With both the Prime Minister and Chancellor promising to tackle the red tape holding the UK economy back, Policy Exchange publishes its latest intervention on regulatory reform.

The Rise of the Regulators, authored by Head of Political Economy James Vitali and Research Fellow Zachary Marsh, and with a foreword from former Cabinet Secretary Mark Sedwill, is the latest report in Policy Exchange’s Re-engineering Regulation programme.

The paper argues that the UK’s regulatory framework is being driven by a “risk aversion ratchet”, which incentivises an ever-growing burden of rules and requirements. The ratchet is the product of a political culture which is increasingly safetyist, a bureaucracy in which it is remarkably easy to generate new regulations, and a complete lack of incentives to remove redundant or pernicious regulations from the rulebook. And it makes lessening the regulatory burden extremely hard for any government.

Policy Exchange contends that reversing this risk aversion ratchet is critical if the UK is to transform its growth potential. Presently, the size of the regulatory burden and its focus on process compliance rather than outcomes is placing a ceiling on UK productivity by reducing competition, curbing innovation, and shifting resources within businesses away from wealth-generating activities.

The way we currently appraise the costs of regulation upon the UK economy is also unfit for purpose, with fewer than 20% of new regulations coming with a proper Impact Assessment, and credibility issues with those assessments that are produced.

Regulatory expansion is producing a democratic deficit in UK governance too. Elected lawmakers have outsourced considerable executive powers to regulatory bodies and agencies, and have little grip over the rules and requirements they are producing.

It’s not just the private sector that is affected by regulatory overreach either. An expanding regulatory state is taking doctors, nurses and police officers away from their core duties and diminishing public sector productivity.

Policy Exchange studied 1200 regulations related to seven regulatory bodies in this paper: the Financial Conduct Authority, the Financial Reporting Council, the Competition and Markets Authority, Natural England, Ofcom, the Care Quality Commission, and the Food Standards Agency.

The report proposes a policy programme for reform based on the experiences of five case studies: the UK 2010-2015, US state governments, Germany, British Columbia and South Korea. Its recommendations would enable the government to stem the flow of new regulatory requirements, bear down on the existing stock of rules, and to produce better regulation in the future.

The launch of this report was covered by:

• The Telegraph
• The Times
• Mail Online
• POLITICO’s London Playbook