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Better regulation: what's missing from the Government's approach?

Better regulation: what's missing from the Government's approach?


Most businesses would agree that better regulation is a desirable goal – but how do you actually achieve it? In the first of a series of briefings on regulatory reform across a range of different sectors, we look at the implications for business of the UK Government's approach to regulation and how far it is likely to succeed.

What is the UK Government's approach?

The UK Government set out its broad approach to regulation in January 2022.  It is based on 5 broad principles (explained in more detail at pages 20-32 of this document) which may be summarised as follows:

  • A sovereign approach – this seeks to take advantage of the greater regulatory freedom following the UK's departure from the EU to set frameworks which are tailored to the country's particular needs and policy preferences.  Such an approach may be advantageous in areas like financial services where the UK is already a leading player - and later in this series, we'll be looking at other areas where the UK might be able to gain advantage by pursuing its own distinctive path.  However, there are many sectors where the UK is not a big enough market in its own right to make this approach viable - and where divergence from the EU in particular is likely to entail costs.

  • Leading from the front – this mainly reflects a focus on putting frameworks of regulation in place for new technologies such as artificial intelligence or driverless vehicles. The aim is to enable the UK to gain a "first-mover advantage", encourage leading firms to establish here and influence regulation internationally by providing a model for other countries to follow.  It's a perfectly sensible principle to adopt, but as pointed out in the first bullet, there will be some markets where the UK cannot, realistically, expect to assume a leading role.

  • Proportionality – this reflects a belief that intervention in markets should not go beyond what is necessary to achieve the best outcomes.   It's an important and worthwhile guiding principle, but as we will see later in the series, a desire to give business as much freedom as possible can sometimes lead to undesirable levels of uncertainty over how to comply.  In implementing this principle, the Government also aims to achieve £1 billion in cost savings from removal of "retained EU red tape".  However, as noted above, divergence from EU regulation is not always cost-free.  More generally, the problem with anti-red tape initiatives of this type is that most of the "easy wins" have been done already and the UK typically does quite well in international surveys on ease of doing business (as do some EU Member States, such as the Netherlands). 

  • Recognising what works – this is the area where, in our view, Government could probably make most progress with improvements, by learning from what works well and what doesn't – and it will be a key theme of this series, where we will be drawing on our experience across a wide range of different practice areas.  However, such improvements are rarely headline-making and require engagement with businesses and other stakeholders, often over matters of highly technical detail – so again, this is by no means an "easy win".

  • Setting high standards at home and globally – the aim here is a laudable one, but there is an obvious tension between this objective and the reduction in costs that the Government would like to see as part of the implementation of the proportionality principle (see above).

Certainty: the missing sixth principle?

Should the Government have added a sixth principle, emphasising the value of regulatory certainty?   As recent events in the UK economy have proved, fiscal uncertainty can have very damaging effects.  Regulatory uncertainty is equally undesirable;  if businesses are unclear about what they need to do to comply with regulation, they will be likely to add a risk premium to their pricing or may decide not to invest at all.  Whilst it is important not to inhibit positive change, it seems to us that Government should be looking to make compliance with new regulation as straightforward as possible for business (and their advisers).   The reaction to proposals such as the Retained EU Law Bill - which has been heavily criticised for creating significant uncertainty over which retained EU legislation will be preserved beyond 2023 – also serves to underline the importance of being clear about exactly what Government plans to change and when (and setting realistic timetables for implementation).

Spotlight on better regulation series: what to expect

Our series on regulatory reform will cover a broad range of practice areas from financial services, corporate and disputes through to infrastructure and energy, employment, real estate, data and tech. As well as looking at the detail, we'll be taking a step back and looking at the bigger picture, together with the practical lessons for better regulation more generally – especially what works and what doesn't. Further articles in the series will appear on this page.

You can also use our Regulatory Reform portal to check for the latest updates on changes to regulation across all areas on which we advise.

For further information please contact:

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Jonathan Rush
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Rachel Woodburn

Spotlight on Better Regulation

A series of briefings looking at regulatory reform and its implications for business across a range of different sectors.

Spotlight on Better Regulation
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