Starmer throws down gauntlet to watchdogs to cut red tape and help kickstart economy

Critics accused the prime minister of chasing a ‘regulatory race to the bottom’ and urged him to pursue closer ties with Europe instead

Sir Keir Starmer has thrown down the gauntlet to Britain’s top watchdogs and regulators – including those covering the energy sector – demanding they come up with ideas to boost investment to kickstart economic growth.

The prime minister, alongside chancellor Rachel Reeves and business secretary Jonathan Reynolds, has written to more than 10 regulators ordering them to submit a range of pro-growth initiatives to Downing Street by the middle of January.

The letter, sent on Christmas Eve to watchdogs covering energy (Ofgem), water (Ofwat), financial services (FCA) and competition (CMA), was unambiguous in directing regulators to prioritise growth and investment, according to one recipient. But critics accused the PM of chasing “a regulatory race to the bottom” and called for Sir Keir to pursue closer ties with Europe to boost growth instead.

Keir Starmer was accused of chasing a ‘regulatory race to the bottom’ (PA Wire)

Communications regulator Ofcom, the Environment Agency and healthcare regulators also received the letter, Sky News reported.

The letter comes as part of a bid by Sir Keir, who has made economic growth his number one mission, to get Britain’s flatlining economy moving.

Shortly after taking power, the PM promised a bonfire of red tape to “rip out the bureaucracy that blocks investment”. Sir Keir also promised to order regulators to prioritise growth in their decision-making, laying the groundwork for the Christmas Eve edict.

It follows a pre-Christmas blow for the PM and Ms Reeves, as official figures showed that there was no economic growth in Labour’s first three months in power.

With the economy on the verge of entering a recession, Ms Reeves said the figures were “only fuelling our fire to deliver for working people”. And she said the task facing the government was huge “after 15 years of Tory neglect”.

The Conservatives said the economy was growing before the general election, and Sir Keir would be better “turning back the clock” to when they were in charge. Shadow business secretary Andrew Griffith said: “It says all you need to know about Keir Starmer’s government when he’s having to beg his own government to create growth after Labour’s damaging Budget and job-destroying employment bill.

"If he wants the fastest growth in the G7, he’d have more luck turning the clock back to before the general election when the UK was growing under the Conservatives.”

Critics hit out at the focus on deregulation to boost growth, calling instead for the government to urgently rebuild ties with the EU.

Rachel Reeves suffered a blow as official figures showed there was zero growth in the first three months of the Labour government (PA Wire)

Sir Keir has launched a reset of post-Brexit relations with Brussels since taking office but has yet to formally agree closer trading ties.

Naomi Smith, chief executive of campaign group Best for Britain, which campaigns for a better UK-EU relationship, said: “Achieving economic growth is vital if the prime minister is to deliver on his promises to the country but the answer is not a regulatory race to the bottom.

“Businesses need regulatory certainty to invest and the real barriers to growth that must be removed are those created by the Brexit deal which have artificially increased prices for consumers.

“The government can do both by committing to a policy of beneficial regulatory alignment with our largest market.”

Liberal Democrat Treasury spokesman Daisy Cooper backed calls for Sir Keir to repair Britain’s relations with Europe to boost growth but also hit out at Ms Reeves’s “damaging” Budget measures.

She told The Independent: “After years of economic vandalism under the Conservative Party, the new government has a mountain to climb.

“If ministers are truly looking to reverse the stagnation we saw under the last Conservative government, the best place to start is reversing the damaging national insurance hike, reforming business rates and fixing our broken relationship with Europe.”

Labour peer Prem Sikka warned against the initiative, saying it risked consumer protections. Lord Sikka told The Independent: “It is a race to the bottom at the expense of consumer rights. It opens the doors for predatory practices and will make people despair.”

Reform UK deputy leader Andrew Tice said Sir Keir was “getting desperate” six months after the general election and called the letter a “desperate ploy”.

Mr Tice told The Independent: “His Budget has backfired, pushing Britain to the verge of a recession. This is nothing more than a desperate ploy to save his own skin without doing the right thing – which is reversing his damaging Budget.

“Reform UK are clear, we would save tens of billions by scrapping the job-destroying net zero that is causing the cost of living crisis, slash foreign aid, cull the civil service and so be able to incentivise work and small businesses with lower taxes to get the economy firing again.”

The letter from Sir Keir, Ms Reeves and Mr Reynolds said that “improving regulation in the UK – ensuring that it enables growth and does not unduly hold back investment – is an essential part of this government’s growth mission”.

It added: “This is a shared endeavour in which we all have a stake, and therefore we would like your support in delivering it.”

The trio reiterated that “every department and every regulator should prioritise growth”, vowing that ministers would support them in doing so. They demanded “concrete proposals” from each of the regulators setting out “how your organisation can go further to prioritise growth and facilitate investment”.

The government declined to comment on the letter but a spokesperson said: “Our Plan for Change will drive economic growth right across the country, putting more money in people’s pockets.

“Regulating for growth instead of just risk is essential to that mission, ensuring that regulation does not unnecessarily hold back investment and good jobs in the UK.”