Memorandum submitted by Professor Claudio
M Radaelli of Exeter University
Dear Mr Caulfield,
REGULATORY REFORM COMMITTEE INQUIRY: GETTING
RESULTS: THE BETTER REGULATION EXECUTIVE AND THE IMPACT OF THE
BETTER REGULATION AGENDA
Further to your letter dated 20 February 2008,
I am sending a short memorandum. I would be glad to elaborate
on the memo and discuss it with you and your colleagues—please
do not hesitate to contact me again if you feel you need more
information. I look forward to reading the results of this inquiry.
I take the liberty of enclosing three annexes
on specific points.
Prof. Claudio M. Radaelli
Director, Centre for Regulatory Governance
[1] This is a most-timely inquiry on a largely
neglected topic. Indeed, better regulation is one of the few high—profile
policies where there has been limited discussion of what the main
political purpose is. There is no systematic reporting on the
activities and the results achieved by the cabinet office and
BERR. Independent scrutiny and ex-post evaluation has been higher
than in several other EU countries, but overall inadequate, with
the important exceptions of the reports on the National Audit
Office on regulatory impact assessment (ex-post evaluation) and
most recently on the reduction of administrative burdens.
[2] What has been achieved? Although
there aren't many systematic studies available, my impression
is that in the UK we have learned about better regulation and
RIA, but we have not learned through these tools. Compliance with
RIA guidelines is high, but we have no information on whether
by using better regulation tools our institutions have become
smarter and regulatory quality has increased. We should not underestimate
the achievement of having learned about better regulation—most
EU countries are still struggling with this stage. There is a
big implementation gap in Europe (annex 1). The Better Regulation
Executive is right to say that they are leaders in Europe. But
there are challenges for the UK too, especially in relation to
learning through better regulation. The challenge for the Better
Regulation Executive, therefore, is twofold. On the one hand,
they have to measure their activities and become accountable for
what they deliver or do not deliver. On the other, they have to
show how these activities are contributing to major desirable
changes.
[3] The challenge of measuring—Measuring
activities and results of better regulation policies is difficult,
but not impossible. There are at least 20 years of research on
regulatory quality indicators. The UK has not adopted a system
of indicators yet. In consequence, the Better Regulation Executive
does not report regularly on output and outcome. Neither have
citizens and business had an opportunity to discuss how progress
should be measured—with the exception of the badly-conceived
administrative burdens reduction plan (see annex 2). This is bad
news for regulatory accountability. Indicators reveal the preference
of the governments about better regulation. They are one very
direct way in which the component of symbolic politics at work
in better regulation can be minimised. Ideas like "good regulation",
"efficient regulatory reforms" and "changing the
culture in Whitehall" are difficult to grasp in abstract.
Measures tell us what they mean in practice and how they can be
monitored. If measures are built in a process in which the setting
and meaning of indicators are discussed, we have a fruitful combination
of evidence and policy process that can foster high quality deliberation
on the intent of better regulation. Finally, consider the cost
of not measuring: someone else out there will start producing
"Burdenbarometers" and similar measures of better regulation....
[4] The overall intent is not clear—The
problem is compounded by the lack of discussion in government,
in parliament, and in the quality press on the general intent
of better regulation. There are three possible aims for a policy
like this. The first is to promote better regulation with the
goal of regulatory legitimacy in mind. Better regulation, in this
case, has a governance orientation. Its objective is to increase
the social legitimacy of regulation via open consultation processes
and an emphasis on regulatory quality (often represented by the
principle that regulation is socially acceptable if it increases
the overall net welfare of the community). Citizens or the median
voter are the main stakeholders in this model. The second possible
intent is to increase the political control of the core executive
on regulating departments and agencies. Regulatory quality is
not an objective in this model. Its essence is the power of the
core executive. The third possible aim is to maximise short-term
political benefits by sending signals to the business community.
In this model, the needs of the business community are not empirically
investigated, they are dictated top-down from the core executive.
The latter first identifies low-hanging fruits, and then tries
to market them to the business community as "improvements"
of the business environment. Symbolic politics is the essence
of this model. It sits comfortably with lack of policy evaluation,
poor reporting of central better regulation units, targets set
without considering carefully their conceptual foundations, accelerated
production of reviews, initiatives, "minds and hearts"
packages and so on. It would be immensely helpful if we could
establish what we want from better regulation in this country,
and whether we live in one of these models, or in a fourth model
(possibly a hybrid?).
[5] Departments are puzzled—The
better regulation units operating in departments have a difficult
job at the moment. It is not easy to sell better regulation because
of the increasing pace of new initiatives. On RIA, there has been
a long period of time in which departments knew the old guidance
was no longer endorsed by the cabinet office, but new guidance
was slow to appear. More generally, policy officers developing
regulation have to comply with the new RIA guidance, take into
account the Davidson review for the EU part of their job, implement
Hampton, measure and reduce burdens at source, engage creatively
with consultation, and so on. By adding requirements at an accelerating
rhythm, we may make the overall package of better regulation appear
unrealistic to the policy teams that formulate and implement rules.
If you speak to departments, you will often hear that better regulation
policy has increased regulation inside government. Add to this
that the Better Regulation Executive has decided to operate at
arm's-length from the departmental RIAs—whilst in the past
they entered departmental RIAs more directly. This has created
in some departments the impression of "having left alone"
at a time when the number of better regulation procedures to be
implemented is increasing. One problem here is administrative
capacity. Whist investments have been made at the centre, in the
Better Regulation Executive, capacity for better regulation remains
distributed unevenly across departments. In a typical department,
good RIA desk officers are not promoted, their professional identity
is not visible (they may be seen as economists, but not as "better
regulators" or "good evaluators of proposed legislation"),
and they have an endemic problem of fulfilling procedures for
which there are no resources around the house.
[6] No "plug & play" solutions—The
fact the departments are puzzled and that there is low capacity
in some quarters has something to do with the fact the better
regulation tools do not work like plug and play devices. If they
are not inserted in a pre-existing system of administrative law
and policy capacity, the system will not recognise them—much
like a computer will not recognise a new peripheral. Better regulation
tools plug and play successfully if they do not bracket politics
away, if they build on the capacity developed in environmental
policy assessment, if they operationalise venerable administrative
law procedures enshrined in administrative procedure acts, if
they expand on freedom of information acts and so on. To illustrate:
RIA makes sense to a US policy officer because it is the operationalisation
of the "giving reasons" and "notice and comments"
rules in the administrative procedure act. I elaborate on this
point in the PowerPoint presentation attached to this memo (annex
3).
[7] The system runs the risk of becoming
self-referential—No matter how good regulatory innovations
look on paper, when implemented they run the risk of being captured
by the administrative system. This is why a robust network of
better regulation actors is essential to the development of this
policy. In the UK, the following actors are missing in the better
regulation picture: Courts, the Parliament, civil society organisations,
the quality press and quality media in general, professions, and
some portions of the business community. The inquiry is a formidable
opportunity to start entering the House of Commons in the picture.
Courts may start reviewing rules by considering the quality of
impact assessment. The involvement of Courts in the US has transformed
the whole system of bureaucratic incentives in areas such as risk
assessment and RIA—there is nothing like the fear of your
RIA being picked apart from a Court that makes a policy officer
most-interested in carrying out high quality economic analysis.
A profession of better regulation experts may evolve, but at the
moment we do not have a body with its shared professional standards
that can press on the government to secure high quality better
regulation activities. Finally, academic research is scarce and
does not produce independent peer review of what the Better Regulation
Executive does.
March 2008
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| Annex 1 | Improving the Practice of Impact Assessment
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| Annex 2 | Reflections on the Poitical Economy of the "War on Red Tape"
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| Annex 3 | The Architecture of Regulatory Impact Assessment
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| The annexes are not printed but are available from Professor Radaelii of Exeter University
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