scully MP, Minister in the Department for Levelling Up, Housing and Communities, and Minister for London. While reiterating that “levelling up is at the heart of what we’re doing in government”, Scully also cautioned against regulatory “mission creep”. He noted that good regulation which protects consumers is a confidence booster in itself. Done right, it is good for consumers and for businesses, helping to create markets and build a consumer base.

Discussing the regulation of financial services, Bim Afolami, MP for Hitchin and Harpenden, was more bullish about the role regulators could play in contributing to Government ambitions. At an event on the question Can the City seize the opportunities of Brexit?, Afolami felt that the Government should be considering any proposal that could help boost productivity. However, he also argued that regulators had been given more powers without a corresponding increase in accountability. He suggested that regulatory accountability is limited to appearing before a select committee a few times a year, and that this is insufficient.

Gareth Davies, MP for Grantham and Stamford, told the event that reform of financial regulation is needed to encourage firms to grow and remain in the UK. He stated that, without reform, the New York Stock Exchange would continue to “eat our lunch”, by luring British companies to the US. Meanwhile, Afolami singled out GDPR as being a particularly “damaging” and overly burdensome form of regulation, saying it inhibits sensible business activity. At the same time though, he noted that recent policy announcements, including the removal of the cap on bankers’ bonuses, may have “poisoned the well” for further meaningful deregulation. He highlighted the Chancellor’s U-turn on scrapping the 45% tax rate as a demonstration of how the Government is struggling to balance its commitment to competitiveness against political realities and public outcry.

Perhaps because of the public reaction to the Chancellor’s so-called mini-budget, there were relatively few significant policy announcements at Conference. The Government did, however, bring forward a change to the definition of small and medium sized enterprises to include businesses with up to 500 employees. This is intended to lift many smaller firms out of certain regulatory requirements, including non-financial reporting rules. But, while this may reduce costly burdens for some businesses, it perhaps falls short of the Business Secretary’s stated aim of “freeing the British economy” as part of the Government’s “tireless quest for productivity”. With a general election looming, the Prime Minister will likely want to accelerate reform if she is to realise the goal she set in her conference speech to “get Britain moving”.

[1] During the speech, Truss actually said ‘by the end of this year’, seemingly bringing the deadline forward from her previously announced deadline of the end of 2023. However, the official transcript reads ‘next year’, and No 10 later confirmed that the deadline remains the end of 2023, echoing what had been announced by Truss during the leadership campaign.

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