Regulatory staff
146. The regulators need
adequate powers and staff who are sufficient in number and quality.
Some witnesses felt they do not currently have them.[330]
One criticism frequently heard of the system, both in the UK
and in the United States, is that many regulatory staff lack business
experience. This failing is usually ascribed to the obligation
on the regulators to offer civil service rates of pay. Professor
Littlechild assured us, however, that these rates had recently
become more flexible and also that 50% of his staff at director
level have relevant experience in the private sector.[331]
We are also pleased to note that a number of capable people now
have experience of working in the office of more than one regulator,
so that the pool of regulatory experience is growing.[332]
We recommend that Government should keep under review the
staffing of the regulators' offices with a view to ensuring that
they comprise an adequate number of appropriately qualified and
paid staff.
Consultants
147. A way to re-inforce
in-house expertise is the use of consultants by the regulators.
Some witnesses complained of excessive use, warning against the
influence of consultants in policy matters. PowerGen told us
"You very often end up talking to consultants about policy.
Consultants are there as hired hands to analyse, churn number
models and give advice. They are not there for you to talk to
in terms of a regulatory policy for how the industry is going
to develop in the future".[333]
Professor Littlechild suggested that the balance between consultants
and in-house staff was a matter of judgement and the best use
of the customers' money: "We have to take a view as to ...
which is sensible to have in-house and which to buy in. Now,
I take the view ... that we need a substantial number of engineers
working in-house because we have on-going assessments of what
they are doing ... but when we come to a price control review
involving 14 companies or, for that matter, involving the National
Grid Company, when we have a particularly intensive exercise to
do, it is sensible to get in engineering consultants and we got
in some of the best consultants there are in the industry, so
I do not think anyone has challenged the expertise that I had
access to".[334]
The DGGS was also in favour of maintaining a balance between
in-house skills and the use of external expertise when appropriate,
both to maintain a breadth of scope and to deal with peaks and
troughs in the workload.[335]
Other witnesses also felt that the use of consultants could be
beneficial.[336]
We recommend that the Directors General take care to ensure
that the role of consultants be restricted to a research and advisory
capacity. We further recommend that regulators should include
among their consultants experts from bodies with knowledge of
environmental, social and consumer protection issues.
Boards and panels
148. Regulators are increasingly
making use of panels of expert advisers. An example frequently
cited was Professor Littlechild's appointment of three advisers
for the transmission price control review;[337]
this was generally applauded. Ms Spottiswoode also uses "a
series of advisers for particular issues".[338]
Some witnesses felt that such use could be extended and formalised
as a Board of Directors to whom larger policy issues could be
referred while the regulator carried out day-to-day business.[339]
149. A panel of advisers
implies a loose structure, a group of individuals who may be called
on at need in particular circumstances; a Board of Directors is
an altogether more rigid and permanent structure, implying some
kind of authority over the regulator and a dilution of his or
her authority. Those in favour of such a Board felt that it would
tend to depersonalise regulatory decisions, broaden the scope
of experience open to the regulator[340]
and reduce the chance of idiosyncratic use of the regulators'
discretion; the opponents that it might be slow.[341]
Professor Littlechild was as yet unconvinced of the merits of
a permanent Board, feeling that "an advisory board, if you
want to call it that, for specific topics, with people chosen
for that point, can be very useful indeed. Whether that would
apply equally for a Board to look at the whole of OFFER's organisation
is to me ... an unknown question".[342]
He reminded us that much would depend on the size and composition
of the Board and who appointed it.[343]
Ms Spottiswoode had been surprised not to find some kind of Board
of Directorship arrangement when she was appointed.[344]
While we feel the use of ad hoc advisory panels can provide
a useful resource for regulators, we are not at present convinced
that Boards of Directors would be an improvement on the present
system. We recommend that the Government review practice across
the whole field of regulation and examine the ad hoc arrangements
used by some Directors General with a view to incorporating best
practice in future proposed legislation.
Access to information
150. Regulators need access
to accurate information on which to base their decisions. The
DGGS referred with apparent envy to the system in place in the
United States where "the regulator, or any other company,
can just tap into the actual computer systems that the company
uses, so there is no question of double sets of books or anything
else".[345]
The DGES told us he had not met with unwillingness to provide
the information he required although it was not always immediately
forthcoming in the form requested.[346]
More serious than any reluctance of companies to provide information
is their occasional refusal to allow regulators to publish
information (see paras 102 and 103).
330 Ev. p.98; Mem. p.29. Back
331 Ev.
p.299. Back
332 eg.
Q.933. Back
333 Q.154. Back
334 Q.1058. Back
335 Ev.
p.249. Back
336 Mem.
p.36. Back
337 Ev.
p.133. Back
338 Ev.
p.277. Back
339 Q.17. Back
340 Mem.
p.34. Back
341 eg.
Mem. pp.22, 49. Back
342 Q.1066. Back
343 QQ.1067-68. Back
344 Q.895. Back
345 Q.907. Back
346 Q.1059. Back
