Select Committee on Regulatory Reform Minutes of Evidence

Examination of Witnesses (Questions 1-19)


29 JANUARY 2008

  Q01.  Chairman: Can I welcome you, Mr Sargent and Mr Kohli, to the session. Mr Sargent, we last met talking of these things on a pan-European basis in Berlin; there is a dimension to that to which we will come later. The Committee, for various reasons, is on a fairly tight timescale so we want to handle this fairly crisply. Thank you for your memorandum that you sent to us. I would invite you to start off by adding any words to that but we have a series of questions we would like to pose to you. If you would introduce yourself and introduce your associate?

  Mr Sargent: Thank you very much, Chairman. I am very pleased to be here. I am William Sargent and I am the Chair and Jitinder Kohli is the Chief Executive of the Better Regulation Executive. We have been in position now for about 24 months so we are rather pleased that this is an opportunity for us to explain and to give some profile to the work that we are doing. Before I start perhaps I could comment on our Minister? Baroness Vadera is not with us this morning and sends her apologies. The actual identification of the portfolios was only finalised yesterday and I know from chatting to her yesterday at some length she is rather keen to engage with the Committee in discussion but felt that it was too early for her to be of any useful contribution in that. She is hoping she will be able to do so at a later date. So I table her apologies before I start. As I said, Jitinder and I have been in position ourselves for 24 months now in an active role. The document that we gave you I feel lays out effectively what we are trying to do. We are looking very much at taking the word "red tape" and breaking it down into its constituent elements in terms of how we go about the business of enhancing the environment in which we work. We start with some very clear principles in place in that regulation is a good thing, is a positive thing in society and in particular in the business community. I come from the private sector and Jitinder is a highly experienced civil servant who has been across four different departments in the government; so we work as a team and we are very clear that what we are trying to achieve is better regulation, by which we mean that regulation is in place to achieve benefits, protections, to encourage fair markets—nobody wants to operate in an unregulated society in terms of the business community. It creates a level playing field in that, and clarity of regulation is very important to us. So we start with a very clear mandate that we are not here about diluting protections, obligations, rights, anything like that; we are about ensuring that the amount of regulation that is introduced and produced and exists is done in a very clear, coherent way and does not create unnecessary costs or burdens for people on the receiving end or the people who are actually responsible for administering them in the organisations, in the public, private sector and third sector. So we are very clear about that particular perspective. You very kindly laid out a statement that you wanted us to give you and I hope that the memorandum has covered all those areas, and I think it might be best to go into the specific questions and for us to respond to you.

  Q02.  Chairman: Leading on from your introduction, do you think that the UK is an over-regulated state?

  Mr Sargent: I do not in terms of the context of my own personal experience. I have over the past decade set up and run businesses in Germany, Spain and the UK and now currently in the UK and the United States and I am very clear from running a business that has gone from 40 people to 750 people that my operation in London is somewhat less heavily burdened by regulation than the one in New York, for example. People hold up America as the bastion of things that are supposed to be a light touch and easy, but the fact of operating on a daily and weekly basis is that things are much more difficult in New York City than it is in Soho in London, is the observation I have. When I look at the evidence across the world, when we look at other countries and I look at the World Bank and OECD and we are currently ranked sixth in the world out of 178 countries, I feel that we are in a good place. However, it is important not to take that for granted because things move on all the time.

  Q03.  Chairman: Is there, therefore, an optimal level of regulation? Following from that, the target of 25% reduction by 2010 seems a bit of an arbitrary target. If we are not over-regulated what is the point of that target? Is there some objective measure in that?

  Mr Sargent: The target refers specifically to a part which is the administration costs relating to regulation. There was an example where we were able to get our analysis and be very tangible and to analyse costs of specific forms of information that had to be given either to shareholders or consumers or the government itself, and we found that when we looked at the evidence around the world—and the Dutch and the Danes in particular had been ahead of us on this particular area—that first of all setting a target was very important and it clearly achieved behavioural changes within departments, so it was very important to set one. The experience we saw of the Dutch in particular, we had the benefit of them being three or four years ahead of us so we could actually see that setting a target was achievable and it was a reasonable target to set to achieve certain behaviours and by setting it the evidence has proven, as I say in Holland, that this is something worth going for.

  Mr Kohli: Could I just add exactly what the target attaches itself to? This is the target of the administrative burden as opposed to regulation as a whole and we defined the administrative burden following the experience of the Dutch government by measuring requirements in law to provide information—that could be information through filling in a form, which is the bulk of the burden, through complying with an inspector or either waiting for an inspector to turn up or preparing bits of paper for an inspector, or it could be providing information to third parties. It is a very defined concept of regulatory administrative burden and broadly the government takes the view that it is possible to reduce this number whilst at the same time maintaining outcomes. If we could design forms in an easier way that were easier for people to make sense of whilst at the same time make sure that planning decisions, let us say, to take one example, are still taken on a sound basis, then that would be a good thing for everyone. That is why we are tackling this particular area; and the 25% number I think is a pragmatic number in terms of your question.

  Chairman: I am going to go slightly outside our planned structure because one of our colleagues has to be in two places simultaneously—one of the problems of Parliament. Lorely Burt.

  Q04.  Lorely Burt: Good morning. I want to ask about the deregulation initiatives that you have introduced already. I would like to ask you about the monitoring of the success of these. Post-implementation is always a big concern I suppose to MPs because we do not see a great deal of it and what we do see is patchy in terms of the physical reviews, so can I ask you what steps you are taking to monitor the effect of deregulation and to undertake post-implementation reviews? What evidence do you have to support the success of other specific initiatives on the reform agenda as a whole?

  Mr Sargent: Deregulation is one of the powers that apply to the agenda to do with better regulation. The way it evidences itself most is in the simplification plans that all the authorities produce. So 19 departments and agencies have produced at the end of 2006 and the end of 2007 plans which specifically say, "These are the areas we are going to simplify" and some of those you would call deregulation where they are moving on simplifying some elements there. For example, the Health & Safety Executive has about half the number of forms it had, so that would be an example of deregulating to some extent. When they produced the 2007 plans, which is the second year, part of the requirement that we put on them was to report on what had happened as a result of the 2006 plans and the intention is that that would carry on so that we would see at the end of this year, for example, reporting on what happened in the measurements. There were 741 measurements identified to simplify in general and 270 of them approximately had already been done during 2007, so in 2008 you will see reports on what happened in 2007 and 2006. Each department is responsible themselves for publishing that and for anybody from Parliament through to the various communities to look at them and say, "Has it happened, has it not happened?" So our view is very much that monitoring is done by the public at large, so to speak. That is my first observation.

  Q05.  Lorely Burt: So that is great that each department is monitoring so that it has these targets and can say, "Has this happened or has it not happened?" Are they looking at yes, it has happened and the effect upon the target audience has been X or Y in terms of the amount of time or the cost factor? And has the target audience actually been consulted in any systematic way in order to create an evaluation that you can actually measure?

  Mr Sargent: These were generally put together in the first place by visiting, consulting and doing focus groups and involving people and in general most departments had structures in place, whether they be boards that they put together of interested parties, and they then test those ideas against them, and in turn both ourselves as the Executive as well as the departments and people who are measuring the performance will validate whether the claims that they are making are true or not. The challenge that we have, which I think is possibly the next step of where you are heading, is has the community at large, the business community or the charities felt that difference? That, I think, is the bit that we have yet to crack effectively because I was very anxious that we only spoke about success once we could prove it and I feel that these implementation plans give us the tools to be able to say that we have actually done this. The bit that we now need to do is to pull through by getting the business community in particular to say, "I notice that you have a number of this or that," and that is I think where we are yet to be fully effective.

  Lorely Burt: That really will be your ultimate measure of success, will it not, if you get the sometimes curmudgeonly business community to say, "Actually that is quite good; that is being helpful." I know one of my colleagues want to elaborate on that, so I will leave it. Thank you very much.

  Q06.  Dr Doug Naysmith: I just want to ask something that is related to that fairly quickly, Chairman. One of the tools for deregulation and regulatory reform is this Committee and it can regulate and deregulate. The government has always seemed to be a little disappointed that we do not get through more deregulatory orders or regulatory reform orders as they would be now and they tend to blame this Committee and say that the Committee does not get through enough work. In fact we have never ever in six or seven years held up any orders that were before us; it is usually because the civil servants and the departments do not bring orders forward to us. Do you first of all agree with our analysis? One of the things that is sometimes said is that it is more sexy politically to tack something on to a Bill and do it through the House of Commons than coming to this committee. What do you think about that?

  Mr Sargent: The answer is I think that part of what you are referring to is more the media, I think, than the government's perspective per se, so I do not agree that criticism lies with this Committee. What I would observe is that the legislative tools which have been put in place, of which this Committee is part of it, are only one part of how you deal with matters. Let me give you an example. If you look at the NAO report the priorities for people on the receiving end of regulation is to get effective guidance, to be consulted properly in the first place, to design the laws right in the first place, and we are having a significant amount of success; there are 741 measures that have been now identified that do not require that particular form of deregulation to happen. So it is there when it is needed but the reality is that generally we can achieve a saving, we can achieve the results without having to use fairly precious Parliamentary time, would be the observation I would make. But it is there because it is one of the half dozen tools that we use.

  Mr Kohli: I think it would be honest to say that the time governments allocate to primary legislation is always scarce and some of the issues which are within our remit would struggle to get some of that time. That is not always true and indeed there are Bills before Parliament right now which will improve the experience of public sector workers through the public sector mergers.

  Q07.  Dr Doug Naysmith: My point is that this Committee could be used much more than it is currently and ought to be.

  Mr Sargent: There are approximately 20 orders in planning of which I think one has already come through and four are in consultation—just finished consultation.

  Q08.  Chairman: Nowhere near us yet!

  Mr Kohli: I think we are expecting one more to be laid in the next few days on health and safety.

  Mr Sargent: Momentum will begin to pick up now.

  Chairman: We hope so.

  Q09.  John Hemming: I think the big question is this one of what is regulatory reform and how do you deliver it. If we look at your list of items of success, for instance, some are clearly very good in terms that they are regulatory reforms; other ones, such as having fewer rail franchises, I am surprised that you got involved in that, I am surprised that anyone thinks that is a regulatory issue. As far as people outside the state are concerned, things like preventing people rolling cheeses down a hill because you cannot get insurance whilst they are rolling down hill to the bottom is an issue that indicates over regulation; similarly, censuring a member of staff who rescues somebody from falling down a cliff is an issue of regulation because if a voluntary organisation is pressurised by government into stopping its staff rescuing people when their job is to rescue people something is badly wrong. Within that context what is your strategic provision for dealing with regulatory reform?

  Mr Sargent: If I can start with your first observations? There is a significant amount of bad reputation that regulation gets and some of it is caused by the vacuum. Health and Safety is quite often used as an excuse by people, which is nothing to do with regulation if people cancel events because they do not want to spend the money. So quite often one of the things that certainly concerns us is to sort out their education of regulation because it is a fundamental positive activity that happens. And misinformation has caused quite a lot of problems. Touching on areas where there are examples, the approach that we have to regulatory reform is to break it down into effectively five strands of activity. If we start with the stock of regulation the administrative burden project is an example of that where we look at what is there. We are looking, for example, at the moment, at doing a consumer overview of health and safety to see where it is that we can work with those departments and agencies. So the first thing is that we look at the stock and say what is it that now we know what we know and experience we have and evidence from talking to people in surveys that we can actually improve it? That is the first thing. One of the strongest drivers of perception regulation is the flow, the material that is flowing—new initiatives from Europe as well as from the UK. There we work with the departments and work with them to try to establish the principles and to make sure that they are going about it the right way. For example, the impact assessments, we introduced a new format for that back in the spring and is an example to make sure that that dialogue is straightforward and effective and it provides members of Parliament with the tools to challenge government effectively. The next bit is one that I feel is going to be the long-term success, which is the culture and the behaviours. In that area, for example, the people who are responsible on the ground—inspectors and people who are enforcing local government—that is the sharp end, so to speak, of regulation, and we will find the Hampton Review conclusions in that, and we will talk about that later on. In Europe about two-thirds of the regulation flow in many parts of the economy comes out of Europe and there we are engaging pretty effectively. For example, the recent 25% targets for administration costs there that we were very instrumental in helping to achieve. So we have broken it down to these constituent elements, so to speak, and have a strategy for each one.

  Q010.  John Hemming: This really does come down to the point that your organisation is clearly structured for dealing with the EU, dealing with government but not dealing with people outside government and issues like how high should somebody be allowed to go up a ladder has a wide impact—that is a regulatory process. It is unclear where that issue comes in but it has quite an impact on all sorts of things—like parades, for instance, involving road closures. All of these things link lots of different aspects of the government and everyone says, "Not me, guv, it is somebody else who is stopping this happening." It does appear that your priorities and your allocation of resources is to do with things within the state and not anything that is initiated outside; you are not doing inquiries into why can the scouts not parade any more.

  Mr Kohli: I am not sure I would agree with that. We are absolutely responsible for the government's agenda to improve regulation and that includes the protection of regulation. So it is absolutely one of the things that I am concerned about within my organisation, how do we ensure that businesses and voluntary groups and public sector workers do not feel that health and safety laws, which I suspect is what you are referring to—

  Q011.  John Hemming: Insurers as well.

  Mr Kohli: ... act as a constraint, which is why we are working with the Health & Safety Executive to do a review of health and safety law.

  Q012.  John Hemming: You are working within the government, you are not actually working outside.

  Mr Kohli: I am not sure I would agree with that either; as an organisation we have spent an incredible amount of time going out and about talking to real businesses on the ground. Many of my staff on a typical week—people have been out in the last few weeks to visit publicans to get a sense of the things that concern publicans. Not in the day, I hasten to add—rather in the evening! People have been out with regulators on inspections. I have personally done a number of inspections with regulators but I always make time to spend time with the business afterwards to get their sense of how it feels. So I just do not recognise that picture of our organisation.

  Q013.  John Hemming: Where things are initiated is the question. The implication of what you are saying is that although you may consult people about things that have been initiated within your organisation you are not having things initiated outside the government in a wider sense.

  Mr Sargent: We are. Let me give you examples. Whenever we interact, as Jitinder said, we do a significant amount of visits and engagements with businesses and other organisations. For example, with a supermarket this week I have asked them to specifically come back to me with specific ideas about things that are barriers. So in the course of most weeks I will meet with businesses of various sizes and shapes and we then get correspondence from them and I challenge them because for me this is something I expect the business community to take as seriously as we do. We have put a portal[10] in place for people who want to give us specific ideas and the emphasis is always on, "Do not just say that employment regulations are false, you have to be specific." So over the past 12 months we have had a significant amount of ideas through the portal and a significant amount of ideas from letters from specific individuals as opposed to lobby groups. I am always very interested to get to the actual people on the ground rather than necessarily lobby groups.

  Q014.  John Hemming: Is there a way of tracking that, which shows that these are ideas suggested outside the BRE and this is what has happened?

  Mr Kohli: It is not something that we just track; it is something we want everyone to track.

  Q015.  John Hemming: Transparency.

  Mr Kohli: And that it is visible to Parliament. One of our hopes is that Parliament will take a stronger role in scrutinising whether these things have been tackled well enough.

  Mr Sargent: So we encourage people to put it on the portal and the answers are then public and if they are not any good then people can be criticised for not putting very good responses on that, and they have to do it within 90 days; and if they fail to meet 90 days it is not us who is saying it, it is up there.

  Q016.  Gordon Banks: Just on that. I have run a small business since 1986 and, quite frankly, I have been too busy running my business to become involved with an organisation such as yourself. So when you mention that you have a portal in place that is fine but how do you tell me when I am 450 miles away that you have a portal in place? Because you have not told me.

  Mr Sargent: If you are a member of one of the trade associations from the CBI through to the local industry ones it would be very rare for it not to have been promoted through those associations, so that deals with those people who are active members. The more difficult challenge is getting to people who do not partake in any of these groups.

  Q017.  Gordon Banks: Which are actually a lot more than people who are members of any kind of organisation.

  Mr Sargent: In my own business experience I come within that category because it covers a minority. Let me give you an example. There is an initiative, common commencement dates, so that new regulations come into effect on two dates of the year, and one is coming up very shortly, in April, and the idea there is to make people aware of everything that is coming out that is new and therefore will impact on them, and to do it in a coherent way rather than getting it piecemeal all over the place. We have given ourselves a challenge to reach a million businesses in the coming one, and we have identified various techniques to do it, emailing being one key way of doing it. These days it is a lot easier to find the tools to get through to someone like yourself—normally by email—and then to do it in a way which is coherent, like one page which then has links. So for us moving from the situation where we could not get through to a small business to getting through to a small business is a key target that we have and I would like to think that if we have this conversation in 12 months' time that I could actually prove to you that we had got through to one million businesses. I cannot at the moment but that is certainly part of our aim.

  Q018.  Gordon Banks: There is nothing worse, you will appreciate, than being bombarded with a range of information which is not relevant to your business—and I have had. Before you get to the bottom of page one and the end of page 12, which is actually relevant to you, it is in the bin or it has been deleted. I have argued that government and organisations such as yourselves should be able to target the regulation, to match the regulation that matches the business. So I am in the construction industry, I need to know about general business regulations but I also need to know specifics to the construction industry—I do not need to know about the disposal of fridges and freezers.

  Mr Sargent: I agree.

  Q019.  Gordon Banks: I think that is the real target, how do you hold it down to make it relevant to the person that you are trying to reach so that they will first of all say, "This is important to absorb" and freely embrace it.

  Mr Sargent: Again if I come back to the construction industry, it is a place that has fairly good lines of communication into people who work in it. I feel that the[11] is obviously the tool that people are trying to view, are desperate to build up and try to make effective and I think a lot of the overhaul over the last 18 months on that has made it a more effective way of signing up for it themselves, who are not part of trade associations. I would like to feel, going forward, that that is going to be the most effective way for someone like yourself going on there and saying, "I am in this sector, this is what I want to know about," and it will turn up. That is one of the channels that we are using.

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