Interview: Lawmaker Baroness Hayter says UK regulation delays are costing the economy

The United Kingdom government has made economic growth its top priority, but businesses continue to raise concerns about slow and unclear regulation.

Companies across sectors say long approval timelines and regulatory uncertainty are making the UK less attractive for investment.

At the same time, countries such as the US, Singapore, and parts of the EU are moving faster to attract capital, innovation, and emerging industries.

In this interview with Invezz, Baroness Hayter, a member of the UK House of Lords, discusses why regulators need clearer political direction and greater flexibility to support growth.

She explains how delays can increase financing costs and weaken investor confidence.

Hayter also argues that the Government must take more responsibility when regulators are asked to accept higher levels of risk in pursuit of growth.

The conversation also explores regulatory reform, innovation, and the urgent need to modernise the UK’s regulatory system to remain globally competitive.

Baroness Hayter serves in the UK House of Lords as a Labour politician.

Excerpts:

Invezz: The Government says growth is its top priority, but regulators still seem unclear about how far they’re expected to support it. At what point does that uncertainty start to damage investor confidence in the UK?

Baroness Hayter: Various types of uncertainty can damage investor confidence in the UK.

We heard from many companies that they were less likely to invest where regulators were not clear about their requirements, and where it was not clear how long it would take for their projects to be approved.

Uncertainty over the bigger political questions around growth and how regulators are supposed to play their part is also an issue.

We are calling on the Government to be clearer about how individual regulators, who often have very different roles, can play their part in achieving growth.

The Government should also be clearer about what the priority is when growth conflicts with regulators’ other objectives, such as consumer, competition or environmental protections.

Invezz: You’ve said regulators need more “political cover” to take risks and move faster. In practical terms, what would that look like, and where should accountability lie if decisions go wrong?

Baroness Hayter: We believe that decisions around the level of risks to which the public are exposed are fundamentally political and should be decided by the Government.

This cover could be provided by strengthening the Growth Duty which applies to regulators, which the Government has signalled that it intends to do.

The Government also has the ability to provide strategic guidance to regulators, but too often this guidance fails to provide any sense of priority.

If the Government tells regulators to allow more risk and then something goes wrong, the Government should be accountable for its part in that decision, although this should not absolve regulators if they carry out these instructions poorly.

Invezz: Businesses often cite slow regulatory decisions as a barrier to investing in the UK. Which areas are under the most pressure right now, and where is faster action needed most urgently?

Baroness Hayter: It is hard to narrow this down to a particular sector, as businesses from a range of sectors, from food standards to medical devices to nuclear energy, cited quicker decision-making as one of the most important improvements that could be made to the regulatory system.

Our previous inquiry into the Building Safety Regulator found that slow decisions had slowed down housebuilding.

These delays increase financing costs, and where it is unclear how long these processes can take, it increases uncertainty and makes the UK a less attractive investment prospect.

The Government set out the 17 key regulators which it has judged as being the ones that are to economic need, which indicate what they view as the priority.

Invezz: Regulatory sandboxes and similar tools are meant to encourage innovation, yet they aren't widely used. Is the problem mainly culture, lack of resources, or something deeper within the system?

Baroness Hayter: We heard that sandboxes could be useful in encouraging innovation and clarifying regulatory requirements for new technologies, but that they tended to be focused on smaller areas rather than creating broader cultural change within regulators.

We also heard that sandboxes could be limited in their ability to allow the regulator to suspend relevant regulations to pilot innovation, and may not be appropriate for areas where safety is the main driver.

Invezz: The Industry and Regulators Committee suggested a possible Regulatory Reform Bill. What kind of real-world difference could that make, and do you believe there’s enough political momentum behind it?

Baroness Hayter: Many regulators are not able to take a more flexible, judgement-based approach to regulating their sectors because the legislation they enforce requires prescriptive processes to be followed.

The Government should identify areas where this is the case and legislate to allow regulators to take a more flexible, innovation-friendly approach which can focus on outcomes rather than process.

We believe that this could allow regulators to take a more sensible approach and reduce unnecessary burdens for companies.

We cannot comment on the political momentum behind this, but the Government has made its commitment to regulatory reform clear.

Invezz: Countries like the US, Singapore, and parts of the EU are moving quickly to attract tech and fintech investment. How urgent is it for the UK to modernise its regulatory approach if it wants to stay competitive?

Baroness Hayter: Businesses can choose where to locate themselves and where to launch products, projects and services, and we heard that the quality of the regulatory framework was a factor in these decisions.

In many areas the UK has a highly regarded regulatory framework, but if the UK wants to retain its advantage, especially as new technologies and industries grow, then it is urgent to modernise its regulatory system.