Going for [rural] growth – how can regulators make a difference?

Regulation is an integral part of our everyday lives, yet it often goes unnoticed – from the professionals we come into contact with (e.g. doctors, solicitors, architects) through to the water and energy we use to run our homes and even the Artificial Intelligence tools in our workplace – regulation shapes the way we think and what we do. So who regulates, what is regulation used for, and with the Government focussed on growth, what more can regulators do to support this? Jessica Sellick investigates. 

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The Labour manifesto contained a commitment to kickstart economic growth by ensuring ‘economic regulation supports growth and investment, promotes competition, works for consumers, and enables innovation’. The manifesto also described how ‘Labour will create a new Regulatory Innovation Office…This office will help regulators update regulation, speed up approval timelines, and co-ordinate issues that span existing boundaries’. More widely, the manifesto included commitments for sector-specific regulation for water, energy, housing, football and gambling. Since taking office the Labour Government has emphasised the crucial role of regulators in driving economic growth. What is regulation, how is it applied, what are the implications of the Government’s growth mission, and what does all this mean for rural communities and businesses? 

What is regulation? The origins of regulation can be traced back to population growth in the 12th and 13th centuries which led to more land, including areas within the royal forests, being brought into production to feed a growing population and produce wool to export to Europe. This, along with the establishment of new towns, led to the creation of guilds, charter fairs and other medieval institutions. Many English towns acquired a charter from the Crown, allowing them to hold an annual fair over 2-3 days. For example, between 1200 and 1270, some 2,200 charters were issued by English Kings. 

Since then, regulations and regulatory powers, usually written by the Government, have been implemented across a range of sectors, services and products. In the 17th century, for example, The Test and Corporation Acts prohibited citizens from universities and corporate bodies if they were not members of the official state church. In 1788 the Act for the Better Regulation of Chimney Sweepers and their Apprentices’ set 8-years as the minimum age for an apprenticeship. This was followed in 1802 by the Health and Morals of Apprentices Act which was the first piece of factory legislation [with further factor legislation introduced from 1844 onwards]. This legislation led to regulations covering industrial workplaces. Similarly, Government regulation of the railways dates back to the 1840s – with Inspectors of Railways first appointed under an 1840 Act, and the Railway Regulation Act 1844 which set a minimum standard for rail passenger travel and provided compulsory services at a price affordable to poorer people.  

Today, in public policy circles regulation is often applied to the use of controls or restrictions on specific activities or behaviours. According to the National Audit Office (NAO), regulation is ‘characterised by a set of rules and activity that, together, incentivise people and organisations to meet expected behaviours’. The Institute for Government (IfG) defines regulation as ‘The use of rules, incentives and penalties to change the behaviour of individuals or organisations’. While rules may be set out in law, this is not always the case. Regulation involves not only setting standards, but monitoring performance against them and enforcing compliance. 

In academic circles, regulation has become associated with regulation theory, a significant body of research and literature. It originated in work undertaken by a group of French economists in the mid-1970s and since then has been translated and applied across social policy, economic sociology, political science and geography. In all of these disciplines, regulation theory seeks to analyse economic and external forces that attempt to regulate instabilities and crisis tendencies in capitalist economies. 

Taken as a collective, regulation is often used to address market failure [i.e., intervening to protect citizens where they do not have the ability to make free choices on the services or products they use]; to underpin the operation of markets; to protect the rights and safety of citizens; and in the delivery of public goods and services. When regulation fails, the need for subsequent intervention can leave taxpayers with significant liabilities (e.g. the bailout of the financial sector 2007-2009) or a collapse in public confidence (e.g. the fire at Grenfell Tower). Regulation matters because it can support better lives and better societies, and it can have truly devastating consequences when it fails. 

What is regulated, and how is it done? There is no single definition of a regulator. They can be statutory, which means they are given powers by Parliament to regulate in certain ways – and these regulators can be public bodies, non-governmental bodies or completely independent from Government. Regulators can also be non-statutory such as industry or professional bodies. The Government does not publish a full list of bodies with a statutory regulatory function, but back in March 2024, research by the IfG identified 116 such bodies; while the NAO has estimated that there are some 90 regulators in the UK. Their regulations and regulatory powers derive from primary and secondary legislation. Regulators cover a wide range of sectors such as financial services, health, social care, housing, education, transport, communications, utilities and the environment. Similarly, other bodies such as Local Authorities while not necessarily on a list of regulators, do carry out regulatory roles and functions (e.g. trading standards, environmental health). Individuals and organisations can also voluntarily follow sector or industry standards and codes of practice without any involvement from a regulator.  

According to the Institute of Regulation (IoR), “many UK regulators were created in response to specific circumstances within a particular sector. For example, IPSA was created to regulate MPs’ costs following the 2009 expenses scandal; and the Building Safety Regulator was established after the Grenfell tragedy. A football regulator is now to be established following concerns expressed by fans and others. In other circumstances, regulators are abolished, overhauled, or re-established following perceived failures in previous regulatory regimes. This has happened in the regulation of health, audit, financial services, and local government”. 

The way regulators operate can vary widely – from being relatively light touch and providing guidance or issuing warning notices, through to being prescriptive and rules based and therefore setting very specific requirements and actions that must be complied with. The form regulation takes will also vary according to Government objectives, the outcomes we want to see (e.g. delivery, innovation, capacity building, safety) and the nature of the risks being addressed. Regulators may also monitor compliance and again this can vary widely – from encouraging transparency through to imposing rigorous reporting requirements and undertaking inspections. This monitoring may take place on a cyclical basis or through adopting a risk based approach. Individuals and organisations within a regulated sector must comply with regulations.

Regulators are also funded in a variety of ways. These may include fees and charges which are paid by the individuals or organisations being regulated and/or through Government funding. In 2022-2023, the NAO estimated that the 12 largest regulators in the UK spent over £100 million. The top three were the Environment Agency (£656 million), the FCA (£649 million), and Prudential Regulation Authority (£326 million). Currently, approximately 72% of the Environment Agency’s funding comes from grant in aid, and the rest from charges and other income whereas the FCA is entirely funded by the fees it charges regulated firms. The PRA is part of the Bank of England which generates the funds needed to deliver its work through a Levy, charging firms, providing banking services, charging for the cost of producing banknotes and investing capital. 

Over time, there has been an increasing focus on how regulators deliver value-for-money. Indeed, regulators are required to estimate the impact on businesses, households and the environment of any significant new regulation, and the Government shares these impact assessments with Parliament. 

All of this existing work does not tell us how every regulator prioritises their objectives, outputs and outcomes; their governance; what standard data they collect to evidence their effectiveness and efficiency; and how they share information with the public about the funding streams they receive and the work they undertake. How can we identify the level of regulation needed to drive the change that we want to see? How can we measure the impact and value offered by regulators versus not regulating or deregulating? 

How is the role of regulators changing? The Government has emphasised the crucial role of regulators in driving economic growth. In a speech at the Government’s inaugural International Investment Summit back in October 2024, the Prime Minister said he would “rip out the bureaucracy that blocks investment and ensure every regulator in the UK takes growth as seriously as this room does”. 

In a speech titled ‘competing for growth’, Sam Woods, the deputy governor for Prudential Regulation and chief executive of the PRA, set out how the financial regulator is ‘strongly committed to its new objective and is taking concrete steps to improve the regime’s contribution to UK growth and competitiveness…[and how it is] going about this in a careful, balanced way’. 

Economists at The Financial Conduct Authority (FCA), published a research note setting out the role of regulation in enabling financial services to support growth and competitiveness in the UK economy. This focused on (i) increasing exports by enhancing the international competitiveness of financial services; (ii) increasing the productivity of the UK financial services sector; and (iii) delivering high-quality and value-driven services, investment and oversight to where they are most needed. The FCA is asking for comments and suggestions about areas for further research. In a speech, Nikhil Rathi (chief executive at the FCA) described how ‘A shift in approach is underway. We won’t always all agree. But we should challenge one another on risks we’re willing to accept for growth…In short, isn’t it time to stop admiring the problems and execute solutions? To collaborate to deliver growth rather than compete for who’s done best’.     

On 24 December 2024, the Prime Minister, Deputy Prime Minister and Chancellor wrote to 17 UK regulators asking them to put forward pro-growth proposals. On 16 January 2025, the Chancellor and Business Secretary hosted a summit with UK regulators – the first in a series – asking each regulator to propose five reforms to support growth in the coming year. Following the meeting, the Chancellor described how “There’s no substitute for growth. It’s the only way to create more jobs and put more money in people’s pockets, which is why it’s at the heart of our Plan for Change [the missions]. Every regulator, no matter what sector, has a part to play by tearing down the regulatory barriers that hold back growth. I want to see this mission woven into the very fabric of our regulators through a cultural shift from excessively focusing on risk to helping drive growth”. This was followed, on 17 March 2025, with the Chancellor publishing an Action Plan, with regulators signing up to some 60 growth boosting measures around fast-tracking new medicines, attracting more investment from international financial services firms, paving the way for package deliveries by drone, reviewing contactless payment limits, simplifying mortgage lending rules and helping start-ups to secure funding. The Chancellor described how “The world is changing and that’s why we must go further and faster to deliver on our Plan for Change to kickstart economic growth. Today we are taking further action to free businesses from the shackles of regulation. By cutting red tape and creating a more effective system, we will boost investment, create jobs and put more money into working people’s pockets”. While there is not currently a legal definition of a regulator, the Chancellor has said the reforms will apply to all bodies exercising regulatory powers and functions in business, finance, energy and environment sectors. 

Also in March 2025, the Government announced that Lord Willetts had been appointed as Chair of the Regulatory Innovation Office (RIO). He will lead a team focused on bringing emerging technologies such as drones delivering medicines or AI training software for surgeons to market quickly and safely. The RIO’s work will build on a report by PWC that estimated the potential impact of drones on economic output, jobs and emissions – finding that drones could contribute up to £45 billion to the UK economy by 2030, and generate £22 billion in net cost savings over the same period. Lord Willetts described how “The Regulatory Innovation Office has an exciting opportunity to shape regulatory approaches that empower new technologies and I look forward to working alongside the team to deliver real change and support the UK’s position as a global leader in science and technology”. 

Asking regulators to consider growth is not new. Back in 2012, the Government commissioned Frontier Economics to review relevant literature on the theoretical and empirical links between regulation and economic growth. The literature review focused on product market and labour market regulation. Reviewers found the relationship between regulation and growth can be both positive and negative, depending on the type of regulation considered. For example, in the case of product markets, regulation can create barriers to entry therefore reducing the level of competitiveness in markets. Much of the literature on labour market regulation focused on employment protection legislation where its impact on growth was unclear. 

The Growth Duty came into effect back in March 2017 and requires regulators to have regard to the desirability of promoting economic growth, alongside the delivery of protections set out in relevant legislation. The latest statutory guidance, published in May 2024, sets out how regulators can define their own sector-specific approach to identifying and delivering sustainable economic growth; and outlines behaviours that contribute to good regulatory decision making and smarter regulation. This is underpinned by a Growth Duty Performance Framework which provides a template for regulators to complete setting out their performance. 

A renewed emphasis on growth has opened up discussions and debates, with some commentators calling for regulators to defend their independence and maintain transparency in their decision-making in order to balance growth with their other objectives effectively; and how regulatory frameworks can boost innovation and artificial intelligence (with Government proposing that regulators take an agile approach).  

On 11 March, the Government announced that the Payment Systems Regulator (PSR) would be abolished to reduce the burdens on business. The Prime Minister described how “For too long, the previous Government hid behind regulators – deferring decisions and allowing regulators to bloat and block meaningful growth…And it has been working people who pay the price of this stagnation”. Then, on 13 March, the Department of Health and Social Care (DHSC) announced changes to NHS England. Under the proposed reforms, the body will be brought back into the DHSC to ‘reduce layers of red tape and bureaucracy, more resources will be put back into the front line rather than being spent on unnecessary admin’. In an interview for the BBC, the secretary of state said “they [frontline leaders] are often receiving a barrage of commands – sometimes contradictory and competing demands – from the Department for Health, from NHS England and from the wide range of regulators in this space”. It is currently unclear if or where NHS England’s regulatory powers will sit.  With the entire regulatory landscape being reviewed by Government, what regulation is necessary and needed to boost growth? And will the Chancellor’s Action Plan deliver?    

How can we ensure regulators and regulation is fit-for-purpose? A survey of 2,000 citizens and 500 regulated business leaders carried out by PA Consulting back in 2023 found 76% of the public understood regulators’ roles, 70% of businesses thought regulators were effective, and 76% of respondents respected regulators. However, 46% of business leaders thought that regulators were working mainly in the interests of larger businesses. Indeed, some businesses have voiced concerns that regulations impede their competitiveness with regulatory costs increasing. 

According to the IoR, efficient and effective regulation enables businesses to thrive and innovate and public services to be well run and improve. This requires as few unnecessary constraints as possible on those being regulated. However, good regulation has a parallel and equally important role to prevent harm and protect those who may be vulnerable. 

The NAO has published a learning cycle setting out the principles of effective regulation. This can be used to inform reviews of existing regulators or when a new regulator or regulatory framework is being set up. The cycle has four components: 

  1. Design – defining a clear purpose based on the problems that need to be addressed, having clear objectives and plans to meet this purpose, setting proportionate regulatory powers, identifying adequate funding and putting robust accountability arrangements in place. 
  2. Analyse – ensuring access to data and information on what is happening in regulated areas – including the perspectives of citizens and stakeholders in regulatory decision-making, understanding the interests and incentives of organisations that need to comply with regulations, ensuring that regulators have sufficient capacity and skills, and adopting a forward-looking approach. 
  3. Intervene – understanding how different regulatory approaches influence change (e.g. through a well developed theory of change or logic map), assessing potential risks and prioritising interventions, determining – on a case-by-case basis – if softer or harder regulatory approaches are needed while being consistent, proportionate and responsive. 
  4. Learn – establishing good governance processes, measuring performance, evaluating impact and outcomes, working collaboratively alongside other regulatory bodies, and operating in an open and transparent way.    

Back in May 2024, the Department for Business & Trade (DBT) published a White Paper on smarter regulation. In highlighting how “there is strong evidence that points to our regulatory culture acting as a drag on our ability to generate economic activity, innovation and to attract investment. The regulatory environment is often confusing and sometimes features of it appear to exist for the benefit of regulators, rather than the industries they regulate, consumers or Britain as a whole…[in the White Paper] we set a template for how regulators should behave under their growth mandate” (page 5). 

For the first time, the DBT set a definition for regulators that directly regulate businesses and operate under frameworks set by the UK Government and Parliament. This definition covers any body that meets the following four criteria: 

(a) have direct (statutory) powers to design, implement or enforce regulations, or are indirectly granted those powers from a body with direct powers; 

(b) directly regulate businesses operating in a given sector or type of activity (rather than individuals, such as professions); 

(c) have some degree of operational independence from a ministerial department, but are one of: jointly accountable to ministers and Parliament, Ministers only, or Parliament only; and 

(d) exercise functions relating to matters which are reserved (or excepted, in Northern Ireland) to U K Government and/or U K Parliament.

Applying this definition, it is estimated that there are 55 business regulators and 50 in direct scope of the reforms proposed by Government in the White Paper. To address the complex, disjointed and burdensome features of the regulatory landscape, the Government suggested they need to work with regulators to: 

  1. Deliver a step-change in culture and mindset across regulators, to ensure they deliver a world-class service to society. 
  2. Ensure we are getting the fundamentals right on regulators’ guidance, duties and accountability; by enhancing the mechanisms the Government uses to set the strategic direction for regulators and identify the outcomes it wants regulators to deliver. 
  3. The Government must lead by example, to further support regulators by abiding by smarter regulation principles. 

Overall, there are several key ingredients for successful regulators and regulation: 

  • Clear objectives: PA Consulting has called on the reframing of a regulators’ remit to start from desired outcomes, and for regulators to work with each other to define their interlocking roles so that the wider regulatory system functions better and delivers more. They describe how regulators need to walk in their stakeholders’ shoes, ‘tuning into and understanding their needs through engagement, research and data analytics’. They cite Ofqual’s listening tour – meeting students, apprentices, teachers and school and college leaders across the country to hear first-hand their views, concerns and ideas – as a good approach to inform decision-making, prioritisation and strategy; and the FCA’s regulatory sandbox for businesses wanting to trial new products and services in the marketplace with consumers. 
  • Appropriate intervention: regulators need to be clear about their powers and how they use them. Is a regulator proportionate and consistent in its decision making, and transparent in its relationships with citizens and stakeholders? Does a regulator have a robust response to unanticipated and emergency events? What checks and balances are in place to monitor the impact and outcomes of its interventions? 
  • Adequate guidance: regulators need sufficient guidance to fulfil their responsibilities while defending their independence and maintaining transparency in their decision-making. What is the relationship between a democratically elected Government and unelected regulators i.e., where the Government appoints leaders, funding and oversight? How can they balance growth with their other objectives effectively? 
  • Measuring costs and benefits: effective monitoring supports accountability to Government/Parliament and citizens. It can evidence value-for-money and improve outcomes. What data is being collected to provide insights into how/where a regulator needs to focus its resources and if/how behaviour change in individuals and organisations is happening?  For me this is about moving beyond units of activity (e.g. the number of inspections, the number of prosecutions) to seeing how individuals and organisations are being supported to comply with relevant regulations.  

On the other side of the world, on 1 March 2024, New Zealand established the world’s first Ministry for Regulation to strengthen the country’s regulatory management system and improve regulatory quality. The Ministry is looking at how to improve existing regulation and ensure the quality of new regulation. This includes a Red Tape Tipline for citizens to make submissions on how regulation affects them, and the introduction of a Regulatory Standards Bill. In a speech to the New Zealand Infrastructure Investment Summit on 12 March 2025, David Seymour, the Regulation Minister, described how “This Government is committed to getting regulation right. Good regulatory settings attract more investment and achieve higher productivity and wages for New Zealanders…We must be better regulators, provide more certainty, and less red tape…Better regulation is better for all investors, both inside and outside New Zealand”.  

What does all this mean for rural communities and businesses? Back in 2015, the Department for Environment, Food & Rural Affairs (Defra) carried out a regulatory stock assessment to consider the costs and benefits of Defra’s regulations. The assessment covered 428 sets of regulations, of which 53% were derived from the European Union (EU) and 47% were entirely domestic. The assessment found the direct cost to business was £6 billion, comprising policy costs (86%) and administrative costs (14%), and that EU and international regulations accounted for 79% of these costs. 

This led Defra to carry out a consultation to better understand how much time businesses and stakeholders were spending reading and understanding guidance. Defra cited a PwC report which found that 16% of business time spent complying with Defra and its agencies regulatory requirements was on familiarisation (based on 2005 estimates) – with Defra itself estimating that 10-25% of time spent on complying with Defra regulation was spent on familiarisation equating to 8-20 working days per business per year. In an Impact Assessment published in 2016 Defra committed itself to a fundamental overhaul of its guidance to make them simpler, quicker and easier to use. For regulators that inherited additional responsibilities from EU institutions following the UK’s withdrawal, has this increased or reduced policy costs to rural businesses?   

According to the NAO, around 30 bodies are involved in regulating for environmental outcomes (excluding local authorities). In January 2023 the Government published statutory targets for air quality, water, biodiversity, and resource efficiency and waste reduction. In April 2023, the NAO examined whether Defra and its arm’s length bodies were using regulation effectively to achieve its environmental objectives. The NAO found that while Defra had put in place a legal framework, it was still developing indicators to measure progress towards them. While Defra was planning to use regulation as a tool to achieve its environmental objectives, the NAO found the department was at an early stage in understanding how this could affect its plans. Indeed some of Defra’s programme of work may require legislative change or other longer-term regulatory reform which will take time. 

In December 2024, the NAO published an overview of Defra for the new Parliament. Under regulation (section 7) the NAO provided an overview of three of the main regulators that Defra oversees and what to look out for: 

  1. Environment Agency (EA): in 2024-2025 the EA is hiring additional staff and completing 4,000 inspections of wastewater and storm installations. The EA has also made changes to the Extended Producer Responsibility for packaging, requiring companies that produce or sell packaged products to pay for the costs of collecting and sorting waste for recycling.  
  2. The Water Services Regulation Authority (Ofwat): published the 2024 final determinations which set the price, investment and service package that customers can expect to receive 2025-2030.   
  3. Natural England: legislation introduced in 2024 requires developers to deliver a biodiversity net gain of 10% on new developments, with Natural England administering the statutory biodiversity credits scheme. 

Regulations do not always work first time. A Post Implementation Review (PIR) is ‘a process to assess the effectiveness of a measure after it has been implemented and in operation for a period of time. Government departments are expected to carry out PIRs on regulation which has a significant burden on business. A blog published by the Regulatory Policy Committee (RPC) in February 2025, in response to the findings of a report by the Office of Environmental Protection (The OEP) which found Defra had a backlog of 56 PIRs, described how Defra had published 64 PIRs since the start of 2023, tackling the backlog and being proactive in undertaking PIRs. If you look at a list of published PIRs in 2023 and 2024, they covered aquaculture, fishing, agriculture, water resources, veterinary medicines and plant and animal diseases.   

To increase transparency of the PIR process, from April 2025 the RPC will start publishing a list of regulations without a required PIR with the intention of increasing the number of PIRs that Government Departments complete on time.   

In October 2024, Defra announced an internal regulatory review. The review, led by Dan Corry, has been examining whether the regulatory landscape is fit for purpose and to develop recommendations to ensure that regulation across Defra is driving economic growth while protecting the environment. The Secretary of State referenced the review in his response to questions from the Chair of the EFRA Committee in January 2025, indicating that the review is looking at customer and stakeholder experience of regulation and the efficiency of regulation. 

Much of the existing analysis on the impact of new regulations and changes to existing regulations within Defra has focused on farm and land based businesses, and the importance of farm regulations being well-aligned to farming itself or protecting the natural environment. While this is important, we know that other regulators and regulation affect rural businesses and rural communities. How many regulatory bodies have a rural footprint, and what impact do they have on businesses and communities? For example, the Parliamentary Inquiry into Rural Health and Care highlighted how some clinical regulatory bodies work in a national pattern of delivery where rural issues are atypical. For new regulations, how can PIRs assess and take into account the effects of regulation on rural areas (and how can we ensure these are not disproportionate when compared to the effects on businesses and communities in urban areas)? 

Back in June 2023, the Government published a policy paper on ‘unleashing rural opportunity’. The ‘growing the rural economy’ priority aimed to boost opportunity through jobs and skills. The paper contained only one reference to regulation which was to consult with key stakeholders on increasing fly-tipping and litter penalties, and ringfencing the receipts released through fines. Regulation in the countryside extends far beyond this, and I believe it should not be seen as a hindrance or as a set of obstacles but a means of harnessing opportunities and working with regulators to achieve societal outcomes. With this perspective, how can the Government’s ‘regulation for growth’ benefit rural areas?        

Regulators have a lot to focus on – physical harms, competition, climate change, online safety, artificial intelligence – and their numbers are increasing (e.g. Independent Football Regulator) or they find their remit expanding (e.g. water regulators). We can now add ‘growth’ to the list of items they need to focus on. The Government has asked regulators to submit key performance indicators by June 2025 and to participate in twice-yearly performance reviews with Ministers. If we want our regulators to be enablers not blockers – to say ‘yes if’, not ‘no because’ – can we make the rules clearer and simpler for rural communities and businesses, and can Defra lead the way through the regulation they oversee and by working with other departments and regulatory bodies? Watch this space.

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Jessica is a project manager at Rose Regeneration and a senior research fellow at The National Centre for Rural Health and Care (NCRHC). She is currently assessing the impact of neighbourhood-based initiatives, supporting the establishment of a new Wellbeing Hub, and collecting data to highlight the positive impact of relocating NHS clinical services into community settings. Jessica also sits on the board of a charity supporting rural communities across Cambridgeshire and is a member of her local Patient Participation Group. 

She can be contacted by email jessica.sellick@roseregeneration.co.uk 

Website: http://roseregeneration.co.uk/https://www.ncrhc.org/ 

LinkedIn: 🌈Jessica Sellick