The Government has confirmed it intends to bring regulators Ofwat, Ofgem, and Ofcom and their regulatory functions into scope of the Growth Duty measure in early 2024.
The confirmation comes in the Government Response published on 21st February by the Department for Business and Trade to the Smarter Regulation: Regulating for Growth Consultation which ran from 22nd November 2023 to 17th January 2024.
The Government intends to lay the refreshed Growth Duty Statutory Guidance for parliamentary approval alongside the extension of the Growth Duty Statutory Instrument. The refreshed Guidance is included as an Annex in the Response.
Subject to Parliamentary approval the extension and updated Growth Duty Statutory Guidance will come into force in Spring 2024.
The Chancellor announced the new measures at the Autumn Budget in November 2024.
The Government will be taking forward the plan to extend the Growth Duty with effect from April 2024, subject to Parliamentary approval of the necessary secondary legislation.It will also be proceeding with the refreshed statutory guidance as drafted for the Regulating for Growth consultation.
Announcing the new measures, the Department for Business and Trade commented:
“The UK is home to world class regulators who protect consumers, promote competition, and help drive forward progress in their sectors. The Growth Duty provides clarification for regulators that they need to consider growth as part of their duties.
“The Growth Duty Guidance sets out how regulators in scope of the Growth Duty can better support sustainable economic growth. It assists regulators in discharging their responsibilities under the Growth Duty as well as providing clarity to stakeholders as to what they should expect from of regulators.”
The Government Response says that regulators play a vital role in shaping the UK economy through the way in which they regulate.
It goes on to explain that regulators “can improve the attractiveness of their sector to investors”, bringing new products to market by encouraging innovation and ensuring competition to deliver the best service to consumers. It is a regulator’s responsibility to design rules that set a level playing field between businesses and to ensure adequate protections for consumers and the environment.
While the UK’s regulators are already recognised worldwide as commanding respect for their technical expertise and “diligent enforcement of reliable trustworthy regimes”, the response says, it follows by commenting:
“there is an opportunity for regulators to foster economic growth, become more speedy and agile in decision-making and forward thinking to anticipate and facilitate change in response to new technologies or business models.”
In the near future the Government also plans to set out a Regulatory Performance Framework that will specify an approach to performance reporting. The Response says the Government believes that transparency and accountability for regulators is vital to show Parliament and the public the critical work that regulators do. The Government has proposed that regulators would be invited to publish a report every year that included a Growth Duty statement and Growth Duty performance metrics.
Under the Growth Duty the regulators will be expected to consider seven Drivers of Economic Growth and seven Behaviours of Smarter Regulation as follows:
Drivers of Economic Growth
- Driver 1: Innovation
- Driver 2: Infrastructure and Investment
- Driver 3: Competition
- Driver 4: Skills
- Driver 5: Efficiency and Productivity
- Driver 6: Trade
- Driver 7: Environmental Sustainability
Behaviours of Smarter Regulation
- Behaviour 1: Pro-Innovation
- Behaviour 2: Skilled and Capable
- Behaviour 3: Business Aware
- Behaviour 4: Proportionate, Efficient and Responsive
- Behaviour 5: Collaborative
- Behaviour 6: Internationally Aware
- Behaviour 7: Consistent, Transparent and Accountable
The Government says the UK’s system of independent economic regulation has attracted over £570 billion of investment between 2000 and 2020, helping to enhance infrastructure and deliver improvements to the water, energy, and telecoms sectors.
Ofwat, Ofgem and Ofcom have “played a vital enabling role in encouraging this investment” and the Government “expect these regulators to continue to focus their efforts on ensuring the sectors are able to attract the investment needed for the UK to deliver on its resilience and climate targets.”
The Government first announced it was considering extending an economic Growth Duty to Ofwat back in August 2023 when it warned that “without investors, growth cannot happen.”
Click here to download the Government Response February 2024 to Smarter Regulation: Regulating for Growth Consultation
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