Former cabinet secretary Mark Sedwill is leading a push to overhaul the UK’s regulatory regime to seize freedoms offered by Brexit and reduce burdens on public sector workers and businesses.
Lord Sedwill, who stepped down as the nation’s top civil servant and national security adviser in 2020, said that since the UK left the European Union and took back regulatory authority it has largely maintained the system inherited from the EU.
“It is time to act, and not by setting fire to all regulation,” he said. “Smart, agile regulation must be part of post-Brexit Britain’s competitive advantage, while maintaining the economic, social and environmental standards our citizens demand.”
Sedwill said such standards are also central to modern free-trade agreements, including the new free-trade areas encompassing some of the world’s fastest growing economies, which Britain wants to trade with.
The former cab sec has spent the past few months chairing an expert panel advising the Policy Exchange think tank as part of its Re-engineering Regulation project. His comments come in the foreword to its just-published blueprint for reform.
Sedwill said it is “clear” that existing regulatory regimes often ratchet risk aversion and red tape onto both regulators and the regulated. He said some regulators have “magisterial authority” to intervene across sectors while others share a crowded space with counterparts and “struggle to respond to change”.
“The UK’s regulatory regime isn't as eye-catching a topic as debates over tax, spending and interest rates, but getting it right is central to Britain's long-term economic growth in the post-Brexit world,” he said.
“Britain needs fewer, more authoritative regulators, with clear mandates from government and accountable to parliament for promoting the health as much as assuring the hygiene of their sectors, judged on impact not process. Regulators’ performance should also be subject to regular independent review by the National Audit Office.”
Sedwill called on the government and parliament to seize the opportunity to both streamline and modernise regulation to deliver the high environmental and social standards that citizens want and “the competitive edge the post-Brexit economy demands”.
The Policy Exchange report said successive governments’ attempts to reduce red tape and the number of regulatory quangos show a “constant tension” between the impulse to regulate and an acknowledgement that regulation places costs on organisations and limits individuals’ freedom.
It added that departments are only conducting post-implementation reviews on between 25% and 40% of the regulations that should be reviewed, and said that if government wishes to use such tools to promote better regulation, it must hold departments and regulators to account for doing so.
‘The centre needs more grip’
Among the report’s recommendations is a call for the centre of government to get a “greater grip” on regulatory policy. It said that over time, institutional responsibility for cross-government policy on regulation has shifted from the centre of government to the business department.
“It should be returned to the centre of government to increase coordination, prioritise areas for reform, and hold departments to account for regulatory costs and benefits,” the report said.
Policy Exchange is calling for the creation of a new regulatory-reform unit in the Cabinet Office and the appointment of a dedicated minister for regulatory reform.
Under the proposals, the new unit would “consolidate and merge” the functions of the Cabinet Office’s existing Brexit Opportunities Unit and the Better Regulation Unit, which currently sits within the Department for Business, Energy and Industrial Strategy.
The report said the new unit would increase cross-government oversight and should also be responsible for developing the Better Regulation framework, conducting periodic reviews of the role and performance of regulators, and developing long-term government priorities for regulation.
Elsewhere, the report said there should be a “presumption against the creation of new regulators and government should “explore opportunities to consolidate the number of regulators in any given sector”. It said fewer, bigger regulators in key areas would enable greater democratic accountability for regulatory outcomes, both in terms of public protection and cost.
It said the UK’s multiple financial regulators could be a “major barrier” to innovation and new market entrants lacking the resources of larger, well-established firms. It added that the NHS in England is monitored by 10 different service regulators and eight different regulators of the healthcare professions.
“The overlap of functions simultaneously increases the burden of regulation on the NHS, creates a potential for conflicting requirements that need to be reconciled, and risks individual regulators avoiding responsibility for the consequences of regulatory failures,” the report said.
“Consolidating the number of regulators in individual sectors would subject the leaders of these regulators to greater scrutiny and accountability.”
But the report added: “Consolidation should not come at the expense of ensuring that the remit and objectives of regulators are coherent and joined-up.”
Policy Exchange said MPs on parliament’s Public Accounts Committee should be given responsibility for conducting democratic oversight of government policy on regulation and the performance of regulators – or that a new committee to perform the function could be set up.
The report also said government should require regulators to collaborate and create a statutory duty for them to report on how they comply with that requirement, which would be checked by the National Audit Office.
The report can be read here.