House of Commons - Regulatory Reform

Select Committee on Regulatory Reform Fifth Report

3 The Better Regulation Executive's strategy, role and location

9. One of the most important objectives for the inquiry was to consider whether the BRE has developed a coherent strategy in its approach to the many initiatives that form part of the regulatory reform agenda.

10. The written evidence submitted by Professor Baldwin of the London School of Economics is consistent with the view of Sir William Sargent, the BRE's Executive Chair, referred to in paragraph 1, in that it suggests that regulatory reform should not stress any one approach (particularly one based solely on impact assessments) to the exclusion of others, but should instead deploy a mixture of policy approaches and a variety of strategies.[11] In his oral evidence, Trevor Huddleston, Department of Work and Pensions (DWP) strategy director, said: "I do not think you can bite off a strategy as big as Better Regulation with one initiative."[12] We agree that a pragmatic approach is needed in such a complex and varied area. Nevertheless, there is a need for coherence between different strategies, and we heard evidence that suggested a lack of coherence at times.

11. The Environment Agency spoke of "initiative overload" from the BRE,[13] and the need for "better forward planning with clearly defined and agreed goals and more realistic timescales".[14] It referred to the danger of "poorly thought through ideas leading to unintended consequences" if regulators are insufficiently consulted, leading to "business expectations being raised and dashed".[15]

12. The Department for Environment, Food and Rural Affairs (DEFRA), too, mentioned initiative overload, and the need to focus action and attention on those initiatives which have the capacity to deliver the best outcomes.[16] It said: "The pace and scope of change can often be daunting and there should be flexibility to look in more detail at balancing competing demands."[17]

13. The Health and Safety Executive (HSE) told us that the BRE approach can "sometimes be reactive or unplanned"[18] and that there has been a challenging volume of initiatives.[19] The Food Standards Agency said that the BRE "can at times appear to be driven by the need to introduce new initiatives before older initiatives have had time to deliver fully the benefits intended."[20]

14. The Department of Health (DoH) memorandum stated: "we struggle with maintaining the necessary pace and scope of delivery, whilst attempting to balance this with the need for cultural change."[21] On the other hand, the Department of Health considered that building on the Hampton Review of regulators, on Less is More, and on the application of regulatory principles of targeting, accountability, proportionality, consistency and transparency, had ensured overall coherence.[22] DEFRA took a similar view but warned against complacency.[23]

15. When we asked Baroness Vadera, Minister of State at the Department of Business, Enterprise and Regulatory Reform, whether there had been initiative overload, her response was that the BRE needs to push hard in order to achieve delivery.[24] We agree with that, and the pressure should continue. However, the views expressed in evidence about lack of clear direction were to some extent borne out by our own initial interactions with the BRE during the inquiry. Its first memorandum to us[25] lacked the coherence and direction of its later submission.[26] Several commentators referred to the need for the BRE to apply more soundly the principles of good regulation-particularly targeting and proportionality-in its own methodology.[27] The need for timely consultation was also mentioned.[28] We therefore welcome the more rigorous approach taken in the BRE's recent communications with us and the progress in developing coherence of vision that has been made during the course of the inquiry. We trust that it is being reflected elsewhere.

16. We acknowledge the need for a diversity of initiatives and the need to maintain the momentum of reform. The pressure for reform should continue, but we recommend that the BRE should set clear priorities, together with timetables for delivery. We suggest that the BRE consider how better to co-ordinate communication of its initiatives to stakeholders. That would help avoid impressions of "initiative overload" and take into account the capacity of stakeholders to manage change.

17. We urge the BRE to apply good regulatory practice (for example, in applying targeting and proportionality in stipulating frequency of inspections), and to target initiatives where they will be most productive. Better regulation principles including consultation and impact assessment should be applied to regulatory reform initiatives themselves (as has been the case in relation to the proposals for regulatory budgets).[29]

BRE's role and leverage within Government

18. The BRE defines its role as being "to lead the overall strategy to deliver regulatory reform, provide mechanisms, tools and guidance which will allow the better regulation agenda to be delivered, and work across Government and with regulators to embed the better regulation agenda."[30] DEFRA's perception of the role that BRE should usefully play within Government coincided. In its opinion: "The BRE's primary function is to champion good policy-making, embed better regulation principles, promote early engagement with stakeholders, and integrate rigorous cost-benefit analysis into the development of policies and legislation in Whitehall."[31] The CBI view was similar: that the BRE has two key roles-as a champion of better regulation across Whitehall and at a more pragmatic level in working on practical solutions.[32] Significantly, the CBI also commented that many of the BRE's achievements probably go unrecognised because they are effected by means of quiet persuasion within Whitehall.[33]

19. We were interested in whether the BRE has sufficient levers to push through the most important parts of its agenda when necessary, which the British Chambers of Commerce (BCC), the TUC and the National Consumer Council (NCC) all questioned.[34] In particular, the NCC said of Departments: "they are quiet happy to dish it out but they maybe do not enjoy being subject to anybody else's scrutiny." It also said: "it is really important that it feels like the BRE have some sort of backing at the high level within Government so that they can go in and influence so far as possible and be a little bit heavier when necessary." The BCC said that the BRE should be "pushed further towards the centre of regulatory activity within Whitehall and must be backed by strong political support."

20. The Minister told us that the BRE has high-level backing from the Prime Minister and that the BRE Executive Chair has Cabinet-level access. She said: "I think that the system tends to respond to [the] institutionalised structures which the BRE has the ability to influence, to use as a lever to influence outcomes."[35] She was emphatic that BRE's move to BERR, which we address below, had increased its leverage on Government.[36] We asked about the role of the Panel for Regulatory Accountability (PRA).[37] The Minister said that the PRA is useful in providing challenge to regulatory initiatives and in forcing reconsideration of impact assessments. It seems to us that, to support the BRE in its work, the PRA should continue to provide real-time scrutiny of impact assessments.[38]We recommend that amendments made during the passage of legislation be referred to the PRA for post hoc analysis.

21. An issue that touches on BRE leverage within Government is that of career development within the Civil Service. Whether the BRE message on better regulation falls on receptive ground may depend on civil servants knowing that they can advance their careers through being involved in the better regulation agenda just as much as through, for example, supporting a Bill through Parliament. Professor Radaelli of Exeter University's Centre for Regulatory Governance claimed that "good RIA[39] desk officers are not promoted."[40] The Institute of Directors (IoD) described the issue as the elephant in the room.[41] In its memorandum it said: "No number of measures tackling various pressure points of regulation will deliver meaningful outcome[s] if the incentive structures and career developments paths of the Civil Service are not examined in the light of their effects on regulation and usage of legislative solutions."[42]

22. We requested a memorandum from the Cabinet Office on this issue.[43] The response showed that the importance of impact assessment awareness is recognised in Civil Service training and career progression, although it did not point to specific examples of where, or how, involvement in regulatory reform projects is perceived as equivalent to and equally as valuable as involvement in a Departmental Bill team. The Minister told us: "I think there has been a radical change in the culture, but I think that we have a long way to go still."[44] She added: "I think we should be encouraging, in particular, the senior Civil Service to be looking at this further."[45] We agree. The inclusion of training in the regulatory reform agenda is to be welcomed but career progression is a separate issue. We therefore recommend that, as soon as possible, those matters be taken into account when determining structures for Civil Service career development.

BRE's location within Government

23. The question of BRE's leverage with Government Departments is linked to that of its recent move from the Cabinet Office. We heard a variety of opinions on the impact of the move to BERR. The BRE's own perspective was that any transitional difficulties have been resolved.[46] Save for the comments made in relation to influencing the European agenda (see paragraph 32 below), the Departments and the HSE indicated that they had noticed little change, although the DWP observed that if the BRE became less enthusiastic about addressing burdens on the public sector and on citizens, DWP would itself lose clout in helping push that agenda along.[47] Among the business organisations, the BCC felt that its relationship with the BRE had warmed since the move.[48] The Federation of Small Businesses (FSB) took the view that there was less confrontation, including-perhaps not surprisingly-between BRE and BERR.[49] The IoD considered that the jury was still out, but was not aware of any problems.[50]

24. In oral evidence, the NCC said that it was not obvious that BERR has the leverage to empower the BRE to influence behaviour across Government.[51] However, the Environment Agency took the opposite view: that BERR Ministers have a voice, whereas within the Cabinet Office the BRE could have been marginalised.[52]

25. The TUC had concerns that the relocation might reinforce the perception held in some quarters that there was too much BRE emphasis on assisting the business sector. They argued that the BRE would "have to work extremely hard if they are going to stay in BERR and establish themselves as a reputable better regulation authority that is capable of understanding issues outside the context of the concerns of…small businesses [in particular]."[53]

26. The NCC memorandum argued that the move "risks sending mixed messages to regulators and weakening the power of the BRE to drive change"[54] and that "Locating the BRE within BERR may hinder the promotion of an effective better regulation agenda, given the Department's present aspiration to be the voice for business."[55] The Environment Agency's memorandum said:

"We think that the BRE has failed to strike the right balance. Seemingly distracted by the current emphasis on reducing the burden on business, it may have lost sight of how regulation and the outcomes that it delivers can be supported and made most effective. We would like to see the BRE adopting a more balanced approach, working more closely with regulators to ensure that regulatory reform delivers real results. This would benefit the environment, the public, consumer protection and business, as well as maintaining credibility and public confidence in regulation."[56]

27. One of the Environment Agency witnesses said: "I get the sense that the BRE accepts the word of the business community without much analysis." The Agency had complained to BERR about the responsible Minister being given the title "Minister for Deregulation".[57] The Local Authorities Co-ordinators of Regulatory Services (LACORS) memorandum commented: "We feel the Government [should] ensure that the needs to ensure that businesses are not burdened with undue "red tape" are fairly balanced with the needs to protect consumers, workers and local communities from health safety, welfare and economic harm."[58]

28. When we visited the BRE, we put to Sir William Sargent the criticism that the BRE is too focused on satisfying business interests. His response was that he preferred to see the BRE as being "economy focused". However, in its oral evidence session, the NCC noted that the BRE website states: "Life's too short to be bogged down by rules and regulations. And that's where the Better Regulation Executive comes in…We make a positive difference to you and your business", the assumption being that everyone who visits the site does so from a business perspective. Even the BCC said that there should be more emphasis on the case for better regulation at the citizen or individual level.[59]

29. The House of Lords Merits Committee has recently expressed concern about potential burdens on business being far more rigorously assessed than potential burdens on the public sector.[60] In the Committee's opinion, that was aggravated by the BRE's move from the Cabinet Office. The Committee added that it had doubts as to whether public sector legislation was drafted with the same attention to cost/benefit analysis as instruments that have an impact on business.

30. The Minister argued that the perception of preoccupation with business interests derives from the BRE's duty to point out the business impact of regulatory decisions to Departments and regulators.[61] Nevertheless, it seems to us that at the very least there is an approach that puts business satisfaction at the top of the agenda at the BRE, and that that attitude might extend into the degree of importance attached to certain programmes. We acknowledge the importance of a competitive economy to all sectors, but, as the NCC pointed out,[62] and as the BRE itself acknowledged,[63] consumers and individuals also have an interest in better regulation, in that they are the ones who ultimately pay the price of bad regulation.

31. The Minister emphasised that the Department is indeed a Department for Regulatory Reform as well as Business and Enterprise, and took the view that the move to BERR helped the BRE to "leverage off the relationships of one major stakeholder, which is business".[64] However, BERR needs to ensure that the BRE has freedom to take on the mantle of the balanced regulatory reform agenda that fully reflects the intention behind the renaming of the Department, without inappropriate pressure to conform to the business agenda at all times.

32. In the oral evidence session with Departments, DEFRA commented that the move from the Cabinet Office to BERR might have diminished BRE's influence at the EU level. However, the HSE seemed to suggest the opposite. The Minister was adamant that there had been no diminution in influence, citing the example of the BRE's success since the move to BERR in getting better regulation prioritised within the EU Small Business Act.[65] The BRE's Chief Executive agreed.[66]

33. Ultimately, on the question of where the BRE is located, we agree with the concluding remarks of Mr Cullum of the NCC, who said: "I would agree with the general point that there is never a perfect solution." He added: "I am not sure that [BERR] is the ideal place for them but if everybody behaves in the right way, you could make it work."[67] Our view is that the real point is one of joined-up Government; that is, how things are done and how well, rather than where. In any event, we do not believe that the disadvantages of the move are so overwhelming as to merit reconsideration at this early stage.

34. Accordingly, we believe that, for the time being at least, the BRE should remain at BERR. However, we recommend that the Government take positive steps to ensure that the BRE retains freedom to pursue a balanced regulatory reform agenda that serves the interests of all sectors, and that it is seen to do so.

35. Although we recognise the steps that the BRE has already taken to engage a cross-section of stakeholders, we recommend that the BRE review its resource allocations, programmes and communications and continue to take steps toward achieving greater recognition of consumers, employees, local government, the public sector and the third sector, alongside business interests, in determining the priorities for regulatory reform.

11 Ev 187 Back

12 Q 128 [Mr Huddleston] Back

13 Ev 122 Back

14 Ibid. Back

15 Ibid. Back

16 Ev 83 Back

17 Ev 80 Back

18 Ev 90 Back

19 Ev 91 Back

20 Ev 202 Back

21 Ev 93 Back

22 Ibid. Back