Reeves to say rules and red tape are ‘boot on the neck’ of innovation

Rachel Reeves will say that rules and red tape are acting as a “boot on the neck” of businesses and risk “choking off” innovation across the UK without bold reforms.

In a speech to City bosses attending the Mansion House dinner at London’s Guildhall on Tuesday evening, the chancellor will heap further pressure on regulators to allow for more risk in order to boost economic growth.

“It is clear that we must do more,” Reeves will say. “In too many areas, regulation still acts as a boot on the neck of businesses, choking off the enterprise and innovation that is the lifeblood of growth.

“Regulators in other sectors must take up the call I make this evening, not to bend to the temptation of excessive caution, but to boldly regulate for growth in the service of prosperity across our country.”

The comments will follow the launch of her financial services strategy, dubbed the Leeds Reforms, which were published during a summit with banking bosses and the heads of City regulators in West Yorkshire on Tuesday morning.

Reeves plans to water down a series of regulations introduced following the 2008 financial crisis, after strong lobbying by City firms, and push for more risk-taking by both businesses and consumers.

However, she will argue that the government is “regulating for growth”, and that weaker regulations will ultimately have trickle-down benefits for consumers.

“We have been bold in regulating for growth in financial services and I have been clear on the benefits that that will drive: with a ripple effect across all sectors of our economy putting pounds in the pockets of working people; through better deals on their mortgages; better returns on their savings; more jobs paying good wages across our country.”

Among the plans put forward in the Leeds Reforms are plans to “radically streamline” accountability rules for senior bankers, and review ringfencing rules – introduced after the 2008 financial crisis – that are meant to protect consumer cash from a bank’s riskier business activities in the coming months.

There will also be a review of risk warnings attached to investment products to ensure that people are “accurately” judging risk levels, and that allow lenders to offer riskier mortgages that are worth more than 4.5 times a borrowers’ annual income.

The chancellor has been under additional pressure to spur growth after official figures last week showed the economy shrank by 0.1% in May, adding to speculation that she will be forced to raise taxes again in the autumn budget.