Calls for the Chancellor to accelerate her City-wide deregulation push grew on Monday after freshly obtained figures revealed headcount at financial regulators has ballooned by over 50 per cent in the past decade.
According to data shared exclusively with City AM, nearly 4,500 more staff work at the City’s five largest regulators than did 10 years ago, despite efforts from consecutive governments to bear down on their ballooning regulatory burden on the engine room of the UK economy.
Headcount at the Financial Conduct Authority (FCA), the financial sector’s largest watchdog, expanded the most of any regulator, the figures showed, growing by 2,149 staff members or 65 per cent. This coincided with 135 additional staff joining the Payment Systems Regulator (PSR), which the government has since vowed to abolish and merge with the FCA.
The growing headcount among City watchdogs was reflected in a parallel rise in staff cost and overall expenditure. The taxpayer-funded Competition and Markets Authority (CMA) has seen its staff bill more than double to £107m since 2015, with two of the three largest single-year increases coming in the last two years.
Staff costs at the FCA, which is not publicly funded and generates income from fees and fines issued to regulated firms, increased the most, jumping from £324m to £492m, or 52 per cent.
Calls grow for faster deregulation
The Labour government has made deregulation one of the core components of its drive to grow the UK economy, branding the burden they place on UK firms as a “boot on the neck” of innovation and entrepreneurialism.
Rachel Reeves has since folded the PSR into the FCA in a bid to streamline processes and minimise reporting burdens, and vowed to “take out” more regulators in a bid to make it “easier to do business in Britain”.
But the figures, which were obtained by the Taxpayers’ Alliance (TPA) and also feature data from the Bank of England and the Prudential Regulation Authority, reveal the scale of the government’s task and have stoked fears that ministers are not moving to slash the strain watchdogs place on firms with enough urgency.
Regulation still a growth sector
Andrew Griffith, the shadow business secretary whose Conservative party was in power for nine of the 10 years included in the study, told City AM: “The research confirms one of the few growth industries in Labour’s Britain is regulation and red tape.
“Today’s City ‘fat cats’ are those who take no risk themselves but who make it slow and costly to do business here.”
John O’Connell, the chief executive of the TPA, added: “The growth in the size and power of Britain’s financial regulators demonstrates everything wrong with Britain’s economy.
“Pen pushers and busy bodies are being prioritised over the wealth creators and risk takers that should be powering our economy but which are instead being held back.”
A spokeswoman for the FCA said: “We need to make sure we have the people to cover a remit that Parliament has regularly expanded.”
Over the previous decade, the purview of many of the Square Mile’s main watchdogs has been expanded dramatically. In the FCA’s case, it now includes work previously done by European Union organisations and the responsibility to regulate new innovations like cryptocurrency and the burgeoning buy now, pay later industry.
The Bank of England declined to comment. The CMA was approached for comment.