UK task force calls for reforms to boost city and fast-growing sectors

A UK government task force is set to recommend sweeping regulatory reforms for the City of London and fast-growing sectors of the economy as ministers seek to free UK businesses from European bureaucracy.

Prime Minister Boris Johnson created the group, led by former Conservative Party leader Iain Duncan Smith, with a “mission to identify opportunities” after Brexit.

A report by Johnson’s Task Force on Innovation, Growth and Regulatory Reform will recommend that the city’s pension funds have more flexibility to invest in small, fast-growing companies, including tech firms in the city. unicorn.

A person briefed on the report said there were also plans to propose changes to Mifid 2, the EU rules that govern financial services, which some executives have complained of as being too onerous and of limited benefit.

And the report will recommend regulatory changes to boost investment in 10 fast-growing sectors, including life sciences, agrotech, and future fuel sources.

The task force is chaired by Duncan Smith and includes former Life Sciences Minister George Freeman and former Environment Secretary Theresa Villiers.

Duncan Smith declined to comment, but a government official said the task force’s report, which was sent to Downing Street last month, had been “very well received”. It could be released as early as next week.

Many Conservative Party Brexiters hoped leaving the EU would provide UK employers with an opportunity to cut Brussels red tape affecting workers’ rights and the environment.

But in January, ministers dropped a business department review of UK labor rules – including the 48-hour week enshrined in EU law – after a reaction from unions and the Labor Party.

Instead, Downing Street tasked the Duncan Smith task force to come up with less controversial ideas that take advantage of Britain’s freedom to stray from EU rules after leaving the bloc. He was also tasked with establishing ways to stimulate potentially lucrative areas of future economic growth.

Duncan Smith has consulted with a range of industries in recent months: Business leaders have advocated a cautious approach to deregulation rather than a ‘bonfire’ from European bureaucracy.

The task force report will recommend pension reforms that involve relaxing the rules to make it easier for institutional investors to invest money in small businesses, according to people familiar with its contents.

He will say that US pension funds have a much higher proportion of their money in stocks and private equity, while UK equivalents are much smaller, these people said.

The report will also recommend changes to the Mifid 2 regulation which sets strict and often prescriptive rules to improve financial services and markets after the 2008 banking crisis.

The Duncan Smith task force will highlight the need for more flexible and targeted regulation for fast-growing sectors.

One person briefed on his report gave the example of nutraceuticals: healthy food products. Currently, these products may fall under the Food Standards Agency and Medicines and Health Products Regulatory Agency, the food and drug oversight bodies.

The task force will also propose that the so-called precautionary principle in government regulation – a cautious approach that usually leads to lengthy reviews – be replaced by a “principle of proportionality”, where the rules are limited to what is necessary. to achieve political goals.

The change would encourage much greater innovation on the part of entrepreneurs, people familiar with the report said.

A government spokesperson said: ‘The Prime Minister has asked the Working Group on Innovation, Growth and Regulatory Reform to identify and come up with options on how the UK can leverage our new regulatory freedoms and spur growth, innovation and competition in the economy, we are seizing opportunities outside the EU. The task force report will be released shortly.

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