IoR Evidence to the House of Lords on Regulation and Growth
The Institute of Regulation has submitted its response to the House of Lords Industry and Regulators Committee, setting out how effective regulation underpins economic growth and supports a thriving UK economy. The IoR is first and foremost a professional network, not a trade body nor a representative organisation. As such, this response represents the views of the Institute of Regulation directors, drawing on their combined decades of experience in regulation and their contact with IoR members, as well as insights from regulatory literature and the IoR’s work with regulatory bodies in several countries — particularly Australia, Canada and New Zealand, where IoR links and membership are strong.
Alongside answering each of the Committee’s questions in detail, our submission highlights five overarching points that shape our perspective on the relationship between regulation, growth, and good governance.
Overarching Points
We have responded to each question but make five overarching points, which inform our more detailed responses.
Good regulation is a precondition and necessary support to economic growth. By promoting trust and fair markets, regulators play an essential and necessary role in the economic ecosystem that can support business growth. As such, the debate about regulation and growth should move beyond a binary focus on ‘more regulation versus less regulation’ to a discussion about ‘good versus poor regulation’. In some areas, more regulation may sometimes be necessary – and indeed welcomed by business - if new markets are to flourish and grow. Elsewhere out-of-date regulation and regulatory frameworks must be removed in order not to inhibit business innovation – sometimes this will require statutory change. The key is for businesses to have confidence in the consistent application of fair, stable rules so that they can make long-term investments in the UK and its people.
UK regulators support the growth agenda. There are no UK regulators that resist the Government’s desire to promote growth. Indeed, our experience is that UK regulators aspire to the same goal, within the scope of their remits. The debate is rather about how best to achieve growth, what to prioritise, what to protect and how to resource any necessary changes to rules or regulatory practices. The Government and regulators in each sector should seek a shared understanding of these matters, including levels of risk tolerance for adverse outcomes. This shared understanding will enable the Government’s overall approach to be cohesive and reflect a consistent theory of growth that is more likely to succeed.
One size does not fit all. There is a wide diversity of regulators in the UK, variously involved in the regulation of professionals, of companies’ activities, of products and services (including health, education and social care), and of markets. These regulators operate under legislative regimes of varying sophistication and flexibility, and maturity. Some of these operating contexts make it easier for regulators to support growth compared with others – and the approach must be tailored case by case.
Regulatory independence and growth are not opposed. As your Committee has previously noted, “independent regulation can support business confidence and …enable long-term decision-making.” Regulators must be politically and publicly accountable and responsive to changing government priorities. But to have the confidence to invest and innovate, businesses must also trust that they are competing on a level playing field within a consistent regulatory regime that is fair to all parties.
Regulators are well-placed to inform government policy. Regulators in the UK have a deep understanding of the sectors they regulate. They can identify and respond to emerging risks and issues and work with governments (at UK and devolved levels) to remove unnecessary barriers and foster economic growth.
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