The Treasury Told 17 Regulators to Stop Regulating

On 17 March 2025 — one year ago this week — HM Treasury published a document on its favourite subject, titled A New Approach to Ensure Regulators and Regulation Support Growth. The Prime Minister had already written to seventeen regulators demanding they explain how they intended to support economic growth. The soviet Action Plan formalised the demand. Administrative costs of regulation on business would be cut by twenty-five per cent by the end of the Parliament. Regulators would publish growth commitments. Their performance would be reviewed against those commitments. The language was unambiguous: regulation, in its current form, was a brake on prosperity.

They are partially correct. Regulators are tools.

Nobody at this publication mourns the regulatory state in its current form. The Restorationist has argued, consistently and at length, against the quango model of governance.

This isn't about regulators, quangos, or being upset our Soviet-style infrastructure failed and needs to be put back. It's about keeping the lights on inside the things you have decided to implement. In a word: competence.

These regulators were already failing. They were bloated, distant, captured, and slow. The Environment Agency could not stop water companies pumping raw sewage into rivers. The CQC could not tell you whether your hospital was safe. The Audit Commission was so bureaucratic it was abolished, and nothing replaced it. The case for reform was overwhelming.

But what Treasury demanded was not reform. It was retreat.

Ongoing Atrophy As Routine

Environmental enforcement had been collapsing for a decade. Analysis of Environment Agency data by the Violation Tracker project found an eighty-four per cent decline in enforcement actions against corporations between 2012 and 2021. Prosecutions fell even more steeply — sixteen times fewer in 2021 than in 2012. By 2024, the Agency completed six prosecutions against water companies nationwide.

Six.

In a year when untreated sewage poured into rivers and onto beaches in volumes sufficient to generate a political crisis, the body responsible for preventing it managed six criminal cases.

Everyone's favourite, the Health and Safety Executive, had been hollowed out over the same period. Staff numbers fell thirty-five per cent after 2010. Inspection numbers, which exceeded twenty-five thousand per year before the cuts, dropped to around thirteen thousand. Enforcement notices fell from seven thousand to four thousand four hundred in a single year. The inspectors who remained were younger, less experienced, stretched across a growing remit, and paid so far below private sector equivalents the HSE could not recruit replacements.

The Serious Fraud Office had become a case study in institutional paralysis. Its major investigations routinely collapsed — disclosure failures, botched evidence handling, cases dragging on for a decade before the court was told there was no realistic prospect of conviction. The London Mining prosecution, opened in 2012, was dropped in early 2025 after problems with the SFO's disclosure software contaminated the evidence. An entire corruption case, abandoned because the agency's own technology failed. The LIBOR convictions (the SFO's signature achievement) were overturned by the Supreme Court in September 2025 on grounds of erroneous jury guidance. The SFO did not lack ambition. It lacked the institutional capacity to turn ambition into convictions.

Food safety enforcement was carried out almost entirely by local authorities, coordinated at national level by the Food Standards Agency. The FSA's own enforcement activity was minimal — a handful of prosecutions per year, focused on food crime and fraud rather than routine safety. Meanwhile, local authority enforcement teams were being cut alongside every other council function. The capacity to inspect, to test, to prosecute was draining away at the only level where it had ever been exercised.

This was the landscape the Treasury's letters landed on. Not a functioning system in need of calibration. A system already on its knees, being told to do less.

Conservative Ideology Goes Wrong

The political logic was straightforward. Britain's economy had stagnated. Investment was sluggish. Business leaders complained, with justification, about regulatory complexity, unpredictable timelines, and overlapping requirements. More than a hundred bodies exercised regulatory functions, many with competing mandates. The government's response — demanding regulators prioritise growth — was popular with industry and defensible in principle. Previous studies had estimated the cost of regulatory burden at three to four per cent of GDP. Something had to change.

The question is what changed.

The absurd Competition and Markets Authority provides the most visible example. In January 2025, the government forced out CMA chair Marcus Bokkerink, two years into a five-year term. His offence: insufficient focus on growth. He was replaced by Doug Gurr, formerly of Amazon. The government issued the CMA a "strategic steer" mandating it to treat growth as the "overriding national priority." Merger review timelines were compressed. Behavioural remedies (previously disfavoured) became acceptable. The Vodafone-Three mobile merger, a four-to-three consolidation the regulator would previously have blocked or required structural divestment, was cleared on the basis of investment commitments and a temporary price cap. The CMA's approach to competition enforcement shifted visibly, immediately, and under direct political pressure.

The government abolished the Payment Systems Regulator entirely, folding it into the Financial Conduct Authority. The stated purpose: streamlining. The effect: one fewer independent voice examining how payment systems serve the public.

The pattern was consistent. The regulators were not reformed. They were not given sharper tools, clearer mandates, or better data. They were not restructured to make them more effective. They were told to do less. To prosecute less. To inspect less. To intervene less. To prioritise the interests of the businesses they were supposed to oversee.

When You Don't Address The Void

This publication will never defend mindless regulators. We have spent a year arguing they were the wrong answer — centralised quangos substituted for the local, experienced, accountable oversight structures they displaced. The Environment Agency is not and never was a substitute for communities holding polluters accountable through local institutions. The CQC's centralised inspection framework was never going to replicate what a ward sister could see with her own eyes. The Audit Commission's reams of comparative data never provided what a district auditor who knew his patch could deliver in an afternoon.

But there is a difference — a critical difference — between arguing the regulators were the wrong architecture and celebrating their retreat.

When these regulators were erected, they displaced or absorbed the functions previously performed by other institutions. Local inspectors gave way to national "frameworks." Community accountability gave way to compliance regimes. The old structures did not survive alongside the new ones. They were abolished, defunded, merged, or simply forgotten. The quangos replaced them.

So when the Treasury tells the quangos to stand down, what fills the gap?

Not the parish constable. He was abolished decades ago. Not the district auditor. She was replaced by a quango, which was itself abolished. Not the local inspector who could smell danger in a building. He was replaced by a digital framework whose computer lost five hundred reports.

The old competence is gone. The replacement was inadequate. And now the replacement is being told to do even less. The result is not deregulation. Deregulation requires replacing regulatory barriers with better mechanisms — transparency, liability, competition, local accountability, the ability of communities to hold power to account directly. The result of telling broken regulators to retreat without creating those mechanisms is something else entirely.

It is impunity.

The water companies continue to operate as monopolies. They cannot be replaced by competitors. The communities they pollute cannot sue them effectively. The regulator — the only entity with the tools and legal authority to hold them accountable — has been told to prioritise growth. The sewage continues to flow. The fines, when they come, are cheaper than compliance. And the revolving door between regulator and regulated turns on.

Healthy markets rarely function well after monopolies develop.

The food supply is inspected by local authority teams whose funding has been cut for fifteen years running. The HSE cannot recruit experienced inspectors because they pay thirty per cent less than the private sector. The SFO takes a decade to bring a corruption case and then drops it because its disclosure software failed. The CQC, as this series documented on Saturday, cannot tell you whether your care home is safe.

These are the institutions being told to stand down. Not in the name of a better alternative. In the name of growth. Growth measured by a dashboard. Growth unaccompanied by any structural reform of the conditions producing the failures these regulators were supposed to prevent.

The Wrong Answer To The Human Problem

Yesterday this series showed you a government deleting patients to make a waiting list shrink. Today it shows you a government ordering regulators to look the other way: not because the regulators were succeeding, but because even their failures were inconvenient.

The regulators were the wrong answer. They always were. But telling them to do less while leaving the monopolies, the moral hazards, the concentrated power, and the structural incentives for misconduct entirely intact is not reform. It is the worst possible approach: a system stripped of oversight without any restoration of the accountability the oversight was supposed to provide.

The self-correcting society needs instruments of correction. For decades, the administrative state insisted those instruments had to be centralised, standardised, and bureaucratic. This series has documented what happened: the instruments failed. The response should have been to build better instruments — local, accountable, transparent, embedded in the communities they serve.

Instead, the Treasury sent a letter.

Tomorrow: the government also built an algorithm to decide who keeps their benefits. The algorithm is biased. The government went to court to keep the bias data secret.

What was satisfactory here?

• Reality: Regulators were already failing to enforce against monopolies, polluters, and financial misconduct.
• Administrative intervention: Treasury demanded growth commitments and twenty-five per cent burden reduction; the CMA's chair was removed for insufficient growth focus.
• Reported statistic: Regulatory burden reduced — and the dashboard recorded success.