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Chancellor Rachel Reeves this week will step up pressure for Britain’s regulators to scrap anti-growth rules, amid fresh criticism from business that the government is making things worse.
CBI chairman Rupert Soames said on Monday that business had been “damaged” by government policies and that new employment regulations would hamper growth and lead to job losses.
Labour’s election manifesto promises to take control of everything from the workplace to football. An impact assessment of the government’s own workers’ rights package estimates it will cost companies £5 billion a year.
Downing Street has said there is no contradiction between its commitment to introducing new rules in certain sectors and control.
“It’s a fine balance,” says No. 10. Legislating for better workplace rights can help create a more productive workforce.
But a spokesman for Prime Minister Sir Keir Starmer added: “The government is going to take an unabashedly pro-growth approach. We work with regulators to remove regulations that unnecessarily inhibit growth.
Allies of Reeves said on Thursday some of Britain’s top regulators were “putting it in” to press that message to show the chancellor has an agenda to lift Britain out of its growth slump.
Some business leaders are not convinced. Soames told the BBC that the government’s “pay-to-work” workplace reforms would encourage companies to lay off workers and create “a playground for employment rights lawyers”.
“I think they’re not only not hiring, they’re letting people go,” he said. I imagine there will be an ugly rush before some of these things are implemented.
Business groups accuse ministers of introducing red tape while banning exploitative zero-hours contracts, ending “fire and hire” schemes, introducing basic rights from day one and preventing workers from being unfairly dismissed.
The Labor manifesto also includes “increased registration and reporting requirements” for companies and promises to introduce “mandatory regulation” on companies developing artificial intelligence.
In the wake of the Grenfell Tower fire, ministers have vowed to take “critical action to improve building safety, including regulation”.
The Starmer government is establishing a new independent regulator to ensure the financial sustainability of football clubs. The Treasury said “buy now, pay later” companies will support growth in the sector and protect consumers.
Reeves While Labor doesn’t shy away from necessary new laws, it believes regulators need to look at the existing rulebook and adopt a whole new culture of risk.
in her Mansion House speech In the year In November, the chancellor told regulators: “The UK is controlling risk but not growth.”
Starmer, Reeves and Jonathan Reynolds, the business secretary, asked the 17 Guardians to identify development proposals on Christmas Eve. Thursday’s meeting is meant to review progress in the Treasury.
First-tier regulators include Ofwat, Ofcom, Ofgum, the Environment Agency and the Office of Rail and Road, along with the Competition and Markets Authority.
CMA is specifically in Reeves and Starmer’s sights. “They are the ones who often talk to business,” said the chancellor’s partner.
The CMA published its annual plan on Monday, which uses the word “growth” 111 times as the regulator tries to show the government is responding to its mandate.
The agency stated that this is not a new approach and that this is the “third year” that such a strategy has been followed in the plan.
The watchdog also announced the creation of a Growth and Investment Council, which will “help identify competitive opportunities to unlock growth and investment”, including the CBI and British Chambers of Commerce.
In October, Starmer told a group of about 200 senior executives that the government would “ensure that every regulator in this country, particularly our economic and competition regulators, is taking progress as a class”.
The focus stems in part from CMA’s $75 billion acquisition of Activision Blizzard from Microsoft, after the agency ultimately blocked the controversial 2023 deal.
The push comes as the new competition system for digital markets comes into full force this month, which will affect large tech companies deemed to have too much influence in certain digital activities.
She said she wants to work with the Conservatives, including encouraging Reeves’ fellow ministers to “reject the entrenched culture of asking for more regulation every time there’s a problem”.
One person said: “Rachel wants them to turn around and say, ‘This is not our problem, it’s a political problem – you solve it.’ “She wants a challenge from the supervisors.”
