Merging of regulators should be considered as businesses struggle with complexity, says new PAC report

- Government struggles to define goals around economic growth or how regulation is expected to contribute to it 

Businesses find the UK's regulatory landscape burdensome, complex, and difficult to navigate. In a report on regulating for growth, the Public Accounts Committee (PAC) calls for a review of UK regulation. It also finds that government's definition of economic growth amounts to an ambiguous objective, the success of which is impossible to measure, given a lack of clarity about what growth it is seeking to deliver and when.

The PAC's inquiry received written evidence showing how challenging it is for businesses to navigate UK regulation, with uncertainty adding to costs and delays for business through unpredictable timelines, unclear interpretations of rules and opaque enforcement thresholds. In areas such as environmental regulation, businesses have to navigate between different regulators. This can result in delays, inconsistencies, and gaps in oversight.

The report recommends that government review how effective the different regulatory delivery models are, in order to improve the regulatory landscape and inform consideration of merging regulators. A small number of measures can account for a significant proportion of savings and costs to businesses, but the PAC is concerned that savings identified to date are much smaller than must be achieved. Future measures around planning and corporate reporting may deliver £460m in savings – well below the existing target of £5.6bn in savings, and which could be offset by costs generated by other pieces of legislation.

The government has committed to cut the cost of the administrative burden on businesses from regulation, estimated at £22.4bn/yr, by 25% by the end of parliament. The PAC's report demonstrates that there is no robust plan to achieve this, and calls for milestones, regular progress reporting, and annual reports to Parliament, with independently validated cost savings.

Government published its Action Plan in March 2025, in response to concerns that regulation is inhibiting investment. It is designed to drive growth, tackle excessive risk aversion and reduce the administrative burden on businesses. However, government was unable to explain to the PAC's inquiry how regulation achieves growth, and the Committee warns the government that it will need a clearer strategy if the Action Plan is to be successful igniting growth.

However, when coming to scrutinise regulating for growth, the PAC found that HM Treasury does not know what risks it expects regulators to take. Nor how this would lead to growth, which it has not defined in any detail beyond an increase in GDP with no intended timeframe or targets around this  set. In evidence to the PAC's inquiry, government officials failed to speak to drivers such as trade, investment, or productivity improvements in regulated entities.

The government needs to be clear on what growth it is seeking to deliver and when, and the PAC is recommending HM Treasury should establish a time horizon for growth targeted in its Action Plan, as well as explain how regulatory actions are expected to contribute to it.

Sir Geoffrey Clifton-Brown MP, Chair of the Public Accounts Committee, said: “This is a government that built itself around missions. One of these was economic growth, and it launched a simply-titled Action Plan to help regulators deliver it. One would expect, then, that officials when asked basic questions about how regulation might deliver growth, or indeed the target of growth itself, that this Committee would have received book, chapter and verse. Alas, we received neither chapter, nor verse, and only the faintest inkling of book. In place of a detailed strategy, government has all but asserted that regulation can deliver growth, without explaining how, or if they will know if it does.

“Our Committee is of course supportive of the thinking behind the Action Plan – to encourage investment, and relieve the administrative burden on businesses. However, our inquiry heard evidence from those same businesses who still find the regulatory landscape a confusing mess. Government must be ready to offer a raft of measures the success of which it can properly track, rather than gesturing towards relieving duplication in reporting requirements as if this is an example of greater risk-taking in the sector - it is not. We hope the government takes heed of the recommendations in our report and undertake a full review of various different regulatory models, with proper feedback from industry as a guide.” 

PAC report conclusions

HM Treasury does not know what risks it expects regulators to take, or how it will lead to GDP growth. HM Treasury called for regulators to be less risk averse in the March 2025 Action Plan. However, HM Treasury could not provide examples of increased regulatory risk-taking delivering growth. When asked to provide an example, witnesses spoke about the need to reduce duplicative reporting requirements. This is not an example of increased risk-taking. Neither the Department for Business and Trade (DBT) nor HM Treasury have articulated what risk appetite they expect from regulators. The DBT-HM Treasury joint unit (the 'Unit'), set up to deliver the Action Plan, requires sponsor departments to issue new strategic policy statements (SPSs) to 16 key regulators. Traditionally these have listed multiple and competing objectives. For example, the SPS for Ofwat had around 50 objectives.  Three new SPSs have been completed thus far. HM Treasury pointed to strategic steers recently issued to the Environment Agency and Natural England. The new SPSs articulate trade-offs, but do not press for growth. We are therefore concerned that these steers will fail to support the growth agenda or lower regulatory risk aversion beyond an acknowledgement of trade-offs.

Recommendation 1. DBT and HM Treasury should set out how they will support departments to provide strategic policy steers to regulators that clarify their risk appetites. These should acknowledge the trade-offs regulators face, and articulate how regulatory actions are expected to contribute to growth in their respective sectors.

HM Treasury will not know if the Action Plan has been successful, as it has not defined growth in any detail beyond an increase in GDP. We do not believe HM Treasury is clear on what success or failure of the Action Plan looks like. HM Treasury defined growth as an increase in GDP but has not defined the intended timeframe or set any targets. DBT and HM Treasury failed to demonstrate how regulation contributes to key drivers of GDP growth in their evidence. They did not speak to drivers such as trade and investment, or the clear need to see productivity improvements in regulated entities. These omissions matter, since government needs to be clear on what growth it is seeking to deliver and when. Without this, HM Treasury's definition of growth amounts to an ambiguous objective rendering success impossible to measure. While short-term growth might mean cutting prices in some areas, longer-term growth could require price increases to encourage investment. Select committees can play a role in holding regulators accountable for shifting the dial on growth, but it is ultimately up to DBT and HM Treasury to implement robust accountability measures to ensure regulators' work increases GDP.

Recommendation 2. HM Treasury should establish a time horizon for growth targeted by the Action Plan, including supplementary indicators (such as investment, the costs associated with investment in different sectors, and productivity). This would establish if the Action Plan is influencing factors that increase GDP and by how much.

It can be burdensome, complex and difficult for businesses to navigate and cooperate with multiple regulators across government.Businesses can face challenges when they must deal with multiple regulators due to gaps, overlapping jurisdictions and trade-offs in regulation. We heard that some departments are trialling a 'lead regulator model' in certain sectors. HM Treasury highlighted the Nuclear Regulation Taskforce recommendation for a lead regulator, which the government has accepted. The Department for Environment, Food and Rural Affairs (Defra) has also been using the new model following the Corry review, with a lead environmental regulator for the lower Thames crossing. In comparison, government expects to create a new single water regulator following the Cunliffe review, and the Payment System Regulator's merging into the Financial Conduct Authority was instigated in the Action Plan.

Recommendation 3. DBT should put in place arrangements to review how effective the different regulatory delivery models are, using the findings to improve the wider UK regulatory landscape and inform consideration of merging regulators. Such arrangements must include feedback from industrial sectors and consumer groups.

DBT and HM Treasury do not have a grasp on which regulatory interventions they should prioritise to achieve the administrative burden reduction target. We know from past interventions that a small number of measures account for a significant proportion of savings and costs to businesses. We are concerned that savings identified to date are much smaller than needs to be achieved. DBT alluded to the new Planning and Infrastructure and Corporate Reporting Bills. These are expected to deliver £460 million in savings in total. This is clearly well below the £5.6 billion target, and could be offset by costs generated by other pieces of legislation. Departments will submit annual simplification plans identifying areas for improvement and DBT is supplementing this with engagement with businesses. However, a year on from the Action Plan's launch the Unit is still waiting for these plans to be submitted.

Recommendation 4. This Autumn the Unit should publish a table of the interventions each department will prioritise to achieve the annual administrative burden reduction target and the expected reduction. It should then update it annually.

HM Treasury and DBT do not have a robust plan to achieve the 25% reduction in the administrative burden. In the absence of individual targets for departments and regulators, the Unit relies on departmental annual simplification plans to monitor progress against the target. The Unit intends to publish analysis of the first set of these plans in spring 2026. HM Treasury announced that it identified the potential for £1.5 billion of administrative burden savings in October 2025, but this is a gross figure. The planned spring update will therefore be the first time the Unit reports on progress against the £5.6 billion net target. If this update shows the target is off-track, the Unit lacks strong accountability measures to hold departments to account. Savings under the Business Impact Reduction Programme (2015-2023) were scrutinised by the Regulatory Policy Committee. No such independent validation is planned for the Action Plan target. Instead, validation will be provided by departmental Chief Economists. This process has not yet started.

Recommendation 5.

1. a) The Unit should introduce milestones and regular progress reporting, to hold departments to account, and report annually to Parliament. Cost savings should be independently validated.
2. b) Alongside the information specified in recommendation 4, the Unit should monitor expected increases in the administrative burden arising from new legislation. This should be published, by department, and updated annually. This would enable transparency as to whether government is on track to meet its net reduction target of £5.6bn. Midway through the programme, if the Unit deems the programme to be off track, it must allocate administrative burden targets to departments.