Sunday, December 29, 2024
Have Labour taken another wrong turn?
They say that they have learnt that the prime minister has written to more than ten regulators - including Ofgem, Ofwat, the Financial Conduct Authority and the Competition and Markets Authority - on Christmas Eve to demand they submit a range of pro-growth initiatives to Downing Street by the middle of January:
One recipient of the letter, which was also signed by Rachel Reeves, the chancellor, and Jonathan Reynolds, the business secretary, said it was unambiguous in its direction to regulators to prioritise growth and investment.
It comes after a torrid first few months in office for the PM, who has been forced onto the back foot by a series of damaging sleaze rows and turbulent policymaking.
October's budget, which involved pledges to raise taxes by tens of billions of pounds, triggered a bruising backlash from the private sector, with bosses in a string of sectors warning that it will fuel inflation and cause job losses and business closures.
One regulatory source said this weekend that the letter to watchdogs and a wider drive for regulatory reform emanating from Downing Street were the brainchild of Varun Chandra, the PM's special adviser on business and investment.
Sir Keir's letter is understood to have referred to a need for every government department and regulator to support growth, and called on each recipient to submit five ideas for delivering that mandate by 16 January.
The letter also urged regulators to identify how the government could remove barriers to economic growth and where regulatory objectives were either conflicting or confused.
Mr Chandra is said by government insiders to have ruffled feathers in Whitehall since his appointment shortly after Labour's massive general election victory in July.
A former managing partner at Hakluyt, the strategic advisory firm, Mr Chandra has been "relentlessly" emphasising the urgency of transforming business sentiment to drive growth, according to one Whitehall source.
The insider added that the letter to watchdogs was expected to be the first step in a broader programme of supply-side reforms to be overseen by Downing Street during the coming months.
Most of Britain's economic regulators already have a Growth Duty enshrined in their statute, having come into effect in March 2017 under the Deregulation Act of two years earlier.
The push for watchdogs to have greater regard for economic competitiveness has already triggered a series of flashpoints, most notably in the financial services industry, where ministers have clashed with FCA officials over a number of policy areas.
The point of regulators is to protect the public from poor practice. The idea that the regulations they oversee hold back growth is a myth put about by businesses who are trying to increase profits at any cost. Any relaxation should be carried out carefully and after a full risk analysis.
We have already seen the consequences of regulators not having sufficient powers to rein in companies with all the sewage pouring into our waterways, and that is before we even get to the financial crash of 2008 which nearly wrecked our economy.
If Starmer and Reeves really are focussed on growth then perhaps they should have thought of that before choosing to burden businesses with additional costs through employee national insurance increases.
