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Edinburgh Reforms a ‘damp squib’ with little impact on economy, MPs find

8 December 2023

The Treasury Committee is disappointed at the limited impact of the Government’s flagship financial services reform programme which was launched on 9 December 2022.   

Speaking almost 12 months ago to the day, the Chancellor of the Exchequer set out his plan to reform UK financial services rules following the UK’s departure from the European Union and after systemic changes were introduced related to the 2008 economic crash. As part of the launch, the Treasury published a list of 31 strands of work which would be taken forward. These were named the Edinburgh Reforms.

In advance of the Treasury Committee's report, the Government sent a progress update on the implementation of the changes. In its submission to the Committee, the Treasury said it had completed 21 of the 31 reforms in the first year.

Analysis by the Treasury Committee finds six of the actions marked as ‘delivered’ by the Government are not yet complete. A further six measures should not be considered as reforms as they relate to actions such as publishing a document or welcoming a consultation, the Committee says.

For those which could legitimately be labelled as reforms, the Committee are sceptical as to the value of some changes – giving the example of a planned reform to the Investment Manager Exemption which is deemed to have no economic impact.

In its report, the Committee noted the big promises employed at the launch of the Edinburgh Reforms in December 2022. MPs from the cross-party group challenge this narrative by arguing that a number of the announced measures amount to preparatory work rather than outright reforms and should be considered as such.

The Committee said the time taken between the Treasury announcing a policy objective and the implementation of changes to rules is too long. Even once consultations end, the next stage of the process often stalls with Treasury responses with the next steps taking too much time.

The Committee called on the Government to prioritise reforms that will make the most difference to the UK's economic growth, as well as those that prevent harm to consumers and businesses.

Chair comment

Chair of the Treasury Committee, Harriett Baldwin, said:

“More than a decade after the financial crash and six years after the UK voted to leave the European Union, the Treasury was absolutely right to look at updating regulation of the financial services sector and identifying rules which needed to be reformed or removed to encourage growth in this important economic sector.

“We welcome many of the changes as logical and sensible measures. We do, though, question the validity of claims that welcoming consultations, establishing reviews or publishing documents should be considered reforms.

“The Edinburgh Reforms were given considerable fanfare last December but, 12 months on, the lack of progress or economic impact has left them feeling like a damp squib.”

Further information

Image credit: Tyler Allicock/UK Parliament