Britain’s regulatory state is about the only thing that’s growing under this Labour government, says Andrew Griffith
As business now know, words are cheap – it’s actions that count. Rachel Reeves has spoken at length about her drive to deregulate the city, from her Mansion House speech in the summer to a recent deregulatory launch. The numbers, however, tell a very different story.
Figures from the TaxPayers’ Alliance reveal the UK’s regulatory state is just about the only thing growing in Labour’s Britain. Across key financial regulators, headcount has risen by 55 per cent in the past decade. The little-known Payment System Regulator, to take one example, has managed to increase its headcount by nearly 200 per cent.
The result is an astonishing 4,466 people more people working across the Financial Conduct Authority, Competition and Markets Authority, Payment Systems Regulator and Prudential Regulations Authority than there were almost a decade ago.
While GDP per capita growth has remained essentially flat in the last decade, the budgets of these regulatory fat cats have ballooned in the same period. From 2015 to 2025, the FCA’s income surged by 48 per cent from £554m to £820m.
What do any of these paragons of paperwork have to show for it? A vast expansion of the regulatory landscape under their watch which has forced the private sector into a compliance and HR arms race, sapping resources from their real operations and rendering them less competitive internationally.
Bloated bureacracy
Like with every bloated bureaucracy, ordinary people pay the price several times over. Once through higher taxes, again through higher prices, again with fewer jobs, and again with lower returns on their private and pension investments. As innovation and investment stutter, so does the growth this government is so fond of promising.
Since the 1990s Britain has slipped from world’s top 10 nations for GDP per capita to not even being in the top 20. Our competitiveness has suffered a similar fate, with the UK dropping eleven places in the IMD world competitiveness ranking since 2021 alone to 29th globally.
Every extra hour businesses spend subsumed in Britain’s byzantine bureaucracy takes us further down the league tables. Every pound spent on expensive regulatory consultants and lawyers is a pound not spent on hiring, investing and competing in the wider world as younger, nimbler economies pass us by.
In a recent FCA survey, combined 77 per cent of fixed firms said they faced “more requests than necessary” or “a lot” of requests that, while understandable, still absorbed huge amounts of time and manpower. More and more firms will shy away from doing business in the UK if regulators are not kept under control.
Meanwhile, the Chancellor has constituted yet another taskforce to identify which regulators have become a brake on economic growth. Still having to ask that question after a year and a half shows just how wrong this government has gone.
In their first 8 months in office alone, Labour created 27 new quangos
Instead of cutting back, Labour are actively birthing new regulatory demons to haunt businesses. While the economy loses 100,000 jobs, Orwellian “Fair Work Agency”, for example, is getting sweeping powers to hunt down and penalise businesses even where not a single worker has complained. In their first 8 months in office alone, Labour created 27 new quangos.
How does it end? The only possible solution is to finally cut back the thicket of red tape that has grown under successive governments. To cut back not with pruning shears, but with a chainsaw. Last week Conservatives announced the first stop for the chainsaw by committing to the repeal of a vast body of ESG and Climate Reporting requirements, including by constraining the remit of regulators in this area. I can promise you that we won’t stop there.
It will take plenty of work and good ideas from people like the Taxpayers’ Alliance, but Britain can beat back bureaucracy with the right leadership. It’s just a shame Labour are all talk and no chainsaw.
Andrew Griffith is shadow business secretary