Chancellor Rachel Reeves has summoned several of the UK’s most important regulators to Downing Street on Thursday to explain how they intend to work to boost growth, as she seeks to restore confidence in her economic plans.
Regulators already operate under a legally binding “growth duty”, introduced in 2017, requiring them to consider the “importance of the promotion of economic growth” while ensuring that any regulatory action is “necessary and proportionate”.
However, Reeves used her first Mansion House speech last November to warn the UK “has been regulating for risk, but not regulating for growth” and in December asked regulators to draw up plans to spur the economy.
Here, the Financial Times looks at their plans to respond to the government request.
Ofcom, communications regulator
Ofcom plans to continue to encourage fibre broadband rollout — including a five-year plan for BT’s Openreach arm — across the UK, as well as forthcoming auctions of radio spectrum for mobile services, drones and satellites to boost connectivity.
The regulator will also look to use the Media Act this year to help the UK’s public sector broadcasters, such as the BBC and Channel 4, to invest in developing their future services.
Meanwhile, Ofcom is taking on the world’s largest tech firms, including Elon Musk’s X, over what they are able to show and who is able to access content under the UK’s Online Safety Act.
Although not focused on growth specifically, officials hope there will be benefits to homegrown tech initiatives around safety and verification.
Competition and Markets Authority, competition regulator
The CMA has been central to the government’s ambitions, with Prime Minister Sir Keir Starmer singling out “economic and competition regulators” when addressing a room of 200 business executives last October.
The CMA has responsibility for approving the biggest mergers in the UK, but business complains the agency is too interventionist. The regulator came under intense criticism in 2023 over its initial decision to block Microsoft’s $75bn acquisition of Activision Blizzard.
The watchdog is due to start a review this year into whether it should more frequently use “behavioural remedies”, such as investment commitments or price freezes, to approve mergers, rather than forcing businesses to sell assets.
The agency said this week that it has set up a “growth and investment council” with bodies such as the CBI to try and “identify opportunities for competition to unlock growth and investment”.
CMA chief executive Sarah Cardell told a House of Lords committee this month that the watchdog recognised there was a “perception of a chilling effect” and it was looking to work more closely with business.
Environment Agency, environmental regulator
Government officials said the EA’s biggest direct contribution to boosting growth was work in building flood defences. “That creates jobs in terms of building projects and investing in regional economies. It also builds wider economic resilience,” they said.
Experts said the EA’s environmental remit, which can see it block developments on environmental grounds, created the potential for confrontation with Labour’s mission to build 1.5mn homes over the parliament, but could also be vital to spurring growth.
Last September, the government overruled EA concerns about water scarcity in Cambridgeshire and granted permission for the 1,000-home Darwin Green development that the agency had previously blocked.
Paul Collins, who worked at the agency for more than a decade until April 2024 and is now at law firm Ashfords, warned of challenges to come. “The growth duty is already in primary legislation. The question is to what extent the new government wants to elevate that further,” he said.
Ofgem, energy regulator
Ofgem is working to restore its reputation after dozens of energy suppliers collapsed in late 2021 and 2022, leading to criticism it had been too relaxed about letting suppliers into the market who were unable to withstand wholesale gas price surges.
The regulator also has the much larger challenge of trying to help the UK meet its goal of cutting total carbon dioxide emissions to net zero by 2050 — and the power sector by 2030. Reeves’ push for growth now gives it another pillar to balance.
It has been trying to encourage investment in electricity grids by overhauling outdated bureaucratic procedures and helping grid owners plan further ahead. But with an estimated £40bn annual energy investment needed to meet the government’s 2030 target, it will need to go further.
Ofwat, water regulator
The watchdog, set up in 1989 when the sector was privatised, is worried about 10 of the water companies’ debt-laden balance sheets and seeking to persuade international investors to inject equity.
In December, Ofwat allowed companies to raise bills by an average 36 per cent by 2030 to pay for an estimated £104bn of work, including overhauling ageing infrastructure. Government officials have said this activity would boost the economy.
However, some companies have argued the increase is not enough to fix the infrastructure backlog. High interest rates on their collective £74bn debt, steep energy costs and labour shortages will constrain their ability to spur growth.
Office of Rail and Road, railways regulator
The government has said reforming Britain’s fragmented and inefficient transport system can help drive growth, and has pledged to improve the railway’s performance and modernise the road network.
The ORR regulates Network Rail and National Highways, public bodies responsible for delivering major infrastructure projects with combined annual budgets of £13bn and nearly 50,000 staff.
But senior industry executives have questioned how the ORR can strengthen the economy when the passenger rail network is about to be renationalised. “Growth and rail ideology I think are oxymorons,” one rail executive said.
The ORR will still be able to stimulate a degree of competition on the railway by granting private companies the rights to run trains on a handful of routes judged not to compete with established operators.
But the transport secretary has cautioned the regulator not to grant “open access” rights that interfere with the main public railway.
Reporting by Peter Foster, Daniel Thomas, Gill Plimmer, Philip Georgiadis, Rachel Millard and Suzi Ring
