HM Treasury published a "New approach to ensure regulators and regulation support growth" on 17 March 2025. We look at what this involves with a particular focus on the ICO.
The government finds that the UK's regulatory landscape is not functioning as effectively as it should and often holds back growth and inhibits innovation.
In particular:
- regulation can be too complex and duplicative
- the regulatory landscape is overly complex with over 100 bodies involved in regulation
- businesses suffer from a lack of certainty and predictability from regulators and regulation
The government proposes addressing these challenges by overhauling the regulatory system as it applies to all regulators (to the extent regulators in Scotland, Wales or Norther Ireland are under the policy remit of the UK government or UK Parliament) to ensure it:
- is targeted and proportionate
- is transparent and predictable
The action plan
The government's aims will be executed through three actions:
Action 1: tackle complexity and the burden of regulation
- The government will reduce bureaucracy for businesses, committing to cutting administrative costs by 25% by the end of this Parliament. It will also simplify regulatory structures to make the system easier for businesses to navigate and less prone to duplication. This will require legislative change in many cases. Regulators will be removed or consolidated where appropriate. The government has already announced that the Payment Systems Regulator will be consolidated primarily with the FCA and has now announced several other steps (none of which cover the digital sector so far). For more on the impact on financial services, see here.
- Planning is identified as one of the most complex regulatory areas. The government will take steps to remove complexity and red tape across environmental permitting, streamlining Nationally Significant Infrastructure Projects, launching initiatives to support priority sectors, and reforming legislation. It will also introduce a 'lead regulator' scheme for major projects.
Action 2: reduce uncertainty across our regulatory system
- The government will simplify the duties of key regulators, including of Ofgem and the Financial Ombudsman Service among others. Alongside clarifying regulators' roles and duties, the government will work with regulators to strengthen transparency, including by using performance targets.
- The government also plans to reform environmental regulation, making legislative changes where required to ensure regulators are enabled to take proportionate risk-based decisions in line with national priorities.
- The government is working with the CMA to ensure its activities are predictable and proportionate. It will give a new Growth-focused Strategic Steer to the CMA in the coming weeks, consult on legislative reform proposals including to provide more certainty on when mergers will be subject to investigation, introduce measures to support the CMA's work in reviewing the Markets Regime, and support the CMA's work on the '4Ps' – pace, proportionality, predictability and progress.
Action 3 – challenge and shift excessive risk aversion in the system
- The government says a more consistent approach is required with a greater focus on the activities of regulators in order to ensure their actions are proportionate, striking the right balance between consumer protection and growth. This requires a whole-of government approach, so the government proposes strengthening the model of accountability and formalising performance reviews.
- Government departments will cooperate with regulators on a pro-innovation regulatory approach to AI
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The Regulatory Innovation Office will work alongside government departments and regulators to help commercialise technologies and innovation, particularly on AI and digital healthcare, supporting the UK space industry, drones and autonomous technology, engineering biology, and the quantum sector.
Spotlight on the ICO
An annex to the action plan sets out actions committed to by some key regulators. By way of example, the data protection regulator, the ICO, made a number of commitments as also set out in its package of measures to support the government's growth agenda published on 17 March 2025.
These include:
- A data essentials training programme for SMEs intended to help savings of at least £9.1 million over three years.
- An experimentation regime to enable businesses to trial innovative data-driven solutions under oversight and have "comfort from enforcement of certain data protection requirements" starting with consent rules for privacy-preserving advertising models. The ICO says realising the full potential of this regime will involve legislative change (most likely of PECR) which the government will consider after the ICO's pilot. In the autumn, the ICO will publish a statement identifying low-risk advertising activities which are unlikely to result in enforcement action.
- A statutory code of practice for private and public sector businesses developing or deploying AI.
- Paving the way for privacy-friendly online advertising with a regulatory review.
What does this mean for you?
As ever, regulatory reform seems to entail….more regulation. While the overall aim is to streamline regulation, give businesses certainty and reduce red tape, it will undoubtedly take time to get there, particularly where additional or revised legislation is required. This may well lead to uncertainty for businesses and a lack of clarity in the short to medium term – just what the government wants to avoid.
As discussed here, it remains to be seen whether the addition of the Regulatory Innovation Office to an already crowded regulatory market will bring real efficiencies and help speed up regulatory reform or simply add to the noise.
What does seem apparent, is that regulators are taking the government's growth mandate seriously, as the ICO's planned actions demonstrate. It's worth noting though that while some regulators may be prepared to relax some of the rules in a sandbox situation to facilitate innovation, we know that regulators like Ofcom and the CMA are ramping up rather than down given their respective responsibilities under the Online Safety Act and the Digital Markets Competition and Consumers Act.
Whether or not the latest plans for reform will go the same way as the Conservative government's planned bonfire of Brexit red tape which ended up being more of a damp squib, or whether Labour will be successful in its ambitions, will play out over the next few years. Businesses will need to pay close attention.
