Not chainsaws, but bonfires. That’s the UK government’s approach to its war on red tape. It’s not quite the efficiency blitz billionaire Elon Musk is unleashing on the US civil service, but should be enough to warm the hearts of investors and executives — especially if politicians take their cues from similar exercises in the corporate world.
Chancellor Rachel Reeves met the biggest regulators on Monday and laid out sweeping efficiency plans, ranging from environmental planning to increased regulatory accountability. The aim: reduce complexity and tackle administrative costs, which some studies suggest could amount to 3 or 4 per cent of GDP.
As companies undergoing efficiency drives know, such a mission calls for hard numbers and goals that allow the what, how and by-when to be reliably tracked. If, for example, your government department vows to reduce management layers from 13 to eight, as US lender Citigroup recently did, or shave about 5 per cent from its cost base — as HSBC laid out last month — then the direction of travel, however painful, is clear to everyone.
That the UK effort is happening at all is encouraging. Yet what’s missing is good metrics. The plans proposed about 20-odd reviews and consultations, liable to create ample foot-dragging opportunities. The Treasury candidly admits it doesn’t yet have a good handle on the cost of regulation to business — though once it does, it plans to cut those as yet untracked costs by a quarter.
Numbers matter because businesses have seen and heard all this before. The Conservative government under David Cameron reckoned its first term between 2010 and 2015 saved businesses £10bn by cutting the regulatory burden, and vowed the same for its second. A review last year of those governments’ papers by the Centre for Policy Studies suggests that £6bn a year was instead added between 2010 and 2019.
Of course, executives get a daily read on how their plans are being received courtesy of the stock market. That can be uncomfortable, but helps show when things are on track. Citi boss Jane Fraser is presumably pleased that analysts polled by Visible Alpha expect her to — just — meet her 10 to 11 per cent return on tangible equity target in 2026. Six months ago they thought she’d barely hit 9 per cent.
Since Fraser announced she was taking an axe to the bank’s middle management in late 2023, the bank’s shares have risen 60 per cent, matching the far more highly valued JPMorgan. Some projects are by necessity a slow burn, but progress wins plaudits. The UK government has said where it wants to go — now it could do worse than set out some signposts.
jennifer.hughes@ft.com
