4th Report - Regulating for growth

HM Treasury will not know if the Action Plan has been successful, as it has not defined growth in any detail beyond an increase in GDP. We do not believe HM Treasury is clear on what success or failure of … Read more HM Treasury will not know if the Action Plan has been successful, as it has not defined growth in any detail beyond an increase in GDP. We do not believe HM Treasury is clear on what success or failure of the Action Plan looks like. HM Treasury defined growth as an increase in GDP but has not defined the intended timeframe or set any targets. DBT and HM Treasury failed to demonstrate how regulation contributes to key drivers of GDP growth in their evidence. They did not speak to drivers such as trade and investment, or the clear need to see productivity improvements in regulated entities. These omissions matter, since government needs to be clear on 3 what growth it is seeking to deliver and when. Without this, HM Treasury’s definition of growth amounts to an ambiguous objective rendering success impossible to measure. While short-term growth might mean cutting prices in some areas, longer-term growth could require price increases to encourage investment. Select committees can play a role in holding regulators accountable for shifting the dial on growth, but it is ultimately up to DBT and HM Treasury to implement robust accountability measures to ensure regulators’ work increases GDP. recommendation HM Treasury should establish a time horizon for growth targeted by the Action Plan, including supplementary indicators (such as investment, the costs associated with investment in different sectors, and productivity). This would establish if the Action Plan is influencing factors that increase GDP and by how much. Show less

It can be burdensome, complex and difficult for businesses to navigate and cooperate with multiple regulators across government. Businesses can face challenges when they must deal with multiple regulators due to gaps, overlapping jurisdictions and trade-offs in regulation. We heard … Read more It can be burdensome, complex and difficult for businesses to navigate and cooperate with multiple regulators across government. Businesses can face challenges when they must deal with multiple regulators due to gaps, overlapping jurisdictions and trade-offs in regulation. We heard that some departments are trialling a ‘lead regulator model’ in certain sectors. HM Treasury highlighted the Nuclear Regulation Taskforce recommendation for a lead regulator, which the government has accepted. The Department for Environment, Food and Rural Affairs (Defra) has also been using the new model following the Corry review, with a lead environmental regulator for the lower Thames crossing. In comparison, government expects to create a new single water regulator following the Cunliffe review, and the Payment System Regulator’s merging into the Financial Conduct Authority was instigated in the Action Plan. recommendation DBT should put in place arrangements to review how effective the different regulatory delivery models are, using the findings to improve the wider UK regulatory landscape and inform consideration of merging regulators. Such arrangements must include feedback from industrial sectors and consumer groups. Show less

DBT and HM Treasury do not have a grasp on which regulatory interventions they should prioritise to achieve the administrative burden reduction target. We know from past interventions that a small number of measures account for a significant proportion of … Read more DBT and HM Treasury do not have a grasp on which regulatory interventions they should prioritise to achieve the administrative burden reduction target. We know from past interventions that a small number of measures account for a significant proportion of savings and costs to businesses. We are concerned that savings identified to date are much smaller than needs to be achieved. DBT alluded to the new Planning and Infrastructure and Corporate Reporting Bills. These are expected to 4 deliver £460 million in savings in total. This is clearly well below the £5.6 billion target, and could be offset by costs generated by other pieces of legislation. Departments will submit annual simplification plans identifying areas for improvement and DBT is supplementing this with engagement with businesses. However, a year on from the Action Plan’s launch the Unit is still waiting for these plans to be submitted. recommendation This Autumn the Unit should publish a table of the interventions each department will prioritise to achieve the annual administrative burden reduction target and the expected reduction. It should then update it annually. Show less

HM Treasury and DBT do not have a robust plan to achieve the 25% reduction in the administrative burden. In the absence of individual targets for departments and regulators, the Unit relies on departmental annual simplification plans to monitor progress … Read more HM Treasury and DBT do not have a robust plan to achieve the 25% reduction in the administrative burden. In the absence of individual targets for departments and regulators, the Unit relies on departmental annual simplification plans to monitor progress against the target. The Unit intends to publish analysis of the first set of these plans in spring 2026. HM Treasury announced that it identified the potential for £1.5 billion of administrative burden savings in October 2025, but this is a gross figure. The planned spring update will therefore be the first time the Unit reports on progress against the £5.6 billion net target. If this update shows the target is off-track, the Unit lacks strong accountability measures to hold departments to account. Savings under the Business Impact Reduction Programme (2015–2023) were scrutinised by the Regulatory Policy Committee. No such independent validation is planned for the Action Plan target. Instead, validation will be provided by departmental Chief Economists. This process has not yet started. recommendation a. The Unit should introduce milestones and regular progress reporting, to hold departments to account, and report annually to Parliament. Cost savings should be independently validated. b. Alongside the information specified in recommendation 4, the Unit should monitor expected increases in the administrative burden arising from new legislation. This should be published, by department, and updated annually. This would enable transparency as to whether government is on track to meet its net reduction target of £5.6bn. Midway through the programme, if the Unit deems the programme to be off track, it must allocate administrative burden targets to departments. 5 1 Regulating to support growth Introduction Show less

On the basis of a report by the Comptroller and Auditor General (C&AG), we took evidence from the Department for Business and Trade (DBT) and HM Treasury on the government’s efforts to ensure regulation supports growth.1

Regulators must balance different objectives and duties when they exercise their functions. This means that they balance risks and manage the associated trade-offs. In practice, this may involve accepting a higher level of risk in some areas based on potential … Read more Regulators must balance different objectives and duties when they exercise their functions. This means that they balance risks and manage the associated trade-offs. In practice, this may involve accepting a higher level of risk in some areas based on potential benefits in others. For example, a decision by financial regulators to relax affordability standards for mortgages could help more people purchase a home, but would mean 6 C&AG’s report, Figure 2 7 C&AGs’ report, para 1.6 8 Committee of Public Accounts, Regulating for growth - Committees - UK Parliament 7 accepting a higher risk of home repossessions and consumer distress.9 HM Treasury called for regulators to be less risk averse in the March 2025 Action Plan.10 Show less

We asked HM Treasury for examples where increased risk appetite could deliver growth but did not get a satisfactory answer.11 HM Treasury told us that macroeconomic stability is important for the Chancellor’s growth goals, which is self-evident, but did not … Read more We asked HM Treasury for examples where increased risk appetite could deliver growth but did not get a satisfactory answer.11 HM Treasury told us that macroeconomic stability is important for the Chancellor’s growth goals, which is self-evident, but did not link this back to regulation. It also explained that government and regulators were working to simplify and streamline reporting requirements for businesses, and are introducing a lead regulator model in some sectors.12 Show less

Having asked regulators to be less risk averse, a year after the Action Plan, neither DBT nor HM Treasury have articulated what level of risk appetite they expect regulators to work within. Without this, regulators cannot know what levels of … Read more Having asked regulators to be less risk averse, a year after the Action Plan, neither DBT nor HM Treasury have articulated what level of risk appetite they expect regulators to work within. Without this, regulators cannot know what levels of risks government is willing to accept, and may be unable to act in accordance with government policy objectives.13 We received written evidence submissions which made the same point.14 Show less

The departments explained that the joint unit responsible for delivering the Action Plan relies on sponsor departments to communicate risk appetite and growth steers through strategic policy statements for the Action Plan’s 16 key regulators.15 DBT told us that work … Read more The departments explained that the joint unit responsible for delivering the Action Plan relies on sponsor departments to communicate risk appetite and growth steers through strategic policy statements for the Action Plan’s 16 key regulators.15 DBT told us that work to ensure all 16 key regulators have steers is ongoing, but to date only the three initially announced in the Action Plan have been completed.16 These are the steers issued by DBT to the Competition Market Authority, and two issued by Defra to the Environment Agency (EA) and Natural England (NE). HM Treasury highlighted the EA and NE steers as examples which help regulators to balance objectives.17 This is true, however, neither prioritise growth over environmental concerns.18 DBT told us it planned to introduce legislation to make all steers statutory.19 Without royal assent the steers are no more than letters of intent. DBT told us that this is important since regulators’ decisions are subject to judicial review.20 9 C&AG’s report, para 1.29 10 HMT, New approach to ensure regulators and regulation support growth, 17 March 2025 (updated 21 October 2025) 11 Q 16 12 Qq 11, 45 and 47 13 C&AG’s report, para 6 14 Yemi Oluseun (RFG0003); Chemical Industries Association (RFG007) 15 Qq 21-23 16 Q 24 17 Q 21 18 Defra, Strategic Policy Statement for the Environment Agency - GOV.UK, 12 March 2026; Defra, Strategic Policy Statement for Natural England - GOV.UK, 12 March 2026 19 Qq 24-29 20 Q 27 8 Defining and delivering growth Show less

Growth can mean very different things depending on the timeframe applied. Short-term growth could involve reducing costs of certain goods and services to stimulate household spend, but long-term growth could mean high prices to budget for investments that are believed … Read more Growth can mean very different things depending on the timeframe applied. Short-term growth could involve reducing costs of certain goods and services to stimulate household spend, but long-term growth could mean high prices to budget for investments that are believed to improve productivity in the future. The written evidence submitted by the City of London Corporation called for HM Treasury to issue clearer guidance on what is meant by “growth” in the context of regulators’ objectives.21 Without clear definitions, including the level of growth targeted and the timeframe over which it is expected, it will not be possible to determine whether the Action Plan has been successful. Show less

We asked the departments what they meant by growth, and the intended timeframe, but they were not able to give us a satisfactory answer.22 DBT told us that growth was “growing GDP”, and HM Treasury said “growth is the GDP”, … Read more We asked the departments what they meant by growth, and the intended timeframe, but they were not able to give us a satisfactory answer.22 DBT told us that growth was “growing GDP”, and HM Treasury said “growth is the GDP”, but did not specify what this meant or how much GDP growth was the aim.23 DBT and HM Treasury were unable to explain how this broke down into growth drivers or productivity improvements, or how the Action Plan was expected to practically contribute to it.24 Show less

Effective monitoring is key to ensuring the Action Plan is kept on track and impacts positively on businesses and economic growth.25 The departments have published regulators’ KPIs, but activity-based metrics such as processing times offer very limited insight into whether … Read more Effective monitoring is key to ensuring the Action Plan is kept on track and impacts positively on businesses and economic growth.25 The departments have published regulators’ KPIs, but activity-based metrics such as processing times offer very limited insight into whether regulation is enabling growth.26 DBT told us it engages with industry regularly to discuss business sentiment. However, these views are not used to measure success.27 Show less

HM Treasury noted that regulators are rarely asked about their role in economic growth by parliamentary select committees.28 Only 8% of select committee sessions in the period January 2013 to December 2025 mentioned economic growth.29 Select committees can play an … Read more HM Treasury noted that regulators are rarely asked about their role in economic growth by parliamentary select committees.28 Only 8% of select committee sessions in the period January 2013 to December 2025 mentioned economic growth.29 Select committees can play an important role in holding regulators accountable, but parliamentary accountability does not replace departmental guidance, governance and oversight. 21 City of London Corporation (RFG0012) 22 Qq 4, 6 and 14 23 Qq 3 and 13 24 Qq 48 25 C&AG’s report, para 9 26 DBT, Regulator KPI dashboard (accessed 1 April 2026); Yemi Oluseun (RFG0003) 27 Qq 43 and 48-49 28 Q 71 29 C&AG’s report, para 2.22 9 Simplifying the regulatory landscape Show less

It can be challenging for businesses to navigate the regulatory landscape. We received written evidence which highlighted how uncertainty adds to costs and delays for business through unpredictable timelines, unclear interpretations of rules, opaque enforcement thresholds, and uncertain priorities.30 In … Read more It can be challenging for businesses to navigate the regulatory landscape. We received written evidence which highlighted how uncertainty adds to costs and delays for business through unpredictable timelines, unclear interpretations of rules, opaque enforcement thresholds, and uncertain priorities.30 In areas such as environmental regulation, businesses have to navigate between different regulators.31 This can result in delays, inconsistencies, and gaps in oversight. This was also highlighted in C&AG’s report on water regulation published in 2025.32 Show less

HM Treasury told us that it considered simplification and streamlining of engagement to be “incredibly important” and cited examples of what government was doing to improve the experiences of businesses.33 The Cunliffe review instigated the ongoing creation of a new … Read more HM Treasury told us that it considered simplification and streamlining of engagement to be “incredibly important” and cited examples of what government was doing to improve the experiences of businesses.33 The Cunliffe review instigated the ongoing creation of a new single water regulator and the Corry review recommended a “lead regulator model” on major projects.34 Defra has since appointed Natural England as the lead environmental regulator on the Lower Thames crossing and the Environment Agency as lead environmental regulator for the East West Rail project to pilot this model.35 Many of the functions of the Environment Agency and Natural England overlap; both have major roles in planning and infrastructure, and they examine the same plans and deal with similar prosecutions. HM Treasury also drew the Committee’s attention to the recommendation for a lead nuclear regulator by the Nuclear Regulation Taskforce, in response to the Fingleton review, which has been accepted by government.36 In financial services, the Payment Systems Regulator has now been merged into the Financial Conduct Authority, as announced in the Action Plan.37 30 Cascade Consulting (RFG0004): Association for Project Management (RFG0010); Utilita Energy (RFG0013); UK Private Capital (RFG0018) 31 Q 34 32 C&AG’s Report, Regulating for investment and outcomes in the water sector, Session 2024–2025, HC 853, April 2025, paras 2.4 and 2.12 33 Q 34 34 Defra, Delivering economic growth and nature recovery: an independent review of Defra’s regulatory landscape, 2 April 2025; Independent Water Commission, Review of the water sector, 21 July 2025 35 Defra, Environmental reforms to break planning system gridlock, 19 August 2025; HMG, Regulation reset to fast-track homes, transport and clean energy, 12 March 2026 36 Q 40 37 Q 31; HMT, New approach to ensure regulators and regulation support growth, 17 March 2025 (updated 21 October 2025) 10 2 Delivering the regulatory Action Plan Identifying savings to support Show less

A small number of regulatory interventions account for a disproportionately large proportion of costs and savings to business. The C&AG’s report found that, out of around 100 published impact assessments reviewed by the Regulatory Policy Committee since 2020, a quarter … Read more A small number of regulatory interventions account for a disproportionately large proportion of costs and savings to business. The C&AG’s report found that, out of around 100 published impact assessments reviewed by the Regulatory Policy Committee since 2020, a quarter of regulations reporting an increase in cost to business accounted for 80% of the rise in overall cost. The same was true for savings: one-third of regulations reporting a saving to business accounted for 80% of the overall saving.38 This principle also applies to past government initiatives to cut regulatory costs. The C&AG previously reported that over 90% of the £10 billion cost reduction reported by government during the 2010–2015 Parliament came down to 10 changes.39 Show less

The Action Plan committed to reduce the administrative burden on business by £5.6 billion (25% of the £22.4 billion annual baseline) by the end of parliament.40 Both departments said work to identify the largest savings was under way, and DBT … Read more The Action Plan committed to reduce the administrative burden on business by £5.6 billion (25% of the £22.4 billion annual baseline) by the end of parliament.40 Both departments said work to identify the largest savings was under way, and DBT has identified the potential in the Planning and Infrastructure, and Corporate Reporting, bills.41 However, these are expected to generate £272 million and £185 million respectively, or £460 million savings in total.42 This compares to the annual savings target of £5.6 billion. Unless the two Departments can identify what the component parts are that comprise this figure, it is impossible to know whether this figure is too high or low. Past performance is no guide to future performance particularly in volatile economic times. 38 C&AG’s report, para 1.27 39 C&AG’s report, para 2.4 40 HMT, New approach to ensure regulators and regulation support growth, 17 March 2025 (updated 21 October 2025) 41 Qq 41-46 42 HMT, Regulation Action Plan - Progress Update and Next Steps, 22 October 2025 11 Show less

DBT is also working with businesses and departments to identify opportunities. It expects the picture to be clearer once it has reviewed the departments’ Annual Simplification Plans “in a few weeks’ time”.43 It is now over a year since the … Read more DBT is also working with businesses and departments to identify opportunities. It expects the picture to be clearer once it has reviewed the departments’ Annual Simplification Plans “in a few weeks’ time”.43 It is now over a year since the Action Plan was published.44 The government has until the end of the parliament to catch up with the target. Show less

The target is net of new regulatory costs, meaning that government counts savings remaining after it has subtracted cost increases arising from new legislation. If new bills are introduced that impose large costs on business this puts the target at … Read more The target is net of new regulatory costs, meaning that government counts savings remaining after it has subtracted cost increases arising from new legislation. If new bills are introduced that impose large costs on business this puts the target at risk. For example, the Employment Rights Bill is expected to cost business £4.7 billion over 10 years, with the Right to Guaranteed Hours alone resulting in an annual administrative burden of £160 million.45 Achieving the 25% reduction target Show less

The 25% target is ambitious and cross-governmental but DBT could not confirm whether the programme was on track.46 In the progress update published October 2025 HM Treasury announced that it identified £1.5bn of administrative burden savings in October 2025, but … Read more The 25% target is ambitious and cross-governmental but DBT could not confirm whether the programme was on track.46 In the progress update published October 2025 HM Treasury announced that it identified £1.5bn of administrative burden savings in October 2025, but this is a gross figure. DBT told us that it expects to report on the net position in the planned spring update, making it the first time the Unit reports on progress against the £5.6bn net target.47 Show less

The equivalent programme in 2025 was successful, but unlike this earlier initiative there are currently no individual targets set for departments and their regulators.48 DBT told us it did not consider individual targets would be necessary to identify whether departments … Read more The equivalent programme in 2025 was successful, but unlike this earlier initiative there are currently no individual targets set for departments and their regulators.48 DBT told us it did not consider individual targets would be necessary to identify whether departments were putting effort into the exercise.49 Instead, it expected to drive progress forward through cross-governmental working and rely on annual simplification plans from departments.50 However, neither DBT nor HM Treasury provided any evidence that they had levers to drive departmental behaviour. If the spring update shows the target is off-track the Unit lacks strong accountability measures to hold departments to account.51 43 Q 53 44 HMT, New approach to ensure regulators and regulation support growth, 17 March 2025 (updated 21 October 2025). The hearing took place 16 March 2026. 45 C&AG’s report, paras 1.22 and 1.26 46 C&AG’s report, paras 10 and 1.14 47 Q 37 48 Qq 50 and 69 49 Q 70 50 Qq 37 and 69 51 Qq 50, 52, 65, 69, 70 and 74 12 Show less

For savings to be credible they need to be verified. Savings reported by departments under the Business Impact Reduction Programme (2015–2023) were scrutinised by the Regulatory Policy Committee (RPC).52 This independence is particularly important given the variable quality of analysis … Read more For savings to be credible they need to be verified. Savings reported by departments under the Business Impact Reduction Programme (2015–2023) were scrutinised by the Regulatory Policy Committee (RPC).52 This independence is particularly important given the variable quality of analysis produced by government departments. According to RPC analysis published in September 2025, almost one third (28%) of Impact Assessments reviewed since 2020 were either ‘weak’ or ‘very weak’.53 Show less

No independent review is planned. DBT told us that departments themselves will instead validate the claims through their Chief Economists. Despite a year having passed since the Action Plan’s publication this process has not started.54 52 C&AG’s report, The Business … Read more No independent review is planned. DBT told us that departments themselves will instead validate the claims through their Chief Economists. Despite a year having passed since the Action Plan’s publication this process has not started.54 52 C&AG’s report, The Business Impact Target: cutting the cost of regulation, Session 2016–17, HC 236, June 2016, para 4 53 RPG, RPC compares the quality of impact assessments submitted by government departments – Regulatory Policy Committee (accessed 31 March 2026) 54 Q 81 13 Show less