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Business Update

Statement made on 31 January 2022

Statement UIN HLWS558


My Right Honourable friend the Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng) has today made the following statement:

The UK has left the European Union. We have regained sovereign control over our laws, borders, and money. For the first time in half a century, we have the freedom to conceive and implement rules that put the UK first. This means that now is the time to think boldly about how we regulate in order to modernize our approach, unlock cutting-edge technologies, ease burdens and cut red tape, and boost competition.

In July 2021 I jointly launched the consultation on “Reforming the framework for better regulation”, to capitalise on the regulatory freedoms provided by leaving the European Union. In the consultation I set out that the Government is committed to a regulatory system that is smart, proportionate and considers the needs of business. The system government uses to manage the flow of regulation and understand its impacts is key to delivering this commitment and plays an important role in helping to drive behaviour and approaches to policy making across government.

An overwhelming majority of responses to the consultation welcomed some degree of reform. A full summary of responses to the consultation will be published today, alongside the Government’s policy document, The Benefits of Brexit.

Our proposed reforms to the framework for better regulation are underpinned by four core policy changes, that aim to improve and control the flow of regulation across government, and assess its value:

  1. Adopting a greater emphasis on proportionality, to ensure that we regulate in a way that focuses on allowing businesses to grow, while giving greater flexibility to try innovative new approaches.
  1. Ensuring that we are making the best use of alternatives to regulation by introducing an earlier scrutiny point at which departments will be asked to justify their decision to regulate.
  1. Improving how we evaluate regulation, including post-implementation reviews.
  1. Improving how we measure the overall impact of regulation, including consideration of a more holistic approach and the removal of the Business Impact Target (BIT) in its current form.

While these reforms represent a streamlining of process and a change of emphasis, they do not undermine or reduce the requirements for departments to produce options appraisals and quantified impacts in accordance with the Green Book.

The reforms proposed to the framework for better regulation will not take place at once. There will be a transitional year, with one final BIT report, while we bring forward legislation to make changes to the Small Business, Enterprise and Employment Act 2015. BEIS will use that time to agree with departments the details of metrics, targets and exemptions.

Alongside these reforms, today I will publish a policy paper on the future of economic regulation of water, energy, and telecoms within the UK. This follows a commitment in the National Infrastructure Strategy for government to produce an overarching policy paper in this area.

The policy paper will set out government’s vision to incentivise increased investment needed to create world class utilities infrastructure that helps protect consumers, promote economic growth and sector resilience, whilst meeting our ambitious environmental targets. The paper covers the following areas:

  • How the government intends to ensure that the regulators’ duties will allow them to meet these systemic challenges, conducting a review of duties in 2022;
  • how the government will provide strategic clarity on our long-term aims for these sectors, publishing a letter of strategic guidance to the CEOs of Ofwat, Ofgem, and Ofcom;
  • how competition for strategic investment opportunities can be enhanced for the long-term benefit of consumers and investors; and
  • how transparency and consistency in key processes can be improved; in particular seeking appropriate alignment on economical calculations and the regulatory appeals system.

This policy paper is the first step to updating our model of economic regulation. In 2022, we will be launching a consultation setting out more detail on a package of measures to ensure the UK model of economic regulation fits the needs of the modern age.

I will place a copy of the future of economic regulation of water, energy and telecoms within the UK paper in the Libraries of the House.

In putting all these reforms into practice, the Government and our independent regulators must always remember that the way we make and enforce regulation makes a tangible difference to people. Our job is to help people and businesses to achieve better outcomes for themselves. That was what taking back control for the UK was about.

I will place a copy of the Benefits of Brexit paper in the Libraries of the House.

Linked statements

This statement has also been made in the House of Commons

Department for Business, Energy and Industrial Strategy
Business Update
Kwasi Kwarteng
Secretary of State for Business, Energy and Industrial Strategy
Conservative, Spelthorne
Statement made 31 January 2022