ALEX BRUMMER: Labour in a regulatory mess

This week the Competition and Markets Authority (CMA) gave its go-ahead, after nine months of delay, to BlackRock’s £2.6billion purchase of City-based alternative investment platform Preqin.

Aside from making its founder, the Suffolk farmer Mike O’Hare, very rich, the deal illustrates the Government’s confused approach to regulation.

It rightly wants to see the CMA speed up deal approvals and the regulator, under its new Amazon emigre chairman Douglas Gurr, is promising to accelerate its initial scrutiny from 65 days to 40 days.

Certainly, the Preqin deal, which barely touches consumers, was unlikely to diminish competition in the City’s highly diversified asset management markets.

The belief, however, that somehow the Government can further growth by shaking up regulators doesn’t always make a great deal of sense. To assist expansion, Andrew Bailey, the Governor of the Bank of England, last month postponed tightening capital rules for banks, as proposed at the central bankers’ club in Basel, to make lending easier.

But this week he cautioned that taking the brakes off regulation was among factors which contributed to light touch regulation behind the 2008 financial crisis.

The banks, not surprisingly, see an open door to less interference. Paradoxically, Paul Thwaite, the boss of NatWest, which was the UK’s biggest loser in 2008, is asking for an easing of ‘ring fencing’, which requires British banks to separate vanilla consumer and commercial banking from other activities such as trading.

Labour is in a mess on regulation and bureaucracy. As this paper noted in December, the UK has set up a new quango every week since taking office.

In addition to Great British Energy, which is designed to use public funds to seed private sector renewable projects, a plethora of mini power oversight bodies have been set up.

Mission Control has been put in charge of delivering clean power by 2030. There is also a National Energy System Operator and a Solar Taskforce.

But amid this alphabet soup, Ed Miliband’s department has still to sign off on Rolls-Royce’s small modular reactors (SMRs). In Washington, Donald Trump already is reaching deals to co-operate on bringing SMRs to India.

Growth advocate Reeves has established an Office for Value for Money, duplicating great work already done by the National Audit Office, a Covid corruption czar, an Office for Investment and much more.

Reeves may well have been correct to have defenestrated the leadership at the Financial Ombudsman Service, where chief executive Abby Thomas and chairperson Baroness Manzoor have departed.

There is reason to think the Ombudsman service has been a pushover for consumer groups damaging the financial system.

The CMA is an entirely different kettle of fish. Without its intervention, the promise of a £9billion new investment in mobile networks, post the Vodafone-Three merger, might never have been attained. The hard line taken by chief executive Sarah Cardell on the Microsoft-Activision Blizzard deal means that the principle of open access to gaming innovation has been preserved.

It would be terrific, given the pathetic response by Business Secretary Jonathan Reynolds, if the £3.6billion bid by Czech sphinx Daniel Kretinsky for the Royal Mail owner International Distributions Services (IDS) were to be probed.

The CMA could look at the implications of a debt mountain for customer service. It might also investigate whether Kretinsky’s pledges can be trusted given his recent cancellation of a contract to build a gas-fired power plant in Yorkshire.

Reynolds demands more agility from regulators but has allowed a Czech billionaire with strong Kremlin connections to run rings around his own department, the board of the IDS and the unions.

Far from encouraging growth, the Government’s muddled thinking over regulation is layering on new bureaucracy and weakening consumer protection.

A Cabinet devoid of business experience is making daft decisions which weaken the protections of Britain’s consumers and enterprises from the big, marauding beast of capitalism. Quickening the pace of decision making is useful but does little to release the animal spirits.

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