The UK is faced with a dual challenge. On the one hand, like other advanced economies, economic growth in the UK has stalled. UK GDP growth per capita between 2008 and 2023 has stagnated at about 0.7 per cent per year. The UK has experienced some of the lowest levels of investment, wage growth and productivity improvements in the G7.

On the other, socio-economic inequality has reached record highs. Analysis by Dr Ben Tippet at King's College London for the Fairness Foundation found that the wealth gap between the top and bottom 10% grew by nearly 50% between 2011 and 2019. Currently, the top 10% of the wealth distribution owns 60% of the nation’s wealth, with clear inequalities in wealth ownership along racial gender, age, and regional lines. These gaps translate to significant inequalities in health housing work, educational and environmental outcomes, as outlined in the Fairness Foundation’s Wealth Gap Risk Register.

The government has made the first of these challenges, growth, its driving mission. Its rationale is simple: that without sustained growth, it will not be able to invest in public services and deliver higher living standards, and in this way to address inequality. As set out by Chancellor Rachel Reeves: “Without economic growth we cannot improve the lives of ordinary working people.”

Where the strategy breaks down is in what has become a driving agenda for its growth plan. Pre-election commitments to deliver greater security and to depart from ideologically-driven economic agendas have waned. Instead, we increasingly find the government relying on the toolbox that has failed our economy for over a decade: deregulation. This strategy is misguided. Regulation is consistent with an ambitious growth agenda, one which is grounded in a long-term and fair vision of our economy. Moreover, it is an important lever to ensure that its growth agenda is consistent with - and reinforces, rather undermines - its programme for mission-led government.

How regulation drives fair economic growth

A strong regulatory system is essential for delivering inclusive growth that makes everyone, not just a few, better off. It is the mechanism that ensures that we minimise the risks of the free market, while unleashing its potential to deliver greater prosperity and better living standards. This is a vision of growth that is grounded in the idea that we are all stakeholders in our economy, and that the rewards of growth should be fairly distributed.

Under this vision of growth, regulations are not seen as burdens to be minimised, but as enablers of fairness. It is a vision that treats the transition to net zero not as a restriction, but as a driver of investment and job creation, that promotes innovation as something that should benefit rather than harm people, and that works with companies as agents who help address social and environmental problems, not entities who profit from them.

We know that this is the model of growth that the vast majority of British people support. 79% of the public think that rules and regulations are ‘important for creating a stable economy and a secure society’. Swing voters are amongst the staunchest supporters of strong regulation. Meanwhile, a libertarian view of economic growth is widely rejected (only 21% say that regulations ‘hold the economy back and intrude on people's lives’). This is understandable in light of the experiences that have shaped our public life that have been linked to deregulation - the financial crash of 2008, the Grenfell Tower Disaster and the sewage scandal, alongside tangible public concern about the decline of standards in public life. People understand that these tragic and costly disasters can only be prevented if the economy is bound by effective regulations.

Recent polling by More in Common finds high levels of scepticism among the public - and particularly Green and Reform voters - about the impact of economic growth on their lives. Just four in ten Britons feel that they personally benefit from growth, and two thirds believe that slower growth and lower tax revenue are a price worth paying for greater economic fairness.

Regulation is a key lever for shaping the kind of fair and proportionate growth that most people want. It is how to make sure that companies commit to the transition to net zero, invest in their workers, and ensure that consumers are the ultimate beneficiaries of their products and services. According to polls, many businesses and investors also appreciate the stability offered through stronger regulation, and support stronger workers’ rights. Only a small minority cite too much regulation as a top challenge. Companies that are committed to productive growth acknowledge that regulation makes it easier to justify investment in people, technology and the transition to net zero.

Experts, including the lead proponent of mission-led growth, Marianna Mazzucato, see regulation as a key instrument of this approach. Regulation is central to the way in which the private sector and governments work together, setting out a clear direction and guiding the expectations of companies that benefit from public investment. This kind of growth cannot be left to markets alone but needs to be directed, bound by conditionalities and driven by strong institutions and rules. Mission-led growth is, by definition, regulated growth.

Regulations break down barriers to opportunity

Strong protections are essential to breaking down barriers to opportunity. A literature review of key drivers of the educational disadvantage gap published by the Education Policy Institute in 2018 details the ways in which deprivation degrades cognitive development and performance, generating educational inequalities and blocking opportunities. Much of this deprivation could be ameliorated through stronger regulation.

Below we set out how they can enable greater fairness (or ‘deep opportunity’)  across a range of issues, ensuring that those who face the greatest barriers have a better chance of overcoming them.

Political fairness

In a system without checks and balances, wealth becomes the key lever of influence. The wealthy can exert a higher level of influence by donating large sums to parties and funding lobbyists to pursue their interests, for example. In the absence of effective regulation around party donations lobbying restrictions or media ownership, control of the narrative and political agenda on wealth and inequality remains concentrated in the hands of a few. Those with less wealth are less able to influence politics and become less likely to participate.  Regulations, especially those which create checks and balances on the most powerful, are therefore an enabler of greater political equality.

Market fairness

The cost-of-living crisis has exposed significant weakness in the level of protection for the poorest consumers. Over the past decade, consumers have faced rising prices, contributing to the cost-of-living crisis and increasing ‘poverty premiums’ for poorer households (whereby people on low incomes are forced to pay higher prices because they have low incomes). Strong protections to ensure that companies cannot exploit vulnerabilities are an essential way of tackling the penalties that affect the poorest consumers. Research by the National Institute of Economic and Social Research found that the most vulnerable families have seen their finances take a £4,500 hit since the onset of the Covid-19 pandemic. Added to this, roughly a quarter of households experience at least one type of poverty premium in Britain, with research estimating that the average low-income household pays a premium of £490 per year.

Fair accountability

Strong protections help to prevent concentrations of market power that result in unfair industry practices. They also improve the UK's financial security, by creating conditions where unfair competition, including from businesses that trade in dirty money and corporate misconduct, cannot thrive. These protections are the foundation of the UK’s reputation as a clean and stable place to operate, and in this way are a key way of driving sound foreign investment while keeping damaging forms of capital at bay.

Fairness at work

The UK has one of the most deregulated labour markets and the highest levels of insecure work in the developed world. This workforce faces uncertain hours, unsafe working conditions, and low pay. Beyond its mental and physical health impacts, insecure work brings financial penalties – the Work Foundation has found that, on average, individuals in severely insecure work face a financial burden of £3,276 per year, compared to those in secure work. This further entrenches socio-economic deprivation and inequalities.

Another important body of regulations is the Health and Safety at Work Act 1974 - which remains a cornerstone of the UK’s regulatory framework, protecting workers from hazards in the workplace. This legislation requires employers to maintain safe working conditions, provide appropriate training, and mitigate risks associated with occupational hazards. The legislation has reduced workplace fatalities by 88% since its introduction 50 years ago, while non-fatal injuries have fallen by over 70%. It has also decreased exposure to hazardous substances, such as asbestos or harmful chemicals, and prevented occupational diseases like mesothelioma and chemical poisoning. The benefits have been felt most significantly by manual workers and those on lower incomes.

Workplace safety standards not only protect individual employees but also reduce absenteeism and improve productivity, generating broader economic and social returns. Despite the progress made since the Health and Safety Act was introduced, the Health and Safety Executive estimates that £21.6 billion is still lost from the economy each year due to work-related illness. By promoting a healthy population through interventions in the workplace and elsewhere, regulations can contribute to a healthier workforce and ultimately a more sustainable and resilient economy.

Fair housing

Poorly constructed housing and compromised environments are a growing problem for communities in the UK. The latest English Housing Survey estimates that 14% of UK households - including 1.5 million children - are living in homes that fail the Decent Homes Standard. Private renters are at the greatest risk of living in unsafe homes, with 21% (970,000 renters) living in non-compliant housing. People living in poor quality homes face higher maintenance costs, driving up living expenses and reducing the long-term affordability of housing itself. Their houses are quicker to degrade and become uninhabitable - something which currently affects a huge number of people across Britain who are forced to spend more of their wages on upkeep. A recent study estimates that the cost to the NHS of treating people affected by poor quality housing is £1.4 billion a year.

Fairness in health

Health inequalities - gaps in health outcomes between different socioeconomic groups - are a persistent challenge in the UK. These inequalities are preventable with the right interventions, and regulations can play a key role in reducing these disparities by addressing the social determinants of health. Non-communicable diseases such as obesity, diabetes, and heart disease are among the leading causes of death in the UK and are where inequalities are becoming most entrenched. Recent regulatory changes - from the Sugar Tax to Food Labelling Requirements - have been some of the most transformative public health interventions in recent years for tackling these diseases. For example, research showed that the Sugar Tax removed roughly 47,000 tonnes of sugar from soft drinks in the first four years after it was implemented.

Regulations are particularly effective at protecting the health of vulnerable groups, including children, the elderly, those on low incomes and those with pre-existing health conditions. The 2007 public smoking ban, for example, has significantly reduced exposure to secondhand smoke, delivering dramatic improvements to public health. This measure has been linked to a significant decline in smoking-related illnesses, such as lung cancer and cardiovascular disease. Meanwhile, research by Friends of the Earth demonstrates that just 21% of income deprived neighbourhoods across England and Wales have ‘inhalable particulate matter’ levels within WHO guidelines; 29% have levels one to two times higher than recommended guidelines, and 50% have levels more than 2.5 times over the threshold. By prioritising the needs of at-risk populations, regulations can help to tackle health inequalities and ensure that everyone has access to a safe and healthy environment.

Growth that exacerbates inequality risks creating deeper economic and social divides, undermining both economic resilience and social cohesion. A government that is serious about breaking down barriers to opportunity needs to embrace effective regulation as a means of shaping growth that is broad-based and inclusive.

Regulation is the cornerstone of the fair energy transition

Sustainable economic growth cannot be achieved without active, future-focused and effective regulations. Regulatory interventions should be seen as an effective complement to the system of targets and incentives that we know will be required to make this critical transition effectively. They are the guarantees that companies committed to the transition need, to ensure that they can invest and innovate without facing unfair competition. They are also the means to ensure that we can shift behaviours in a way that the public feels is fair.

These goals are not at odds with our ambition to grow the economy. Indeed, a strategy that seeks to unlock growth without such protections is likely to cost us dearly in the long run.  Most investors in the UK cite climate-related risk as a primary barrier to growth, and see government intervention, including via regulation, as fundamental to unlocking green investment. Growth driven by an erosion of standards will lead to a self-reinforcing cycle of poor-quality housing and degraded local environments. As companies and developers are encouraged to prioritise speed and cost savings over long-term quality and sustainability, the result will be infrastructure and homes that lack resilience, have little regard for space standards, have poor energy efficiency, and undermine communities. The evidence shows that poorly planned developments exacerbate issues such as overcrowding, inadequate public transport, and a lack of green space - all of which diminish life chances.

When environmental protections are weakened, the impact on ecosystems and community wellbeing becomes even more pronounced. This not only harms biodiversity, but also reduces the natural environmental benefits that green spaces provide, such as better air quality and improvements to mental health and wellbeing.

Deregulation sacrifices sustainability for narrow economic payouts, fostering a downward spiral. To break this cycle, a robust regulatory framework that prioritises environmentally sustainable development is essential. These protections will ensure that the government is able to deliver on its mission to tackle the structural barriers to opportunity. They will also deliver the savings in people’s pockets that will be essential to bolstering public support for the reforms needed to drive net zero.

The UK is a country on a quest for renewal. A different vision of the role that regulation can play in our economy needs to be part of this endeavour. This new approach is not about putting a brake on growth, but is about shaping growth in a way that meets, rather than undermines, the needs of people and of the environment.

Reset the strategy - the Fair Growth Duty

As a starting point we propose that the government rethinks the Growth Duty as a Fair Growth Duty. The Growth Duty was introduced by the Conservatives in 2017 under the Deregulation Act (2015), placing a requirement on regulators to ensure that they “have regard to the desirability of promoting economic growth” and “consider the promotion of economic growth and ensure any regulatory action they take is necessary and proportionate”. The Duty originally applied to any named regulator included in the Economic Growth (Regulatory Functions) Order (2017), covering over 50 regulators working in areas such as agriculture, plant health, food standards, medicine, and outer space. In 2023, the Duty was extended to Ofcom, Ofwat, and Ofgem, embedding commitments to consider economic growth for communications, water, and energy providers in the UK from April 2024. The Growth Duty relies on a narrow concept of growth, and does not account for opportunities provided by green growth or inclusive economic policies.

The Fair Growth Duty would mark a shift from this position, by integrating economic, social and environmental objectives. It would end the false dichotomy between the promotion of growth and the need to bolster basic social and environmental protections, showing how these are in fact mutually reinforcing. The Fair Growth Duty would share the commitment of the existing Growth Duty to promoting economic growth, while underlining the importance of broader social and environmental outcomes.

The Fair Growth Duty would also send a clear signal to regulators that they will be supported by the government to focus on their core mission: promoting growth and breaking down barriers to opportunity. The Fair Growth Duty would acknowledge regulators’ importance in driving up standards across the UK and their value in helping the government to deliver on all its missions. It would make them key players in the task of renewal.

The case for the Fair Growth Duty is as much about delivery as about resetting the strategy. It would help to prevent tensions between duties on regulators, most notably the Socio-Economic Duty, which the government is committed to introducing. A consultation is about to launched on the implementation of Section 1 of the Equality Act (2010), which will require public bodies, including regulators, to “consider how their decisions might help to reduce the inequalities associated with socio-economic disadvantage”, in areas such as health, crime, housing and education. The commitment to implement the Socio-Economic Duty is part of the government’s Opportunity Mission, which aims to “break down barriers” to opportunity. The Fair Growth Duty would support the aims of the Socio-Economic Duty, whereas the current Growth Duty would directly undermine it.

At the same time, rationalisation and simplification would build more transparency and accountability into the regulatory decision-making process. The Fair Growth Duty would put the achievement of all five missions at the heart of government policy. For example, investment in renewable energy infrastructure, nature-based solutions and improvements to energy efficiency can provide significant growth opportunities. Similarly, steps to address inequality and increase opportunity through fair wages, affordable housing, and more accessible education and healthcare can increase consumer spending, expand the skilled workforce, and drive innovation.

Table 1: Principles of the Fair Growth Duty

Rebuild the regulatory system

To deliver on the government’s growth mission and its other four missions, we need an effective regulatory system. This means a system that has the resources and expertise to function efficiently, to deliver an excellent service and to be at the forefront of technological advances. It needs to be a system with teeth, which has the power and resources to hold rule breakers to account and to incentivise behaviours that are in line with a vision of fair growth.

Well-enforced regulation is a sound investment that can pay for itself many times over. HMRC’s enforcement work, for example, adds £18 to the public purse for every £1 spent. Meanwhile, fraud across the private and public sectors and against individuals is estimated to cost the UK approximately £219 billion a year. Failure to invest in enforcement is not a cost-saving measure, but a false economy that risks greater costs in the long run.

A key priority will be to commit to sustained reinvestment to restore staffing levels and rebuild specialist skills and expertise. It will require reversing the deep funding cuts to regulators that have severely limited their ability to achieve their objectives. Between 2009 and 2019, the average budget of key regulators fell by 41%.

This is not about creating a punitive environment for businesses. Instead, it is about creating the conditions where businesses can be confident that competitors who cut corners will be punished. It is also about reassuring businesses that dealings with regulators will be efficient, expert and productive. Investment in regulators will pay off by addressing poor corporate practices, restoring public trust in the private sector, and creating favourable conditions in which businesses can plan, invest, and innovate. Far from being a barrier to growth, world class regulatory institutions create the certainty that responsible investors value, and can be an important source of expertise to help to drive sustainable growth.

A cornerstone of the government’s programme is the Fair Work Agency, which will help to support proper enforcement of the new protections contained in the Employment Rights Bill. Here the government has recognised that new protections can only be effective if they are enforced by a well-staffed, well-resourced regulator. This is well overdue. According to the International Labour Organisation, the UK currently falls significantly short on enforcing labour standards, with only 0.29 labour inspectors per 10,000 workers, far below the recommended level of one inspector per 10,000 workers. The UK ranks 27th out of the 38 OECD nations on this measure. Without adequate inspection resources, the enforcement of labour law remains weak, making it difficult to address issues of non-compliance, let alone to prevent cases of exploitation and workplace abuse. The result is an epidemic of abuse affecting UK workers. Over a third of employees on the lowest wages are paid less than what they are owed, and only a tiny proportion of cases are investigated, sanctioned or addressed.

Although the labour market is an extreme case of under-enforcement, we know that the enforcement gap affects the system across the board. Resourcing regulators effectively will be key to achieving this. There are several self-financing mechanisms for increasing the funding of regulatory bodies. Hypothecating financial sanctions could redirect penalties collected from non-compliant firms directly into the regulatory system to enhance enforcement capacity and oversight. Expanding licensing regimes to new sectors could generate steady revenues by introducing or increasing fees for regulated businesses. Sector-specific levy systems, already in place in some sectors, could require companies to contribute a small, proportionate fee to support regulatory activities. These approaches could provide regulators with more consistent, independent funding, reducing their reliance on government budgets.

The regulatory system should be embraced as an essential tool for driving renewal. It is a key way to break the vicious cycle of inequalities in health, income and wealth, education and employment, all of which undermine both growth and opportunity. Making regulators agents of this shift would help ensure that the regulatory system is geared towards the renewal that that country needs.

Empowering and investing in regulators would be a popular and cost-effective way of boosting growth while making progress on the government’s wider mission agenda.

Well-designed protections prevent costly mistakes that can plague projects for decades. They don't block progress - they enable it. They don’t undermine innovation - they create the conditions in which those with the best ideas can thrive.

The government should focus on rebuilding capacity in our regulatory systems. This requires both a clear direction and proper funding.

It is time to look beyond the failed deregulatory playbook, to abandon the false choice between growth and standards, and to invest in making our regulatory system fit for purpose.