In a new report published this morning, the National Audit Office is calling on HM Treasury and the Department for Business & Trade to provide improved support for regulators to kickstart economic growth.

In March 2025 HM Treasury (HMT) published its regulation ‘Action Plan’, which outlined a new strategy to encourage regulators to support innovation and economic growth, and cut down on administrative burdens by 25%, creating an annual net reduction target of £5.6 billion.

The Action Plan comprises a series of regulator commitments, performance reviews of key regulators, and a target to reduce the administrative burden of regulation for business. However, there is a risk that businesses will not feel the benefits of reductions if these are outweighed by the total cost of new regulation.

Although the Action Plan ultimately aims to make regulators less risk averse, government has not defined the risk appetite it expects regulators to work towards and HMT and the Department for Business & Trade (DBT) have not yet provided comprehensive insight into what those risks are or what their risk appetite is.

Poorly designed or implemented regulation can stifle productivity, investment and growth

The Action Plan makes clear that when regulation is designed and implemented well, it can be a tool to promote growth and investment. Conversely, if poorly designed or implemented, regulation can stifle productivity, investment and growth.

Regulation is often designed by individual departments and implemented by regulators. The Department for Business & Trade (DBT) leads on regulatory reform across government. HMT leads on growth and productivity policy.

HMT and the Department for Business & Trade (DBT) want to reduce administrative burden on business by 25%, or £5.6 billion per year, but have not allocated departments individual targets to deliver this.

DBT and HMT should develop package of work to help hold regulators to account on delivering growth commitments

The NAO has recommended that DBT and HMT develop a package of work to help Secretaries of State and Select Committees to hold regulators to account on delivering their commitments to growth.

The Action Plan is the tenth initiative designed to reduce the cost of regulation in the last 20 years, the most recent being the 2017 Growth Duty. However, DBT and its predecessor did not monitor the implementation of the Growth Duty and has therefore not been able to hold regulators to account, or assess the impact of the duty.

The NAO says DBT and HMT need to establish a regular reporting cycle of progress against the Action Plan, or this could affect the future success of its delivery.

A survey by the NAO found that regulators recognise that they have a role in supporting economic growth. Nearly three-quarters of regulators surveyed reported they are taking specific actions to implement the Growth Duty.

Responses to the survey also show that nearly two-thirds of respondents believe that innovation will be the key driver of economic growth, and some are changing to support innovation in their sectors by reducing the cost of compliance, changing organisational design to support the sector, and reducing barriers to innovation in the sector.

The purpose of the NAO report is to support DBT, HMT, regulators and sponsor departments in their pursuit of growth, as they embark on a new programme of work to deliver the Action Plan.

The NAO says that in order to achieve the government’s vision, DBT and HMT must articulate how regulation can support growth and manage risk simultaneously, and acknowledge the trade-offs regulators face. The report says that at present DBT and HMT are not helping departments articulate their risk appetite, which can make it challenging for regulators to operate in line with their sponsor department’s expectations.

"We found evidence that regulators are implementing changes in response to the Growth Duty, and the new Action Plan is stimulating further action. However, we cannot conclude whether this has had a material impact on growth, because DBT and HMT do not have the data." the NAO says.

In order to achieve the government aims for the Action Plan and regulation more widely, the NAO has recommended that HMT and DBT should consider:

• Developing an implementation plan and monitoring arrangements for the Action Plan by Spring 2026, including an implementation timetable and programme evaluation.
• Developing a package of work to help Secretaries of State and Select Committees hold regulators to account on delivering their commitments to growth.
• Setting out publicly which regulators are in scope of the Growth Duty.

Gareth Davies, head of the NAO commented:

“The Action Plan plays a key role in the government’s vision of achieving enhanced economic growth and innovation, and our report shows that it is helping to encourage regulators to consider growth when making key decisions.

“It sets a clear expectation that regulators must become less risk-averse. But regulators should implement regulation in line with their sponsor department’s strategic steer and risk appetite. In order to achieve the government’s vision, DBT and HMT should articulate how regulation can support growth and manage risk simultaneously. Only then can they help departments articulate government’s risk appetite to regulators.”

Click here to download the full report