Jeremy Hunt’s post-Brexit City shake-up has been dismissed as a “damp squib” that has had little impact on the UK economy a year after its launch.
The chancellor announced the “bold collection” of policy changes known as the Edinburgh reforms in December 2022 with the claim they would “create jobs, support businesses and power growth across all four nations of the UK”.
Parliament’s Treasury committee, however, found on Friday that the reforms were peppered with mere preparatory work that had disappointingly failed to deliver on Hunt’s big promises.
The committee said: “From what has been completed so far, the subcommittee is of the view that none of the achievements to date will make a substantial difference to the UK economy.”
The conclusions follow a formal review into the 31-point package of measures designed to “review, repeal and replace” a host of EU rules – as well as some introduced as a result of the financial crisis – which the government believed were hindering the success of London’s banks and insurers.
The committee’s chair, the Conservative MP Harriett Baldwin, said: “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.
“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 committee concluded that a number of measures in the plan merely “amount to preparatory work rather than outright reforms”. Even among those that were deemed to be genuine changes to regulation, MPs said the chancellor’s attempt to categorise those reforms as significant and worthy of attention was “unconvincing”.
For example, it was not obvious how a one-off £25m tax cut for beneficiaries of real-estate investment trusts, or broadening a tax exemption for overseas investors of crypto assets, would boost UK growth.
Although the government claimed to the committee it had already completed 21 of the 31 reforms by the time the report was published, the committee found that six of the actions marked as “delivered” were not yet complete, and a further six only related to actions like publishing a document or welcoming a consultation.
The report will embarrass Hunt’s attempts to portray the Edinburgh reforms as building on the former Tory chancellor Nigel Lawson’s 1980s “big bang” deregulation of the City of London.
The chancellor argued earlier this week that his changes formed a central plank of the government’s economic agenda, alongside focusing on sectors including artificial intelligence and clean energy.
Defending his plans, after a damning report by the Resolution Foundation said Britain was in a state of relative economic decline, Hunt said building on Lawson’s legacy was a key way to reverse the UK’s stalling growth performance.
The Treasury committee called on the government to prioritise reforms that would make the most difference to economic growth, as well as those that prevented harm to consumers and businesses.
The Treasury’s new City minister, Bim Afolami, defended the Edinburgh reforms. They had “shown the UK’s dedication to fostering a sensible, innovative and robust financial landscape”, he said. “Over the past year we have made significant strides towards creating an environment that supports economic growth, openness and the wellbeing of savers.
“Already companies worldwide are taking note of the UK’s approach, and we will continue to deliver on our reforms as we make the UK the best place in the world to create and grow a business.”