Reeves steps up pressure on UK regulators to scrap anti-growth rules

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Chancellor Rachel Reeves will step up pressure on Britain’s regulators this week to tear up anti-growth rules, amid renewed criticism from business that the government is making things worse.

CBI chairman Rupert Soames said on Monday that businesses had been “hurt” by government policies and that new employment rules would stifle growth and damage jobs.

Labour’s election manifesto promises to regulate everything from the workplace to football. The government’s own impact assessment of its workers’ rights package estimates it will cost companies £5 billion a year.

Downing Street insists there is no conflict between its deregulation drive and determination to introduce new rules in certain sectors.

“It’s a balance struck over regulation,” said Number 10, adding that legislation for better workplace rights would 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 will work with regulators to get rid of regulations that unnecessarily stifle growth.”

Reeves’ allies say the chancellor will do some “hustling” to Britain’s top regulators on Thursday to push that message, as he tries to prove he has an agenda to pull Britain out of its growth slump.

Some business leaders are not convinced. Soames told the BBC the government’s “work pay” workplace reforms would force companies to lay off workers and create “an adventure playground for employment rights lawyers”.

“I think they just won’t hire, I think they’ll let people go,” he said. “I think there can be a pretty ugly rush before some of these things become effective.”

Business groups accuse ministers of introducing a thicket of red tape as the government bans exploitative zero-hours contracts, ends “fire and rehire” tactics, introduces basic rights from day one and protects workers against unfair dismissal.

The Labor manifesto includes “enhanced registration and reporting requirements” for companies and promises to introduce “binding rules” on companies developing artificial intelligence.

Ministers have pledged to take “decisive action to improve building safety, including regulation” in the wake of the Grenfell Tower fire.

Starmer’s government is establishing a new independent regulator to ensure the financial stability of football clubs. The Treasury says new regulations on “buy now, pay later” companies will support sector growth and protect consumers.

Reeves Arguing that Labor will not back away from necessary new rules, it believes regulators must look at the existing rule book and adopt a whole new culture around risk.

in him Mansion House Speech In November, the chancellor told the watchdog: “The UK is controlling for risk, but not for growth.”

Starmer, Reeves and Jonathan Reynolds, the business secretary, asked 17 watchdogs on Christmas Eve to identify their pro-growth proposals. Thursday’s meeting at the Treasury is intended to assess progress.

The first phase of through-the-door regulators will include Ofwat, Ofcom, Ofgame, the Environment Agency and the Office of Rail and Road, along with the Competition and Markets Authority.

CMA is particularly in the sights of Reeves and Starmer. “They often come into negotiations with businesses,” says an ally of the chancellor.

The CMA released its annual plan on Monday, which used the word “growth” 111 times, as the regulator tried to show the government it was responding to the mandate.

The agency has been at pains that this is not a new approach, noting in the plan that this is the “third year” it has pursued such a strategy.

The watchdog announced that it had formed a “Growth and Investment Council” with organizations including the CBI and the British Chamber of Commerce to “help identify competitive opportunities to unlock growth and investment”.

In October, Starmer told a room of about 200 top executives that the government would “make sure that every regulator in this country, particularly our economic and competition regulators, takes growth as seriously as this room does”.

The focus stems in part from the CMA’s handling of Microsoft’s $75 billion acquisition of Activision Blizzard, which the agency ultimately approved in 2023 after controversially initially blocking the deal.

The push comes as new competition regimes for digital markets come into full force this month, which will affect big tech companies deemed to have external influence on certain digital operations.

Allies of Reeves say he wants to work with watchdogs, including encouraging them to push back against an entrenched culture where ministers “ask for more control every time something goes wrong”.

“Rachel wants them to turn around and say ‘this is not our problem, this is a political problem – you solve it’,” said one person. “He wants a challenge from regulators.”