Have you ever felt completely ripped off by confusing contracts, overwhelming insurance options, or subscriptions you accidentally signed up for? You’re not alone—and it’s a bigger problem than you might think. A recent report on the UK’s productivity crisis (https://getting-out-of-the-hole.uk/) reveals that the way markets for essential services operate isn’t just frustrating for consumers—it’s actively harming the economy. But here’s where it gets controversial: while Rachel Reeves has promised to tackle the cost of living in her upcoming budget, her focus on quick fixes like removing VAT on energy bills (https://www.theguardian.com/uk-news/2025/nov/02/rachel-reevess-5-vat-cut-on-electricity-bills-will-backfire-experts-say) might not be enough. Economists Andrew Sissons and John Springford argue in their paper, Getting Britain Out of the Hole, that we need a bolder, more interventionist approach to fix broken markets.
They point to a lack of genuine competition in sectors like energy, telecoms, and insurance as a key driver of the UK’s stubbornly high inflation (https://www.theguardian.com/business/2025/oct/14/uk-faces-highest-inflation-in-g7-this-year-and-next-imf-warns). While goods prices spiked post-Covid, it’s services inflation that’s lingered, fueled by rising wages and policies like Reeves’s £25bn increase in employer national insurance contributions—costs that companies have simply passed on to consumers. But this is just part of the story. The real issue, Sissons and Springford argue, is regulatory failure. Markets aren’t structured to benefit consumers, and this is making inflation stickier than it should be.
And this is the part most people miss: it’s not just about high prices—it’s about the complexity and opacity of these markets. Consumers are drowning in a sea of confusing tariffs, automatic bill hikes, and impossible-to-cancel subscriptions. Take phone and broadband contracts, for example. Since 2022, there’s been a noticeable inflation spike every April, when automatic price increases kick in. These hikes are often tied to the Retail Prices Index (RPI), an outdated inflation measure that’s conveniently higher than the Bank of England’s target. The authors call for regulators to crack down on these “RPI-plus” contracts, which unfairly drain consumers’ wallets.
But the rip-offs don’t stop there. Even in markets with many players, the complexity of products and the hassle of switching mean only the most determined consumers get a fair deal. This is a classic case of information asymmetry—companies exploit their superior knowledge, while consumers are left in the dark. As Sissons and Springford put it, “Most consumers don’t have the time or skills to decipher terms and conditions, and companies use data to take advantage of them.”
This isn’t a new argument. Behavioural economist David Halpern and former cabinet secretary Gus O’Donnell recently highlighted the issue of shrouding—where hidden charges and opaque information prevent consumers from making informed choices (https://www.bi.team/wp-content/uploads/2025/05/Fixing-the-holes-in-economics-better-theories-for-better-growth-1.pdf). So, what’s the solution? Reeves has called on regulators to “tear down barriers” (https://www.gov.uk/government/news/chancellor-calls-on-watchdog-bosses-to-tear-down-regulatory-barriers-that-hold-back-growth) and cut red tape, but Sissons and Springford argue that regulators need more resources and a stronger mandate to intervene.
Their proposals are radical: restrict RPI-plus contracts, ban auto-renewing subscriptions (except in essential areas like car insurance), and even introduce standardized products—like plain vanilla insurance policies—to simplify choices. Imagine if every service you subscribed to online could be canceled just as easily. Or if companies competed on price and service instead of burying consumers in legal jargon.
Labour’s rhetoric on regulation has often echoed the Tories’ laissez-faire approach, with Reeves calling overbearing rules a “boot on the neck” of businesses (https://www.theguardian.com/politics/2025/jul/15/rachel-reeves-rules-red-tape-boot-on-neck-innovation-mansion-house). But here’s the bold question: Is less regulation really the answer, or do we need smarter, more proactive oversight to protect consumers and boost the economy? Let’s debate this in the comments—do you think stronger regulation is the key to fairer markets, or is there another way forward?
