A bonfire of red tape doesn’t actually make us more competitive
Stripping back regulation causes more uncertainty and can actually wind up making British businesses less competitive rather than trigger economic growth, writes Carum Basra
Last week, Liz Truss returned to the public eye to defend her brief time in office. In her speech, she called for an overhaul of the regulatory system, advocating sweeping cuts to rules she sees as stifling innovation and growth. But her arguments are both misguided and misinformed. The truth is stable and well-designed regulation supports innovation, opens markets to new entrants, and provides predictability for businesses to invest and expand. It upholds the values that people care about – worker protections, consumer rights and environmental safeguards. Without these, public trust evaporates.
For years, the view echoed by Truss has held that regulation inherently stifles investment and growth. This ideology runs counter to reality on the ground as well as the benefits smart rules provide. According to some measures, such as the World Bank’s Doing Business Index, the UK has historically been one of the OECD’s most lightly regulated economies. Promises of the savings that could result from further deregulation have proved to be an illusion. David Cameron’s much trumpeted Red Tape Challenge saved the average UK business just £230 annually.
Businesses are generally supportive of regulation, as research by the Aldersgate Group has shown. Across construction, automotive and waste industries, most businesses reported to the industry group that environmental regulations had a positive overall impact on their competitiveness. For these firms, the costs of compliance were offset by gains in quality, performance and competitiveness. This aligns with the findings of a recent essay collection compiled by Unchecked UK, in which leading UK businesses argue that well-designed regulations support innovation, investment, and growth.
Clear standards prevent companies from being undercut by competitors who cut corners on quality or protections. By mandating minimum benchmarks, regulation creates a level playing field where businesses compete on service, innovation and meeting societal goals – not a race to the bottom.
Meanwhile, wholesale deregulation risks unintended instability when business needs predictability. Rishi Sunak’s u-turn on Truss’s plans to scrap EU-era laws shows the impracticality of such an approach. Months of pressure from industry, civil society, and conservation groups forced the government to drop the “sunset clause” that would have automatically removed 4,000 EU-derived laws. This demonstrates that unilateral deregulation remains unpopular and unworkable. The path forward lies in pragmatic, evidence-based reforms updating rules where necessary while retaining balanced oversight.
The notion that Truss’s ideas are “not fashionable on the London dinner party circuit” may be true, but neither are they in Long Eaton, Blyth, Stevenage, or numerous other key battleground constituencies. Extensive focus group research conducted by Unchecked UK and More in Common in these critical swing seats shows that key voters want strengthened oversight and enforcement from government, not deregulation.
People associate stripping back rules with declining standards and a rigged system. They expect regulations to tackle problems in their everyday lives like crumbling schools, sewage pollution and online harms.
Liz Truss decries the regulatory state, but in doing so caricatures both business and public opinion. Truss’ ideological position looks increasingly outmoded. Her party would likely benefit both politically and economically from leaving rigid anti-regulatory dogmas behind and crafting evidence-based reforms that empower business within balanced oversight focused on the public good. To compete globally, the UK must lead with high ambitions for standards, not engage in a race to the bottom. With pragmatic reforms and robust enforcement, regulation drives innovation and prosperity.