Examination of Witnesses (Questions 465-479)|
25 JANUARY 2006
Q465 Chairman: Good afternoon, gentlemen,
you are most warmly welcome. Could I ask you to identify yourselves
for the record, please?
Mr Haythornthwaite: My name is
Rick Haythornthwaite and I am the Chairman of the Better Regulation
Dr Thatcher: I am Mark Thatcherno
relation I should add!
Q466 Chairman: It never crossed our minds
and it is only accidental that you were going to have a hard time!
Dr Thatcher: Not here, I hope!
I am a Reader in Public Administration and Policy and I have worked
on regulation and independent regulated agencies in Britain and
elsewhere in Europe.
Q467 Chairman: That is very helpful.
Mr Haythornthwaite, could you just tell us the most important
conclusions and recommendations you have made to independent regulators
about better regulation?
Mr Haythornthwaite: I think the
most important really relates to the governance of the independent
regulators first and foremost. The independent regulators do need
to have a very clear idea of their objectives. They have to have
a very clear sense of their governance to ensure that there is
an appropriate governance, preferably with a separation of chairman
and chief executive, that there is a mix of executive and non-executive
board, that they have a clear commitment to the governance principles
of consultation, they have clearly accessible and affordable means
of appeal, that they are committed to impact assessments, and
I think therefore, Madam Chairman, the process of the independent
regulators is important but also the way they conduct their business
in terms of spirit is equally as important. It is no good being
independent unless you really have the support not only of those
on whose behalf you regulate but also the regulated community.
Therefore the way the independent regulators conduct their business,
the relationships they adopt, the transparency with all of the
communities is as important to their licence to operate as the
governance that they have in place.
Q468 Chairman: How have they responded
in general to the seven recommendations?
Mr Haythornthwaite: The Task Force
(before it became the Commission) did go back and have a look
at how the response had been during the course of last year and
actually the response has been positive. There is far more consultation
than there used to be. There is more practice of impact assessments,
although there are still very considerable questions about the
quality of those impact assessments.
Q469 Chairman: And presumably differences
between one regulator and another?
Mr Haythornthwaite: It is very
variable, yes indeed. We have not looked at the CAA and the aviation
industry in particular, although one can say, looking very briefly
at the sponsorship statement, there are many of the aspects we
would wish to see in there, not least the commitment in any primary
and secondary legislation to impact assessments, and to driving
down the administrative burden, which is very encouraging. In
the corporate plan of the CAA I think the words we read about
adhering to the principles of better regulation and about the
adoption of the principles of the enforcement concordat, all of
that is very positive. We have also found in the meetings that
were started in 2004 that were convened by the National Audit
Office and the Task Force, and now the Commission, where we brought
independent regulators together, there is no doubt there is a
strong commitment to drive better regulation through, although
it is very noticeable that quite often they are quite hidebound
by the founding statutes, so often when quite simple areas of
deregulation are desired they are not always easy to push through.
Q470 Chairman: What happens when
the regulators fail to follow your recommendations?
Mr Haythornthwaite: First of all,
we make our recommendations to the Government and the Government
has, by and large
Q471 Chairman: Well then, put it
another way, what has the Government done to encourage regulators
to take up your recommendations?
Mr Haythornthwaite: The Government
so far has done it first of all by very willingly and rapidly
accepting the recommendations that we make. The most important
sets of regulations were around the regulators as a whole and
certainly by endorsing those there was a strong degree of pressure
put on the regulators, even though they are independent, to adopt
them. There was really a why explain?" tone to it and certainly
most of them have responded. Now it is an important time in the
evolution of this because the Less is More Report and the
Hampton Report laid out quite clearly some challenges for simplification,
making sure that any new regulation was accounted for by a net
reduction in the existing stock of regulation and by a very thorough
process of administrative burden simplification being adopted
by the departments. Now there has to be visible evidence, I think,
that the independent regulators are picking up the tone and spirit
and the process that we are seeing in departments.
Q472 Chairman: Are you rather implying
that that has not happened totally yet? Is that the burden of
Mr Haythornthwaite: No, it is
just very early days. The departments are really in the earliest
stages of measuring their administrative burden. One has to say
that we see the right words in most quarters, but from the standpoint
of the Better Regulation Commission we are only interested in
outcomes and until we see real outcomes we will retain a tinge
of scepticism. However, there is no hard evidence as of today
that they are not being adhered to.
Q473 Chairman: You did identify in
the 2003 Better Regulation Task Force report a number of examples
of good practice particularly in relation to accountability and
answerability (horrible word). Have you seen any evidence of the
CAA adopting that best practice?
Mr Haythornthwaite: I think from
our standpoint, bearing in mind we have not beyond that initial
report (where we did look at the economic side of the CAA and
compare it to Ofgem and Ofwat) looked at it in any detail.
Q474 Chairman: You mean you have
not looked at the CAA in detail?
Mr Haythornthwaite: The CAA in
Q475 Chairman: But you have looked
across the board at this?
Mr Haythornthwaite: We have looked
across the board and in terms of accountability and answerability,
yes, we have seen improvements in quite a number of departments.
I think if one takes an independent regulator such as the Financial
Services Authority, the Financial Services Authority has made
significant strides in moving towards a principle-driven regulatory
environment, consulting widely with the stakeholders, and there
is a transparency and accountability that is being built up, and
there are other examples throughout, but it remains patchy.
Q476 Chairman: Who apart from you
evaluates the performance of regulators?
Mr Haythornthwaite: There is no
hard and fast systematic evaluation of the regulators as far as
we see it. Obviously each regulator is accountable to the Secretary
of State of the relevant department, just as the CAA is accountable
to the Secretary of State for Transport, and one would hope that
they would be judged against the sponsorship statement and their
performance against that. Moving forward, the only other areas
are really what we see through the Independent Regulators Conference
where we are able to make an assessment of the direction in which
that is moving, and one hopes that this current simplification
exercise will expose poor performance and poor levels of commitment
to better regulation, but there is no other systematic process
that I see to judge the independent regulators.
Q477 Chairman: To be mildly unfair
for a moment, since you found there were differences between the
different regulators has it not occurred to you as a group that
possibly one thing that you could do would be to create your own
set of rules for evaluating the performance of regulators? Is
that something that is happening?
Mr Haythornthwaite: I think there
is a set of rules.
Q478 Chairman: Not the ones that
you originally laid down. I am saying do you have any way in which
you can evaluate the gaps between what you have asked them to
do, what you think they ought to do, and what they are doing?
Mr Haythornthwaite: Bearing in
mind that what we asked them to do represents only a proportion
of what the day-to-day job of the regulator is, and therefore
I think one needs to be mindful of that, I think we can lay down,
as we have, the basic principles of better regulation and a clear
goal that we wish to see a net reduction in administrative burdens
and regulation as a whole. Against those areas we have the right
to scrutinise and vet and we stay in contact with people. Do we
have a hard and fast measure that we can throw back in the faces
of the regulators? No, we do not, but does that mean that we cannot
influence through the various methods you talk about, yes we can,
and that is the way we choose to operate.
Q479 Graham Stringer: I think that
meant that you do not believe there should be a regulator of the
regulators? Is that what you are saying?
Mr Haythornthwaite: You are referring
to the Commission as a regulator of the regulators.