Potential reform of the UK’s regulatory regime has been welcomed by ICAEW for tackling many of the questions raised in its own Better Regulation project launched earlier this year.
Last month, the government announced an in-depth review into most regulators across the country, including a 12-week call for evidence, with the aim of ensuring regulators are working efficiently and delivering on reforms needed to help grow the economy and protect consumers.
In particular, the review – which excludes financial services and local authorities –- will seek the views of businesses, consumers and regulators to identify areas in need of improvement that will have a positive impact on economic growth, as well as improving the outcomes for consumers and our environment. The review says there are around 90 regulators in the UK covering most sectors between them, costing around £5bn a year, and that 39% of small businesses say red tape holds them back.
Business groups also argue that regulators are overly risk averse and focus too heavily on process at the expense of delivering the best outcomes. Meanwhile, regulators’ powers and accountability have not moved in tandem, the government says, partly because of the increased decision-making power of some UK regulators post-Brexit.
The call for evidence, due to close on 7 January 2024, is seeking experiences of those the regulators regulate or interact with, and views on aspects of the regime including regulatory agility, proportionality, predictability and consistency of approach. It will also consider whether further reforms to the existing stock of regulation on the UK statute book are needed.
Kemi Badenoch, Secretary of State for Business and Trade, said the move was part of the government’s wider Smarter Regulation Programme, which aims to bring about more effective and less burdensome regulations across the economy. Reviews of Ofgem, Ofwat and Ofcom are already underway. “It’s clear the regulators that enforce the rules can also sometimes be a blocker to businesses, so our review will seek to root out the bad practices with the aim of making companies’ lives easier and reducing costs for consumers.”
Badenoch stressed the crucial role of regulators in protecting the environment, consumers’ and workers’ rights, and said reforms will not come at the expense of the UK’s already high standards.
Charles Worth, Head of Business Law at ICAEW, said the benefits of good regulation should not be underestimated: “Our regulatory infrastructure needs to be designed for the long term. There is room to question some of the perspectives in the consultation, but its underlying objective of improving the UK’s regulatory landscape is surely in the public interest and the lessons learned from this consultation should be valuable for future governments of any political persuasion.”
ICAEW shares the government’s wish for the UK to have a world-leading regulatory system; an ICAEW briefing outlines how the UK’s regulatory regime is meant to work to demystify what is often seen as a rather daunting and impenetrable subject.
“We already know from our work on better regulation that there is room for improvement,” Worth adds, “for example, regulators that do not have clear statutory objectives, rules that are unnecessarily complex and requirements or regulatory approaches that impose disproportionate burdens on business. The mechanisms designed to help Parliament ensure that the regime is working as it intends are not as strong as they could be.”
ICAEW’s response to the consultation will draw heavily on feedback from its members through consultation with committees and volunteers. Members are also invited to provide comments via ICAEW’s better regulation hub.
Some of the government’s consultation questions call for the regulator in question to be named. Regulated persons may be reluctant to provide candid feedback about their regulators for fear of damaging their relationship or drawing attention to themselves. Worth noted: “This is an area where input from bodies such as ICAEW can be especially helpful as we can provide valuable feedback from our members without naming them.”
- Full details of the government’s call for evidence on smarter regulation and the regulatory landscape.
- Find out more about ICAEW’s Better Regulation project via our Better Regulation hub.
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