The Starmer Government
The 2024 General Election put the previous government out of its misery and installed Prime Minister Kier Starmer. He and his ministers faced pressure to toughen environmental regulation and introduce further regulations to improve workers' rights. But they also had a 'growth agenda' which would appear to require deregulation. Sir Kier told potential inward investors in November 2024 that he wanted to "back the builders, not the blockers".
The Times' Dominic O'Connell shortly afterwards published this perceptive review of the recent history and future prospects of regulation/deregulation state of play at this time:
Chief executives’ favourite pastime, aside from rising at 4am for 30 minutes of meditation, an hour in the gym and a cleansing herbal tea, is bitching about red tape. At a dinner last week two property bosses complained to me about the impossibility of getting developments through planning, the susceptibility of the process to any nimby attack and the shortage of people at every stage, from council officials through to the fire-safety experts needed to put together new post-Grenfell risk assessments.
This was the audience Sir Keir Starmer was trying to address at this week’s innovation conference, when he said he wanted regulation that would “back the builders not the blockers”. It remains to be seen whether the prime minister’s zeal will percolate all the way down to the officials who actually deal with new developments, but it struck me that there had already been plenty of deregulation in the past few years.
Many seem to have forgotten that the previous government made big changes to stock-market listing rules, City bonuses, audit reform and directors’ duties. There is more to come too, with an important change expected next year on the rules governing when listed companies need to produce a prospectus. The red tape might be piling up in drifts around physical infrastructure but in capital markets and corporate governance it is being stripped away.
The largest of these changes were by omission rather than commission and resulted from a Conservative leader spiking the carefully laid plans of one of his predecessors. It seems lost in the mists of time now — it was in fact only eight years ago — but Theresa May came to power promising a crackdown on corporate bad behaviour. She was reacting to a public mood soured by a string of corporate scandals, notably the collapses of Carillion and Patisserie Valerie and the chaotic demise of BHS. Her speech to the CBI in 2016 spelt it out. “The behaviour of a limited few has damaged the reputation of the many … it is clear that something has to change. For when a small minority of businesses and business figures appear to game the system and work to a different set of rules, we have to recognise that the social contract between business and society fails and the reputation of business as a whole is undermined.”
This set in motion the full machinery of government reform. There were inquiries into the different scandals and expert reports on reform of some basic business plumbing. Sir Donald Brydon, the plain-speaking former chairman of London Stock Exchange Group and Royal Mail, was enlisted to rewrite the rules on company audits and auditors themselves. Sir John Kingman, one of the key Treasury officials during the 2007 banking crisis, devised a wholesale reform of the accounting regulator, the Financial Reporting Council. There were also inquiries and recommendations for change from the Insolvency Service, the business and pensions select committees and the Financial Conduct Authority (FCA).
This burst of reforming zeal was wrapped up into a set of new regulations that would have completely changed the nature of audits and put hefty new duties on directors to make sure that company accounts were not works of fiction. Uncontroversial stuff, you might think, but the whole thing was tossed out of the window by Rishi Sunak. A year ago the Companies (Strategic Report and Directors’ Report) (Amendment) Regulations were dropped. The press release that marked the decision dismissed them as “burdensome legislation withdrawn in the latest move to cut red tape for businesses”.
That was one big deregulatory step and there were more to come.Anguish about the sluggish performance of the London stock market led to a relaxation of the listing rules. The ban on dual-class share structures has been dropped (to permit charismatic and dynamic founders to take their companies public but still retain control) as has the need for shareholder approval of large transactions. These changes have been cheered to the rafters by those who benefit from more listings — the exchange and the army of lawyers, bankers and accountants who feed on the fees — but given the raspberry by some investors. As my colleague Patrick Hosking reported recently, the group that represents council pensions thinks that they are a big backward step and risk “ ‘poisoning the well’, making the UK an unfavourable place to allocate capital”.
There is another change in the works that may provoke fresh rage among pension investors. The FCA consultation on changes to the prospectus regime closed on Friday. There are some amendments to the rules on float documents, when a company is selling shares on a public market for the first time, but the big one is on capital raises by companies already on the market. At present if you want to sell new shares worth more than 20 per cent of your market value you must issue a prospectus. That is expensive, time consuming and potentially embarrassing. Prospectuses often reveal more about the murky inner workings of a company than the management would like. The proposed new rule lifts the threshold to 75 per cent. If that is carried into law, almost all fundraisings by listed companies will no longer require a prospectus.
That is almost a red-tape bonfire in its own right, one you could keep burning with the scrapping of the cap on bankers’ bonuses and, as we revealed on Friday, the proposal to cut the deferral period on those bonuses from eight to five years. If you fear running out of fuel there is also the mooted watering down of the banking ringfence, the biggest single measure to emerge from the post-mortem examination of the 2007-08 banking crisis.
None of this, of course, will in any way ease my chief executives’ complaints about the difficulties in building stuff. Compared with clearing the way for railway lines or housing developments, opening up capital markets and financial regulation is easy. It is also the kind of deregulation that comes with big risks. It opens the doors to another round of corporate scandals: a repeat of the ones that created the rules in the first place. It can also, as the council pension funds argue, create markets that are less attractive to investors, not more. Starmer needs to ensure that he is backing actual builders, not just people pretending.
The Prime Minister returned to deregulation and the growth agenda in a Times article in January 2025.
Growth is the defining mission of this government. It is the only way to deliver our Plan for Change and put more money in people’s pockets. The only cure for the sickness of stagnation and decline. ...
... there is a morass of regulation that effectively bans billions of pounds more of investment from flowing into Britain. Thickets of red tape that, for all the Tories talked a good game, was allowed to spread through the British economy like Japanese knotweed. Our pledge today is that this government will do what they could not. We will kick down the barriers to building, clear out the regulatory weeds and allow a new era of British growth to bloom.
... we have shifted gears with a raft of pro-growth deregulation policies. We will streamline environmental obligations. We will limit the cynical legal challenges that block major infrastructure projects. We will strip away the years of consultation that drown builders. We will cut the number of statutory consultees who can slow or veto projects. We will intensify development in urban areas and around key transport hubs — like train stations — with a presumption in favour of quality building. Every state regulator will be given an explicit duty to consider growth. Artificial intelligence will be placed at the heart of our new industrial strategy. The untapped wealth of defined benefit pension schemes will be unlocked to back British business. We will finally grasp the nettle on major national infrastructure projects and speed up decision-making. And we will keep our foot firmly on the accelerator when it comes to planning reform. A “big build” that will create new homes, warehouses and data centres, the length and breadth of our country.
Fundamental Reform of the British State?
This was followed in March 2025 by a substantial speech by the Prime Minister announcing plans to attack the "cottage industry of checkers and blockers":
"We’ve created a watchdog state – completely out of whack with the priorities of the British people. ... We will make sure compliance costs for businesses are cut by a quarter… Yes that’s 25% compliance costs that are going to go – and they will. ... I think there is something deeper about Westminster politics here
There is a knee jerk response to difficult questions, to difficult lobbies. The response goes like this, let’s create an agency… Start a consultation… Make it statutory, have a review. Until slowly, almost by stealth, democratic accountability is swept under a regulatory carpet. Politicians almost not trusting themselves, outsourcing everything to different bodies because things have happened along the way – to the point you can’t get things done."
You can read the full speech here.
Comment: It was not immediately clear what was intended to be included in the 'compliance costs' that were to be reduced by 25%. And one is bound to wonder whether ministers will take serious steps to bring regulation back in-house given all the advantages of allowing arms length bodies to take all those difficult decisions.
The Rise of the Regulators
Right-leaning Policy Exchange published the above-named report in December 2024. Although its policy prescriptions were a mixed bag, and unlikely to appeal to the new government, its initial premise wasn't far wrong, describing:
... a political culture which is increasingly “safetyist”, which privileges risk-mitigation and security over other imperatives, and which expects the government to eliminate risk from people’s lives. Secondly, a bureaucracy in which it is remarkably easy and ostensibly “cheap” to generate new regulations. And finally, a complete lack of incentives to remove redundant regulations from the rulebook.
The Government Dismisses the Chair of the Competition and Markets Authority
Here is my blog, written shortly after hearing the above news in January 2025:-
I was surprised, bordering on appalled, to hear that the government had sacked Marcus Bokkerink, the Chair of the Competition and Markets Authority (the CMA). He has been replaced by Doug Gurr who previously worked for Amazon.
There are three reasons to be concerned.
The first is that this decision hugely undermines the independence of this key regulator, and by implication threatens the independence of others.
Not all regulators claim great independence, of course. You cannot expect ministers to take no interest in the regulation of schools and hospitals. The public expect accountability in these areas to rest with politicians. But decades of experience have shown that competition and price control regulation are best left to independent bodies. Politicians are far too likely to take decisions that play well in the short term (Lower prices! Yay! Lots of votes!) but lead to less investment and poor customer service. Or they refuse to take tough decisions which are unwelcome to their mates in company boardrooms.
Ministers have for these reasons accepted (until now) that the CMA and its predecessor, the Competition Commission[1], were highly independent, not least because that particular regulator faces a constant bombardment of submissions and lobbying from the world's largest companies and their very highly paid lawyers and economists. The intensity of this pressure has increased dramatically since we left the EU whose DG(Competition) used to deal with the largest cases collectively, so to speak. The government's removal of the CMA's Chair thus represents a severe blow to the credibility and effectiveness of the CMA.
My second concern is that ministers were mistaken in suggesting, in effect, that the CMA's pro-competition stance was anti-growth. Apart perhaps from in the very short term, growth comes from innovation and greater efficiency, both of which are strongly encouraged by effective competition.
Politicians might have been misled by the observation that innovation and size are positively correlated - but they get the causality the wrong way round. Innovative companies grow rapidly. They then stop innovating and focus on maintaining their market power by squeezing or buying up their competitors. That's why they hate competition authorities such as the CMA.
There is also the point, made recently by Diane Coyle, that enforcing competition to make markets work in the interests of customers means there is less need for regulation of other kinds.
My third concern and major disappointment is that is that I had hoped that Labour ministers would not behave like their predecessors when making public appointments. Here is an extract from a blog entitled Public Sector Appointments - Labour Must Behave Better that I published just after last year's election:
It is vital that arm's length bodies take high quality decisions bearing in mind their statutory duties and the facts and arguments that are brought to their attention. They cannot do this if their Chairs and Chief Executives are concerned about how their decisions might be received by politicians and the media, and/or if they arrive in post with strong biases, prejudices or predispositions.
It is therefore hugely disappointing that ministers have not only sacked the perfectly decent Chair of a competition authority but replaced him with someone who used to work at a very senior level in one of the USA's largest companies. They will have intended this to send a clear message - but it is a very worrying message which will surely lead to a less competitive UK economy and hence lower growth.
I am far from the only commentator to express these concerns:-
The FT reported one antitrust lawyer as believing that the move would have "a chilling an intimidating effect" and that " although in the short term it seems reassuring for business if competition policy is at the mercy of political fashion, it becomes less stable and predictable, which undermines business confidence ... It is an extraordinary move by the government to interfere so much in a competition authority".
Writing in the Guardian, Nils Pratley said that 'it is too simplistic to think that strong regulation impede impedes growth. In most cases, firm and predictable regulation coupled with the rule of law is good for attracting investment. In general, investors prefer high regulatory standards over a free-for-all that invites fraud or worse.'
Ministers responses to questions have been underwhelming at best. Business minister Justin Madders was asked whether the CMA would "hold powerful tech companies accountable". His answer was that "We do need to protect consumers but we also need to drive growth".
You might also like to check out what is, I think, fairly standard advice to senior officials about how to design an effective regulatory system.
Finally, I attach Mr Bokkerink's resignation statement which is surprisingly polite - but includes, towards the end, the very good question whether his successor and the government will in practice be able to develop a strategy that is more effective than the CMA's past pro-consumer and pro-competition stance.
Mr Bokkerink’s Statement
As the government announced in this afternoon's press release about governance changes at the CMA, it is attempting to find new ways of boosting growth from the UK's competition and consumer protection authority, that are different to its current approach.
The CMA's future strategy for boosting growth and supporting the economy will become apparent in the weeks and months ahead under its new Board leadership. In the meantime, let me take this opportunity to reflect on the approach that I had the privilege to lead as chair to drive the kind of growth that is broad-based, lasting, and tangible felt by the people and businesses of the UK - an approach that, in essence, has been about consumers making choices, businesses competing on merit, and the benefits of the resulting innovation and productivity spreading across the economy.
The CMA has a statutory duty to promote competition for the benefit of consumers. On becoming Chair, I refocused the CMA on delivering three all-important outcomes that this duty is intended to achieve for the country: consumers and business consumers having a choice, free from manipulation - instead of being forced to accept higher prices and worse service because they have no other option; businesses large and small being free to compete, innovate, and have a fair shot at succeeding based on merit - instead of being excluded or having their hands tied behind their back; and a level playing field in markets, so that the economy as a whole can benefit from the productive, sustainable growth that comes from that combination of empowered consumers and effective competition - instead of being held back by a few powerful incumbents setting the rules for everyone else.
During the past two years, that's what the CMA has been delivering it, in practice. We have worked to safeguard choice and a fair deal for consumers in markets that matter to people's daily lives and the economy - from buying or renting a home, to groceries, road fuel, and veterinary services, to shopping online and medicines that the NHS buys on people's behalf. Similarly, we have acted to open up markets, unlock innovation and create a level playing-field for businesses seeking to compete, invest and grow - from open banking and online marketplaces to construction, electric vehicle charging, gaming, cloud and mobile services. In parallel, I've made transparency and openness the hallmarks of the CMA - advocating more frequent reviews with Parliamentary Select Committees, engaging more directly and frequently with consumer groups, businesses and investors, using their feedback to improve how we work, strengthening the Board to include more business, entrepreneurial and investor experience alongside competition law and economics expertise.
My experience across decades working with businesses and investors, as well as more recently at the CMA, reinforces what empirical evidence around the world also shows. That these fundamentals - genuine choice, effective competition, a level playing field, safeguarded by an independent, impartial and transparent competition and consumer protection authority working for the benefit of people and businesses across the UK - are essential to achieving the kind of growth that fosters opportunity and prosperity for all. With competition, with empowered consumers, you get innovation, investment and productivity. In short, they work. In the same way that reduced choice, constraints unfair competition, monopolisation of markets, consumer and competition authorities vulnerable to short term expediency or vested interests, don't work - at least not for growing the economy overall and over the long term. These are choices. Parliament knew what they were choosing in strengthening the UK's competition and consumer protection laws.
The draft plan which the CMA Board published for consultation last week sets out the actions the CMA was planning to take, over the next 12 months and the next three years, to drive that opportunity, prosperity and productive, sustainable growth for people and businesses in the UK further and faster. Throughout, by bringing or restoring, genuine choice, effective competition, and a level playing field in markets, including the digital markets on which UK consumers and businesses depend; and continuing to reform the way the CMA works.
With new Board leadership appointed and a new government strategic steer in the pipeline, this approach will no doubt change. I wish Doug and the government best of luck in finding a different path that works more effectively. From my own perspective it has been a privilege to be able to champion the pro-consumer, pro-competition, pro-innovation, pro-UK approach of the past two years. Above all, it's been a privilege to be able to work with the committed, dedicated, talented, unique set of people who make up the CMA, who have made all that possible. I thank you all.
And here is my subsequent comment, a few days later:
I recently commented that, by replacing its Chair, the Government has undermined the UK's principal competition authority. The CMA's new (interim) Chair, Doug Gurr, has now told us (via the FT this morning) 'what the CMA is going to do differently'. Sadly, I don't think his proposals are going to make much of an impact on GDP.
His first idea is 'efficiency: we have to make our investigations and processes as simple and rapid as possible ... Good decisions, clear decisions, rapid decisions'. Great stuff! - although the law already encourages the CMA to set tight deadlines for the receipt of submissions and answers to their questions - avoiding those delays that are the main causes of slow decision-making.
The catch, of course, is that businesses only like good, clear and rapid decisions when they win the arguments. Unwelcome good, clear and rapid decisions are swiftly challenged and if necessary appealed. Remember Microsoft's reaction when it was told it couldn't acquire Activision? It can even be worth going to the Supreme Court. "Of course we will appeal all the way. We don't think we will win but, given the payoff could be massive, even a 10% chance makes it worth taking the bet given the legal costs are so small."
His second idea is that the CMA 'will build mechanisms to ensure we invest in, and can access, world class expertise to enable a rapid, meaningful and grown-up conversation with every sector we investigate'. This is apparently so that businesses have to spend less time 'educating us about their sector dynamics and issues'.
The catch, here, is that the CMA gets involved in a huge range of sectors. I was the CEO of one of its predecessor organisations and I remember that we investigated stock exchanges, steel piling, airports, second hand gaming software, supermarkets, banks, railways, buses ... and there were many more investigations that I can't remember. It was vital, of course, that our decision-makers (who were not CMA officials) learned the key attributes of the relevant sector. We therefore encouraged the parties to the investigations to teach us through their submissions and oral evidence. Maybe I am missing something but I can't quite see how the employment of (genuinely independent) world class expertise will make much difference.
'Finally ...it's essential we engage directly and meaningfully with the business community ... open door, open ears, and open minds'. More great stuff! - but the business community is very large indeed and most business people have better things to do than spend time in meetings with the CMA, not least because most of them will never have anything to do with the competition authority at any time in their careers. The CMA will certainly find that some sectors are keen to engage - not least our friends in American high-tech. But it will not, I think, be a great development if our competition system comes under the sort of pressure from professional lobbyists that is endured by our opposite numbers in Washington DC.
By way of postscript, I was struck by Anne Applebaum's Substack this morning:
Like other oligarchs who control big social media platforms, [Elon Musk] is very keen to avoid the regulation that many Germans, many Europeans and indeed many other democrats are beginning to demand. Not everyone wants their country’s political system to be manipulated by American social media companies, any more than they want their country’s political system to be manipulated by Russian propaganda. But most countries are too small to combat Musk and Zuckerberg on their own. ... Only one institution on the planet is large enough and powerful enough to write and enforce laws that could make the tech companies change their policies. Partly for that reason, the European Union may soon become one of the Trump administration’s most prominent targets.
I worry that the CMA, working on its own now that we are no longer in the EU, might be another (easier) target for US big tech. There is as yet no sign that Mr Gurr will in practice take a less robust stand than his predecessor ... unless his three modest, initial ideas are in reality code for something more worrying.
Alan Beattie, writing in the FT in February 2025, commented that:
The CMA has long been criticised by big businesses for blocking takeovers and taking too long to make decisions. Now, you could debate the operation of UK competition policy. But it's worrying that the government seems to identify the interests of large companies as identical with promoting growth. Unregulated monopoly produces big profits for monopolists, but not traditionally growth or innovation. ... As it happens, the UK has embarked on an experiment in radical deregulation within the past five years, disowning a system of official rules mainly developed in association with businesses. The system was the EU single market and customs union and the experiment was called Brexit. It was based on outright fabrications about EU regulations on bent bananas and the like - and it's failing, costing perhaps 5% of GDP. If the government wants a growth model then, ironically, rejoining the regulatory EU super state is right there, and I have yet to see any convincing argument that being outside the EU's AI regulatory framework will outweigh the benefits. The government's refusal to discuss the issue shows it is insufficiently serious about growth.
The 2025 Regulatory Policy Committee Report ...
... was published in October 2025. The accompanying blog summarised its contents as follows:
The report reflects on a very busy year with many changes for the RPC, including the completion of the transition to the revised Better Regulation Framework (BRF). This new framework has moved the RPC's scrutiny role to earlier in the policy-making process and focused our work on reviewing the rationale and choice of options to support better policy making.
Of the 77 submissions we received this year, 43 were impact assessments submitted under the previous BRF, 27 were under the new BRF, and the remaining seven were post-implementation reviews (PIRs).
We are particularly pleased to report substantial progress in addressing the longstanding issue of departments failing to complete PIRs. Following our publication of a list of outstanding PIRs across government and direct engagement with permanent secretaries in departments with the most outstanding PIRs, we have seen a positive response with significant progress being made. While there is still some way to go, this represents an important step in improving attention to evaluation.
Toward the end of March 2025, the Chancellor published an Action Plan to cut red tape and kickstart economic growth, including a pledge to cut the administrative cost of regulation on business by 25% before the end of the Parliament. We are keen to help government in developing this target and offering our expertise in independently verifying the cost reductions achieved.
The Chancellor made further announcements in October 2025.
Here is my report of them:
I was startled to read the Financial Times report (11 September) that Rachel Reeves had pledged to “take out more regulators” and had already acted by “getting rid of the Chair of the [Competition and Markets Authority]”. She apparently told an audience of private equity professionals that, as well as abolishing the Payments System Regulator, she had “severely constrained” the Financial Ombudsman Service.
The Chancellor followed this up with more detail within a recent more wide-ranging speech. Here is a lightly edited transcript of what she said about regulation:
In March this year, the Prime Minister pledged that we would cut the administrative costs of regulation by 25%: a reduction that I can today announce will save businesses £6 billion a year by the end of this Parliament.
Only weeks into office we ripped up the planning rules … the Planning and Infrastructure Bill now in Parliament will deliver over £2 billion in savings to businesses over the next 10 years. Our new food and farming agreement with the EU will slash red tape for businesses and today we’re going further to reduce corporate reporting requirements scrapping needless form-filling for tens of thousands of businesses and taking the savings to businesses from our reforms to over £1 billion a year already.
Today I can announce three new reforms to boost competition and make the UK a top destination for global capital.
First, we will consult on a cross-economy AI sandbox modelled on the success of the FCA’s pioneering Fintech sandbox to allow new AI products to be developed under supervision by regulators accelerating approvals for the use of AI in sectors like legal services, planning assessments and advanced manufacturing.
Second, the Civil Aviation Authority will publish an investor roadmap outlining the steps to launching commercial drone operations by 2027… technology that has the potential to generate up to £66 billion in business revenues over the next 25 years and transform everything from surveying sites for development to delivering blood supplies for the NHS as already trialled at Guy’s and St Thomas’…
And third, we will reform the panels that review company mergers and provide greater certainty on whether transactions will be subject to merger control.
Much of the above is welcome, of course, as was the deregulation programme announced in March, but I have two comments:-
Comment on:- Reduce Administrative Burdens by £6bn pa
I wondered, back in March, how the government would define ‘administrative costs’. I was therefore very grateful to Simon Corden who drew my attention to the c.2006 Administrative Burdens Measurement Exercise which was part of the Administrative Burdens Reduction Project. This exercise used a Standard Cost Model (SCM) prescribed by the Better Regulation Executive and resulted in individual reports to c.20 departments.
The SCM was first developed by the Dutch government and was then adopted around the globe. The SCM defines administrative costs as the costs of administrative activities that businesses are required to conduct in order to comply with the information obligations that are imposed through central government regulation. They include ‘business as usual’ costs, for instance bookkeeping and accounts preparation which would be incurred anyway, even if they were not also required by HMRC.
(There is presumably much room for debate about the extent of ‘business as usual’ costs. Much health and safety and HR activity should be carried out by a decent employer but many employers no doubt attribute much of this cost to ‘regulation’.)
The 2006 exercise calculated that the administrative burdens imposed by the Business Department and HMRC both exceeded £5bn pa, with DCLG and HSE coming in third and fourth at £2.5bn and £2bn respectively. The total was £25bn, of which around half were estimated to be ‘business as usual’ costs. The total was then reduced by £5.7bn (2024 prices) by the 2005-2010 ‘Simplifying Regulation’ exercise.
Treasury officials and the Better Regulation Executive estimate that administrative burdens now total c.£24bn pa, and that they can save 25% (£6bn pa) pretty quickly. The detail is in this technical annex which (if I understand it correctly) itemises savings of c.£1.5bn from deregulatory initiatives that are already planned or in train. Only £4.5bn to go!
(Post-Grenfell building safety measures are excluded from the current exercise.)
Comment on:- ‘We will reform the panels that review company mergers’.
The Chancellor’s dislike of the CMA’s decision-making panels makes no sense to me.
A merger can currently be prohibited only if an expert (non-civil service) panel, advised by officials, feel that it would lead to a substantial lessening of competition. Removing the panel, and its real world and often business experience, does not seem to me to be likely to be improve the quality of decision making.
Maybe Ms Reeves wants decisions to be taken by officials who can be leaned on when Microsoft, Amazon, Apple etc. complain? She has, after all, already sacked the CMA’s Chair and replaced him with a former senior Amazon executive. But defanging our principal competition authority is surely not the best way to generate economic growth.