Labour’s regulatory reset shapes future for growth
23 Jan 2025
The Party has finally started to lean into its commitment to prioritise growth – but there’s devil in the detail, argue Jon McLeod and Nathan Ashley
After its landslide victory and a clear mandate for change, Keir Starmer’s government made it clear that growth is its top priority. However, recent polling suggests the public remains dissatisfied with the speed of change, as the air of scepticism begins to creep in.
Fortunately for Starmer, the next General Election isn’t due until on or before 15 August 2029, giving him ample time to make his mark. In the meantime, regulators find themselves navigating a dramatically altered environment, one in which political, commercial, and legal forces are converging in unprecedented ways.
A new era for regulators
The unceremonious departure of Marcus Bokkerink as Chair of the Competition and Markets Authority (CMA) signals a key part of this shift. The Chancellor, Rachel Reeves MP, and Business Secretary, Jonathan Reynolds MP, have set an unmistakable tone: regulators must facilitate, not hinder, economic growth. This signals a new era where political oversight is becoming more pronounced. In other words, regulation must align with the government’s growth agenda.
Doug Gurr, former Amazon UK boss, now takes the helm at the CMA, a move that has raised questions about how the regulator will balance its pro-growth agenda with consumer protection. The timing of Bokkerink’s departure is significant, as the CMA is in the midst of Cloud services market investigation (phase 2), and the implementation of the Digital Markets, Competition and Consumers (DMCC) Act 2024. It could be said that Bokkerink paid the price of being not just a representative of the CMA but carrying out the very legislation Parliament delivered in the DMCC. This is not the first time that a CMA has fallen out with Government, with Lord Tyrie having quit the watchdog in June 2020 over ‘limits’ being placed on the role.
How important is the Chair and how will it impact Labour’s mission for growth?
The CMA Chair plays a crucial role in providing strategic direction and leadership, ensuring the Board takes consistent and proportionate decisions that align with national objectives. The Chair must also act as the bridge between the regulator and government, representing the CMA in discussions with Ministers and Parliament. Other members of the board include Dame Patricia Hodgson, Non-Executive Director and Member of the Independent Commission on Freedom of Information, Will Hayter, Executive Director for Digital Markets, and Sarah Cardell, CEO of the CMA.
Cardell has been particularly proactive in setting out the CMAs programme being “unashamedly focus[ed] on the best outcomes for UK consumers, UK businesses and the UK economy; and always be open and transparent. We must deliver a regime that leaves no one in any doubt that the UK is open to business.”
Let’s get political – when politics, commercial interests, and legal tensions collide
Labour’s approach to competition, as set out in this DRD report, is simply about control. In his Labour Party Conference speech, Keir Starmer went to great length to talk about the need to “take back control”, to be “more decisive” and to create a market that “serves working people”. The party has long promised a more interventionist stance, balancing consumer protection with the need to stimulate investment. Yet, businesses accustomed to a relatively predictable regulatory environment are now facing a period of challenge and change. The ousting of Bokkerink, a move criticised by antitrust lawyers as an “extraordinary” intervention which could have a “chilling” effect on other UK regulators, highlights the Government’s willingness to challenge institutions that do not align with its vision.
According to government sources, Bokkerink was seen as “a bit of a blocker” at recent Treasury discussions on regulatory reforms to support growth. The CMA however, believed it had responded sufficiently to Labour’s pro-growth mission, but the Government clearly thought otherwise having cleared the Vodafone / Three merger and Microsoft’s hiring of former employees.
The timing of the departure has raised concerns about the impact of the CMA’s enforcement strategy and whether further senior departures could follow.
From a commercial perspective, the message is clear – adapt or risk being left behind. The CMA’s evolving remit, particularly in digital markets and consumer protection, presents both challenges and opportunities for businesses. On the one hand, the regulator’s focus on driving competition could unlock new growth avenues. On the other hand, heightened scrutiny and evolving rules add complexity to an already challenging economic climate.
Meanwhile, the Financial Conduct Authority (FCA) is also feeling the pressure. With Labour’s focus on unlocking capital investment and accelerating digital innovation, the FCA’s role is under increasing scrutiny. Missteps and a perceived lack of alignment with Labour’s agenda could see calls for a “breaking up of the FCA” alongside changes in leadership. The FCA have moved quickly to align and support the growth agenda. The financial services sector must now anticipate closer regulatory engagement and a sharper focus on growth facilitation.
”The party has long promised a more interventionist stance, balancing consumer protection with the need to stimulate investment."
The environment businesses find themselves in
Businesses now operate in an environment where regulatory risk is increasingly intertwined with political priorities. The Government’s call for regulators to support growth is putting pressure on businesses to demonstrate their alignment with the growth mission. From financial services to energy, business must navigate a landscape where regulatory decisions are no longer purely technical but are subject to broader economic and political considerations.
The CMA’s new Growth and Investment Council, bringing together representatives from major business groups, signals an attempt to bridge the gap between regulatory enforcement and commercial realities. Yet, for businesses, the challenge remains, how to comply with evolving rules while also seizing the opportunities presented by a government eager to spur investment.
Looking ahead
Labour’s regulatory reset is not a short-term change. As the Government continues to bed in its pro-growth policies, businesses must stay agile and engage proactively with regulators to ensure their interests are considered. The coming years will likely see further interventions, particularly in strategic sectors such as digital markets, infrastructure, and finance.
The big question is whether the CMA, the FCA, the PRA (Prudential Regulation Authority), Ofgem (the Office of Gas and Electricity Markets), Ofcom (the Office of Communication) and other regulators will align with Labour’s ambitious growth agenda, or whether further leadership changes are on the horizon. With Parliament and Select Committees expected to push on this year with renewed and stronger oversight alongside the Government signalling its intention to push for deeper regulatory reforms, businesses should prepare for a period of regulatory evolution.
One thing is certain, the mood music has changed, and those who can adapt to this new reality will be best positioned for success under Labour.