One of Britain’s top industrialists has blasted a “fundamentally flawed” regulatory environment that stifled economic growth during 14 years of Conservative rule.

In an unusual intervention, Keith Williams, the chairman of Royal Mail parent IDS, said Sir Keir Starmer must realise that the UK has a “regulatory model that is not fit for purpose”.

Williams, the former chief executive of British Airways, has battled successive governments to allow reform of postal services. But his issue with the quality of regulators in the UK is wider-reaching.

“The UK has been a leader in economic regulation over the last 40 years and has been copied widely internationally. But that has changed. We now lag countries such as Singapore or Australia and, nearer to home, Denmark and Ireland,” he said. “While price control across sectors from energy to water has been arguably successful in keeping down bills, it has left fundamental flaws.

“We are all starting to pay the price, whether in service quality or charges, and potentially the need for government subsidy.

“These flaws are becoming well known, but less visible is the way in which economic regulation has stifled growth.”

Royal Mail is losing between £325 million and £675 million a year by sticking to regulations that stipulate letters must be delivered to UK addresses six days a week. “This outdated regulatory burden is holding back growth in other services both domestically and internationally,” he said.

Williams cited France and Germany, where working alongside the government to adapt domestic markets had allowed former state monopolies to grow overseas.

He said: “Today in the UK many of our parcels are delivered by DHL, a subsidiary of Deutsche Post in Germany, and DPD, a subsidiary of Geopost La Poste in France.

“DHL has annual revenues of €82 billion [£70 billion], La Poste has annual revenues of €34 billion. IDS — a combination of Royal Mail and GLS internationally — is a tiddler, with revenues of around €15 billion.” Williams further pointed out that Spain had announced €4 billion of state subsidies this month to prop up its struggling postal operator.

He said: “We do not want a subsidy, but we urgently need regulatory reform to compete against international competition. The incoming government offers a belated chance both to reform regulation in the UK and to bring in new thinking and new investment.”