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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The writer, chair of Legal & General and Barclays UK, is a former Treasury official and a member of the government’s Industrial Strategy Advisory Council
Make no mistake: the UK prime minister’s commitment to cut the administrative costs of regulation by 25 per cent is, or could be, a big deal. But how to make sure this tantalising promise doesn’t disappear like a mirage in Whitehall sands?
The government has promised to establish a quantified baseline to measure progress and has set a timescale to meet the target (the end of this parliament). If it commits to independent verification of progress, the elements of a robust framework will be in place.
But it will also have set itself a monumentally tough task — particularly since the same government is introducing plenty of new regulation, generating its own headwind.
None of this has any chance of success without one critical thing: make it someone’s job to ensure the promise is delivered, someone who is both effective and in a position to exercise clout.
History can help. Having set a similar target, Tony Blair created the Better Regulation Executive (BRE) — a very small unit in the Cabinet Office. It was led by an energetic outsider, the Oscar-winning visual effects entrepreneur William Sargent, aided by Jitinder Kohli, a ferociously effective official. The unit could hire externally, including a young Jacinda Ardern, later to be New Zealand’s prime minister. Sargent was given permanent secretary rank, access to the prime minister and the ear of the cabinet secretary and the Treasury.
This demonstrably had impact. The unit only had mixed success in staunching the flow of new regulations — but it certainly had some. Meanwhile, the target to reduce administrative burdens by a quarter was measurably delivered.
So it is an oddity that it was quietly allowed to wither away. At this point the regulatory bindweed inevitably began to regrow — as it always will, without counterpressure to restrain and prune.
Sir Keir Starmer now needs to reinvent it. And we know the main ingredients: extreme leanness in size; high-quality people; being at the centre of government with access to key players; and external leadership willing to fight Whitehall fudge and compromise.
It could usefully be combined with the proposed Regulatory Innovation Office, a well-intentioned but narrow initiative of the science department. Whitehall does not need two better regulation units. More importantly, the insight behind RIO — that good regulation should promote disruption not inhibit it — should have much broader application than its current tech focus.
Starmer has also missed a trick in limiting his promise to business regulation. What about the public sector? Red tape is the bane of the lives of nurses, teachers and the police. In its day, the BRE rightly tackled public sector regulation as well as private — Starmer’s target should cover both.
Finally, we must think seriously about why some regulators are not as good as they could be. One glaring issue is a relentless increase in size, with startling growth in staff numbers in all the major regulators. People — especially given draconian powers and limited accountability — naturally create work, process and cost, not justified by benefits.
Talent can be an issue too. This is particularly true at some of the most challenged regulators — the Competition and Markets Authority, Ofwat and Ofgem — which by historical accident are trapped by civil service recruitment and pay rules. Absurdly, they are outbid even by other public sector regulators free from these constraints. The Treasury needs to impose a new bargain: free them up, but only alongside a sharp reduction in staff numbers across the entire regulatory state.
There is a risk the government is distracted by reducing the number of regulatory bodies — which may just mean cosmetic mergers — when there would be vastly more impact from reducing regulators’ size and improving their quality. Another task for a powerful new unit to turn aspiration into reality.
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