Examination of Witnesses (Questions 40-59)
MR WILLIAM
SARGENT AND
MR JITINDER
KOHLI
29 JANUARY 2008
Q040. Judy Mallaber: You see them
at a very early stage.
Mr Sargent: Very early on, when
they are just saying, "Here is a list of things that we think
might be useful for us to be doing"; so we are seeing them
probably within the first few weeks of the ideas beginning to
emerge in plans.
Mr Kohli: To give you an example,
sometimes even before the plans have been written we are engaged
in that process. I was invited by Dame Deirdre Hutton to speak
at an event which the Food Standards Agency held with its stakeholders,
to effectively brainstorm ideas of the things on which the Food
Standards Agency should focus energy, and a large number of people
affected by the FSA's regulations were in the room and that was
an event at which BRE staff were present as well as Food Standards
Agency staff.
Q041. Judy Mallaber: Do you regard
it as your job to make suggestions and say, "We are not sure
about that" or is your job more to mediate and to make sure
that they are talking to the right people?
Mr Sargent: Across the piece.
Jitinder referred to the dispute resolution as an example of one
where we more actively did some research and worked with the department
on that. One of the things I am particularly encouraged about,
if I look at the development of the second year's plans really
is that if you think about it we have a situation now where previously
people regulated and brought about legislation as an activity
that they could perform in and do well in and it would be well
regarded. Now we have a significant amount of brainpower in a
given year being spent on what can we do to simply, what can we
do to clarify, what can we do to improve things, as another line
of activity, which the plans are all about.
Q042. Chairman: So your message to
the external stakeholders is that the drafts are genuine drafts
and they are genuinely out there for consultation?
Mr Sargent: Absolutely. And they
do change as they evolve.
Q043. Gordon Banks: It is really
good to hear about your involvement in the simplification plans
at different levels and that they are not just something that
are churned out by the department and then you have a reactive
role to play, so from my point of view that is very heartening.
Do you think that you have a role in training civil servants to
draft regulations so that the more pertinent interests of business,
especially small businesses, can be taken into account? And if
that is not your role whose role is it? I suppose it goes back
to the other question I was asking, upside down, if you are trying
to get business engaged after the complying stage, how do you
get people like me, before I came here, to be engaged at a very,
very early consultative stage and to buy in to what you are trying
to do so that I take some kind of ownership of this?
Mr Sargent: I do perceive it as
our responsibility in terms of training. It is part of the culture
to try and achieve that. Jitinder will give you more details of
the specific programmes we do, but the short answer is that I
do perceive it as an important part of our role.
Mr Kohli: We cannot achieve the
kind of culture change that we are talking about across government
departments and regulators if we do not work very closely with
them to help them to make that journey. Formal training is one
route to do that—it is not the only route to do that but
it is certainly one. We have put on formal training over the last
year or so in two areas—one is around impact assessment
and a new impact assessment to help people genuinely work out
what the cost and benefits of the new regulations are; and also
on how to use a standard cost model which forms a basis of the
administrative burden measurement exercise. So on those two areas
we have done training. The main training provider for most civil
servants is the National School of Government and we work pretty
closely with them on ensuring that better regulation schemes are
in their training programmes. I have had a couple of meetings
with them where we are pushing at an open door and they are very
keen to get the message across. The one thing I would add to that
is that in the last few weeks we have announced that the bodies
that Rick Haythornthwaite chairs, the Better Regulation Commission
as was, is to be replaced by a new body called the Risk and Regulation
Advisory Council, and one of its jobs is to work with both Ministers
and senior civil servants to develop a better understanding of
public risk. Certainly one of the things that they will be doing
is running workshops to help Ministers and senior civil servants
to understand what good and poor practice is, and that is in their
terms of reference.
Q044. Gordon Banks: It is hard to
measure how a regulation or how a piece of legislation that has
a certain level of burden on an industry or charities, etcetera
is good and acceptable, as opposed to what might have come out
of the department if your involvement had not taken place, because
you do not know what might have come out of that department so
you have nothing to measure it against really. So it is very,
very difficult and that is where the feel bit comes into it, when
you get back to businesses and people who are faced with these
things, that they feel things are better because sometimes you
are not in a position to actually measure what might have been
because if you do not know you do not know.
Mr Sargent: One of my personal
pet projects—and I did this when I was chairing an advisory
body for government as opposed to now operating within government—was
the idea that I was very anxious that civil servants spent time
in the community they regulated. It was an obsession of mine,
so we did a thing called A Week in Business, in which the Department
of Trade, as then, and HMRC and various others participated, and
I persuaded individuals at the top to require their top civil
servants to do that, and what is now in the better business enterprise
regulatory forum it is the requirement that people do this week
in business. I feel that if you are regulating health that you
should be spending a week in it as opposed to just turn up for
two hours and walk in and walk out. My own team has an obligation
to spend time with people so that we really understand it. For
me it is a cultural thing because if you are really busy and just
go and hang out with a small business—you go to a newsagent
and hang out for a day it feels like a waste of time and so you
need the people at the top to say, "It is okay to stand behind
the counter for the entire day in a shop." It does not feel
like real work and so people need that permission to do that.
That is beginning to happen—it is not purely that which
we do—and there is definitely a culture that that is happening,
5%, 10%, whatever it is, that it is happening. But people need
permission to do things like that.
Q045. Gordon Banks: It might not
be a burden that is there from six o'clock in the morning but
it might be a burden that comes on at eight o'clock at night because
of some regulation. Moving on to something you mentioned earlier,
Mr Sargent, was the relationship with the EU and you mentioned
that you had had some successes. The British Chamber of Commerce
seems to say that there is a lack of synchronisation between the
EU and Member State impact assessment systems. Is that something
with which you would not go along?
Mr Sargent: The EU is a distance
behind the UK in terms of its agenda, frankly. I think the Barroso
Commission and Catherine Day, who is now the Cabinet Secretary,
are two individuals who really get the agendas. We start with
the fact that there are now two individuals at the top of the
political leadership and civil service leadership who are personally
committed to this and that is quite important. The structures
by which people work have a distance to go. They have just started
their journey on impact assessments and they are where we were—if
you go back to our old regulatory impact assessments—they
are in a place where they have yet to get clarity and make these
become absorbed and so forth, but they are doing it. The first
thing that the Barroso Commission did when it came in was to look
at the workload and take a significant amount out and to say,
"We are just not going to do this stuff," and that was
quite a unique change. So if you look at the Community, particularly
the administrative burdens project on that, we are in danger of
having a European-wide standard cost model by which you start
to measure costs and the Commission has now bought into that and
is using the same methodology. So I think we have moved significantly,
particularly in the last 18 months, to a situation where people
want to do it; they need to get everybody else on board, and I
think the big success that we had in getting involved in the Commission
accepting the 25% target was that all the nations accepted variations
on the target as well. So we have a situation now that is pretty
common across the nations of Europe as well as the Commission.
Q046. Gordon Banks: So who in your
organisation has a responsibility for liaising with the EU Commission?
Mr Kohli: We have a Director of
European International.
Q047. Gordon Banks: You have a director?
Mr Kohli: He sits on the Commission's
high level group, he talks to other Member States and he and his
team were enormously successful in persuading the European Council
last year in the spring—not the Commission but the Council—to
agree to the 25% target at the EU level, which effectively meant
getting 27 Member States to sign up to it.
Q048. Gordon Banks: This is a question
from ignorance, I am afraid, but do our European counterparts
all have organisations such as yourself?
Mr Sargent: It varies.
Q049. Gordon Banks: Because it is
difficult to speak to someone if you have nobody to speak to.
Mr Sargent: Let me give a personal
observation. Unfortunately our colleague who is responsible for
Europe would have more facts to hand but I can give you a personal
impression. If we start with the business community it is not
as an effective a voice in Brussels because it is not as well
organised. We start with the fact that government needs to do
its bit but the reality is that the business community needs to
do its bit and one of the things that European officials complain
about most often is that they very rarely see the business people
who are being regulated talking to them. So there is that lack
of connection going on, which hopefully is improving. So you start
with that end of the equation. Jitinder, myself, as well as my
colleague Andrew, are off to Paris in a few weeks' time to meet
with the French who are quite influential and have perspectives
on this. We met the Chairman in Berlin where we were having quite
an active dialogue with quite a few of the members and in that
place, for example, there were 56 countries, which included every
Member in that. So literally in 24 months we have gone from a
situation where we would not have had many people to talk to,
only the Dutch, the Danes, the Germans and the French, to a situation
now where every country has its equivalent of myself and Jitinder,
and we turn up at events and we have a dialogue and communicate,
and not just Europe but there were 56 countries at that, and when
I went to one a year earlier there were 29. So it is fairly fast
moving.
Mr Kohli: So in a couple of years
there are two countries that had done the measurement exercise
on which we were embarking and both the Netherlands and Denmark
are relatively small countries in comparison to our economy. Since
then Sweden, Germany, Denmark, the Czech Republic and Austria
have done measurement exercises and 11 other Member States have
done partial exercises and France is finishing its exercise in
the next couple of months. It is a movement which is going on
across Europe and the UK is one of the leading lights. So it is
one area where we have persuaded our counterparts in the Member
States to get involved.
Q050. Dr Doug Naysmith: Mr Sargent,
your organisation previously under a Public Service Agreement
required an improvement in the perception of regulation by April
2008. But in the memorandum you sent us the perception of regulation
is still pretty poor. Do you think there has been any achievement
at all of that original requirement?
Mr Sargent: I think it is the
area in which we are most challenged. Changing perception in a
large multinational or in government is the most difficult thing
to achieve.
Q051. Dr Doug Naysmith: Do you think
it was achieved at all or are you still where you were?
Mr Sargent: I think it is partially
achieved but I think it has a long way to go, is the short answer.
Mr Kohli: We have only started
measuring and we only have one measurement, which is from the
National Audit Office survey fieldwork carried out about a year
go. They are back in the field right now—I say they are
back in the field, I will be corrected by the NAO if I am wrong—so
we will get a second data point in the coming months.
Q052. Dr Doug Naysmith: The paragraph
in your memorandum was pretty bleak and said that there was not
much improvement.
Mr Kohli: We have a mountain to
climb in addressing perception. If we are going to succeed we
are going to have to take real costs out of the system which businesses
genuinely noticed—that is what the administrative burden
programme will do—and we also have to address other issues
that businesses find frustrating and irritating. So it is not
just about a numbers game, it also has to be about focusing on
the things that people find frustrating. Could I give two examples,
would that be helpful?
Q053. Dr Doug Naysmith: Could I just
say something to you first, and then you can give me the examples.
Sir David Arculus said that success should be judged by whether
results are felt on the ground, not by whether departments think
they have done a good job—and that just makes common sense—and
the government will have failed if a difference cannot be felt.
I am not sure that "felt" is a useful word. How do you
measure feeling? You can feel good one day, get up the next day
and feel awful—feelings change in between. How are you going
to measure that? What plans are there to improve business perception?
Mr Kohli: The central measure
that we are using, the NAO asked the question in their survey
which is, "Do you agree with the statement that most regulation
is fair and proportionate?" That feels to us to be a reasonable
thing to try and alter. I do not think we are going to get to
a world where business—
Q054. Dr Doug Naysmith: What is the
proportion now that says that it is not fair and proportionate?
Mr Kohli: 46% against 39 who agree.
So we have a minus seven, which is probably less bad than people
think.
Q055. Dr Doug Naysmith: That is a
lot better than predicted.
Mr Kohli: But certainly success
for our organisation and our endeavour has to be moving those
numbers to a more positive light. The department still has strategic
objectives which measures that.
Mr Sargent: The NAO is just doing
its second one so every year you will get a benchmark and so every
report has to be benchmarked. Local government obviously is one
of the areas which business feels regulation has been expecting
that and that measurement has been embedded there as well. So
we have a situation where we put structures in place that independent
people will be verifying whether these things are happening or
not.
Q056. Dr Doug Naysmith: The Committee
asked for an explanation of why the initiatives you selected for
implementation were chosen in preference to others, and for evidence
of their potential cost effectiveness and expected outcomes. We
were rather disappointed that you did not actually provide us
with that information so now is your chance. What was your reasoning
behind your selection of the initiatives you did select and what
evidence did you use to support the choices that you made?
Mr Sargent: You would have to
look at each individual one but let me give you—
Q057. Dr Doug Naysmith: What sort
of evidence?
Mr Sargent: Let me give you examples.
We started with looking at reviews and surveys that had been done
by both government as well as independent groups of people as
to what it is that is worrying businesses. If you look at the
NAO report they talk about lack of clarity with guidance, lack
of understanding of things, so that is one example. We did lots
of visits, we did lots of focus groups; we looked at surveys both
internal and external to government. The administrative burdens
project, for example, is one of the benefits as it tells you exactly
where the costs are falling down so if you have somebody who has
a billion pound cost they might think, "Right, we want to
put energy in there." So a whole collection of things. We
would have to give you a very long list to say every single survey
that we used and every single piece of evidence that we used,
but generally in broad terms they involve talking to people who
are on the receiving end. We can give you some examples.
Mr Kohli: Can I give you one example,
which would help to elucidate here? First of all, the administrative
burden exercise gave us a great deal of data; it gave us 20,000
lines on a spreadsheet and each line was a separate requirement
in law and for each of them it told us what the cost was and how
that cost was comprised. One of the things it told us that we
found slightly surprising was that a higher proportion than we
had expected of the costs arise from requirements in law to give
information to others, including to consumers, and when we talked
to our Dutch and Danish counterparts they were surprised that
our numbers were as high as they were. Our overall numbers are
not high but they were surprised that the ratio was as it was.
So we thought, let us try and understand what is driving those
numbers and what are the areas where these kinds of regulations
work and where they do not work. So we commissioned a project
working with the National Consumer Council to say where are these
requirements of consumer information helpful or unhelpful. We
will send you a copy of this report[14]—this
is the report that was published jointly with the National Consumer
Council, and you will see the message very clearly here on the
front cover. Sometimes they work but actually 52 different safety
requirements on a toaster probably does not help the consumer
of the toaster and actually gives regulation a bad name, which
is one of the things I am worried about, going straight back to
your perception point. This is one initiative where that is where
the evidence came from. So in order to do this work we got a lot
more evidence; we talked to citizens and said to them, "Which
requirements work for you; which requirements do not work for
you?" and out of that comes an understanding of how to do
it better and a guide to policy makers on how to get it right
next time. That is an example of an initiative and the thought
processes relating to it.
Q058. Dr Doug Naysmith: What I was
trying to get at was the underlying evidence that you use. What
enables you to make these decisions? For instance, there are what
people would call—departments call sometimes—low hanging
fruit, easy things to get a hold of and demonstrate that you have
done something. Obviously you need to do some of those because
they are there and they need to be done, but that could tend to
obscure the long-term, more strategic things that are much harder
to work at but will give a much better overall impression in the
long-run. So how do you choose between these?
Mr Sargent: If we go back to the
administrative burdens project, which is one example, that was
very clear because there were four or five areas where fundamentally
80%, 90% of the costs fell so straight away you said to yourself,
"If you deal with that 80 to 90% across the four areas we
are likely to have a bigger impact." So straight away out
of the 20,000 we have narrowed it down to a few hundred areas
of specific obligations. That is an example of being very specific.
The low hanging fruit is one area; the low hanging fruit quite
often tends to be what one would call irritants—things that
wind people up, they do not know why they are doing it, and they
are quite easy to deal with and quite often cost very little money,
but they drive perception. If you take consumer law review and
health and safety review that we are in the middle of at the moment
that is an example that we know if we can get to the bottom of
that, understand it and do something there then we will have a
significant impact. So that is why we chose those two areas, that
is why we chose dispute resolution because we knew that employment
is the single biggest area where people struggle in managing their
business, particularly if you are a smaller firm, and within that
the bit that was really causing you a problem was disputes with
your employees and the fact that they were really cumbersome,
awkward to deal with and leading to bad relations. So that is
why we tackled that in the course of the last year. So if you
look at our reviews and our programmes they very much start with
where we are going to have the biggest impact—they work
through there; and at the same time what are the things that are
winding people up, and quite often they are slightly separate.
Mr Kohli: We are not terribly
interested in things that are short-term and sound good. That
is not the kind of organisation we are trying to be, and that
is why this is a long-term agenda.
Q059. Dr Doug Naysmith: Do the similar
sort of principles apply to the 700 initiatives in simplifying
the departmental procedures as well? How do you decide what should
be given priority?
Mr Sargent: There are two things
there. We ask them to do a plan which says, "We think we
can achieve this," and that plan is made up of a raft of
things—some big, some small. Some of the things that are
achievable. I am very anxious that people look at things that
they can achieve quickly, easily and effectively and in the short-term,
so out of the 741 they delivered 288 in the first eighteen months.
Some of them are small, some of them are quite big—they
vary. While that is going on and within those plans, if you look
at the Business Enterprise and Regulatory Reform Department quite
a lot of the stuff in there is big and long-term stuff. So if
you analyse the plans they are a mixture of both; they are a mixture
of what they can achieve now, this month, next month, the month
after and the sort of stuff that might take one, two, three years
to achieve. But we as the overall body responsible for looking
across government use the data that we have collected and we look
at the research and look at the NAO surveys and say, "This
is what people are worrying about and if you are not doing something
about it we will be on your case." So if, for example, if
the Health & Safety Executive was not interested in dealing
with things we would be on their case. The reality is that there
is nobody that we do business with that does not want to do something
about it because it helps them.
14 http://bre.berr.gov.uk/regulation/reform/next-steps/too-much/index.asp Back
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