Select Committee on Regulatory Reform Minutes of Evidence


Supplementary memorandum submitted by the Department for Business, Enterprise and Regulatory Reform

What is your strategic vision for the delivery of regulatory reform?

  1.  Effective and well-focused regulation plays a vital role in correcting market failures, promoting fairness and increasing competition. Society expects government to ensure protection for the general public, consumers and employees consistent with the best international standards, and these expectations grow over time.

  2.  But inefficient regulation imposes costs on the private, public and third sectors that are unnecessary for achieving the desired policy outcomes. These unnecessary costs are a waste of the nation's resources and affect our national competitiveness and the quality of public services.

  3.  The UK's regulatory reform agenda is therefore focussing on making sure the Government regulates in a way that reduces unnecessary burdens, and works for everyone by being justified and proportionate so that the UK's regulatory frameworks remain fresh, fit for purpose, and support a fair and flourishing society.

  4.  The Better Regulation Executive (BRE) leads this regulatory reform agenda across government. Working with and through others, our aims are to:

    —  eliminate obsolete and inefficient regulation (the "stock");

    —  achieve user-friendly and effective new regulation (the "flow55);,and

    —  improve the way regulations are delivered: in particular by tackling inconsistencies and overlapping inspections and information requests by different regulatory bodies, and by ensuring enforcement is proportionate and risk-based ("culture").

  5.  We are working to deliver these aims through:

    —  reforming the processes by which the UK government and the European Union makes and reviews regulations, and changing the culture within government and the regulatory community to increase the understanding that regulation comes at a cost which needs to be identified and managed; and

    —  intervening in specific policy areas: in particular working to support and challenge departments and regulators as they develop and review policy to make sure that it is effective and keeps regulatory costs to a minimum.

  6.  In addition, we put a high emphasis on engaging with businesses, third sector bodies and the public sector front line to understand their issues in dealing with regulation and to communicate the government's agenda to them.

  7.  The Government's better regulation programme is not delivered by the BRE alone. Regulatory Reform is a cross-government goal. The role of the BRE is to lead the overall direction of regulatory reform and support and challenge departments and regulators as they deliver reform and advise Ministers on the overall cumulative burden of regulation on business. Individual departments and regulatory bodies are responsible for delivering individual parts of the programme: for example developing and delivering simplification programmes; for ensuring that their new regulations are effective and as light-touch as possible and based on effective impact assessment; for leading internal programmes of culture change; and for managing the rationalisation of inspectorates.

The Committee asked for an explanation of why the regulatory initiatives that were selected for implementation were chosen in preference to others, and for evidence of their potential cost effectiveness and expected outcomes. What was the reasoning behind your selection of various initiatives and what evidence supported the choices that were made?

  8.  The individual elements of the better regulation programme are chosen to deliver the vision set out above.

  9.  The programme involves a combination of workstreams focused on:

    —  process reform and culture change; and

    —  detailed work in specific policy areas;

    at both the UK and European level, directed at:

    —  stock;

    —  flow; and

    —  culture.

  10.  The table at Appendix A sets out how key elements of the better regulation programme fit into this framework.

  11.  The elements of the programme originate from:

    —  the Better Regulation Task Force "Less is More" Report and the Hampton Reports which the Government accepted before the Better Regulation Executive was established, and which contained their own evidence base; and

    —  BRE engagement with businesses, third sector organisations, the public-sector front line, local authorities, regulators and government departments, and through making use of data such as the administrative burdens database (this highlighted the top four areas of burden—planning and building, employment, health and safety and consumer policy) and an analysis of business perceptions.

  12.  Elements of the programme have been selected for their potential to impact on areas of major concern and burden as well as to deal with irritants. A number of workstreams are been collaborative and have worked to bring a better regulation perspective to other Department's work, such as our recent work with the Flanagan Review of Policing and the our work with the Healthcare Commission on the development of a risk based inspection framework.

In the evidence sessions you said that the impact assessment for the extension of the school leaving age caused a dramatic change in policy approach. How has the policy changed, and why?

  13.  The Department for Education and Skills (now the Department for Children, Schools and Families), worked closely with the BRE and other departments including the Department for Trade and Industry (now the Department for Business, Enterprise and Regulatory Reform) and HM Treasury from the earliest stages of their work to develop policy to raise the participation age in education and training to 18 years. This engagement across departments enabled a set of policy proposals to be formulated that took account of the potential impacts on business and other stakeholders.

  14.  Officials from the BRE provided a substantial contribution to the development of the initial regulatory impact assessment, which helped to produce a thorough and robust analysis of the potential impact of the policy. In the early stages of policy development the role of employers and potential costs business were considered and proposals refined in light of this—for example, an early idea that employers could be required to dismiss a 16 or 17 year old employee if they dropped out of training was rejected as not feasible for business to implement and not included in the consultation document.

  15.  In March 2007, these proposals went out to public consultation, accompanied by the initial regulatory impact assessment. At this stage and throughout the process DCSF continued to work with the BRE, other government departments, and external stakeholders to develop their assessment of the impacts of the proposals. Following consultation with stakeholders and further work with other departments, some refinements were made to the policy, partly as a result of evidence that was gathered on potential costs to employers.

  16.  For example, the Green Paper suggested that employers should be required to check that a young person applying for a full time long term job with them was in training or education, for instance by checking with the electronic tracking system operated by local authorities. Following the consultation and further evidence on the impacts, a similar requirement was adopted, but with the onus on the young person to produce proof to the employer that they were in training or education.

Are you working to encourage greater consistency between different types of regulatory form (including web-based forrns)s and to achieve fewer changes year on year?

  17.  The BRE is encouraging regulators both to reduce the number of forms, and to design forms that are consistent within the same sector and as easy to use as possible. However, we do not intend to be overly prescriptive on the,format of form design, as there is often a good reason for differences.

  18.  The Hampton Implementation Reviews demonstrate that regulators are improving on both design and quantity.

  19.  The BRE will publish guidance this Spring to encourage regulators to involve businesses in the design of their forms, and keep forms under review to ensure that the burdens placed on businesses do not outweigh the benefits.

  20.  Many regulators are now introducing web-based forms. The BRE is watching these developments closely and will identify good practice as cases arise.

Are you involved in food regulation? Sf so, how?

  21.  As explained above, the BRE works to support and challenge departments and regulators through understanding their priorities, influencing the design of future regulations in the UK and Europe and helping simplify existing regulations. This includes working with the Food Standards Agency, DEFRA and other Departments with an interest in food-related regulation.

  22.  The BRE also works to promote culture change in how regulations are delivered, including making sure that enforcement is proportionate and risk-based. We work both with the Food Standards Agency and with local authority regulatory services departments on this.

BERR's PSA targets refer to improving the economic performance of English regions and reducing the gap in growth rates between them. What steps are being taken to measure and compare equivalent data for Scotland and Wales, and what, if any, is the involvement of the Scottish Parliament and the Welsh Assembly in such activity?

  23.  Devolved Administrations are responsible for the day-to-day management of their own economies, particularly in relation to areas such as economic growth, business and regional support. The Government works in partnership with the devolved administrations to promote economic growth within an over arching framework of UK fiscal and monetary policies which aims to promote the economic interests of all.

  24.  BERR's regional economic performance PSA target is solely focused on the English regions, but both the national productivity PSA and the PSA to deliver the conditions for business success are focussed on the UK. Both of these PSA's play an important role in improving the economic performance of the devolved administrations and the English regions.

What has been the impact of the BRE move from the Cabinet Office to DBERR, particularly with regard to efficiency and morale?

  25.  The responsibility for better regulation moved from the Cabinet Office to the new Department of Business, Enterprise and Regulatory Reform in June 2007.

  26.  The Better Regulation Executive remains a cross-Government unit with an unchanged role of leading the Government's programme of regulatory reform. The BRE continues to support and challenge those responsible for regulations which impact on the private, public and third sectors, including other parts of BERR.

  27.  The move to BERR has created new opportunities for the BRE to drive regulatory reform by strengthening our connection with other elements of the government's business-focussed agenda.

  28.  Any major organisational change causes a certain amount of uncertainty for those involved. In the first few months, a number of BRE staff felt unsettled in our new environment, so some staff were given the opportunity to return to other posts within the Cabinet Office.

  29.  This transitional period is now over and morale is now once again high.

Were there any transitional difficulties and, if so, have they now been dealt with?

  30.  As with any large organisational change, there were some difficulties but mainly relating to logistical issues such as finding enough desks to house the Better Regulation Executive within the new department and transferring information, files and systems.

  31.  On whole the move progressed very smoothly. It took approximately two months to physically move from the Cabinet Office to BERR, however we were able to make arrangements to access BERR IT systems from our Cabinet Office location during the transitional period.

  32.  A few issues from the machinery of government change remain outstanding, the main one being creating a common pay and grading system and promotion arrangements for BRE and ex-DTI staff. But the transitional issues are largely resolved.

How does your vision of Regulatory Reform influence the way your organisation is structured?

  33.  The Better Regulation Executive is led by William Sargent, its Executive Chair and Jitinder Kohli, its Chief Executive. William and Jitinder are supported by a Strategic Support Unit.

  34.  There are four business units within the Executive:

    —  the Regulatory Reform Directorate works with Government Departments to influence new policy developments and to simplify existing regulations that impact on the private, public and third sectors. It leads the work strand focused on regulatory reform in the European Union. It leads the BRE's work on culture change in central government departments. And it also leads the BRE's relationships with individual businesses and business organisations and public sector and third sector stakeholders.

    —  the Regulatory Innovation Directorate undertakes a range of projects to:

    —  identify, build support for and deliver improvements in the framework within which government makes and delivers regulation; and

    —  examine in depth specific areas of regulation to determine whether new approaches can deliver policy outcomes in a more cost effective way.

    —  The Regulatory Services Team leads the Executive's work on reform and culture change within the wider community of national and local government regulators. For example:

    —  working with the NAO, we have developed and implemented a framework to assess the performance of national regulators in relation to inspection and enforcement of regulation.

    —  a statutory code of practice for national and local regulators comes into effect from April;

    —  the Local Better Regulation Office has been set up with a specific role of working with local government to improve the consistency of regulation delivered at a local level.

    —  The Communications Team leads the Executive's external engagement programme.

  35.  The Executive Chair, the Chief Executive, the Heads of each of these four Business Units and the Head of the Strategic Support Team form the Better Regulation Executive's Senior Management Team.

How do you determine your priorities and how does this influence the allocation of resources?

  36.  The BRE formulates the ideas for its work programme through constant engagement with businesses, third sector organisations, the public-sector front line, regulators and government departments, and through making use of data such as business surveys. Our aim is to identify and address:

    —  situations where the real world impact of regulation is not delivering effective outcomes efficiently; and

    —  systems and incentives around the creation and delivery of regulation, where these are shown to lead to poor overall outcomes.

  37.  The Better Regulation Executive's priorities and work programme are agreed

with Ministers. The Senior Management Team determines the shape of the

organisation and the allocation of resources to deliver these priorities.

What do you believe might be your organisational defects?

  38.  The organisational shape of the Better Regulation Executive has evolved over the past two years as our understanding of the agenda has developed.

  39.  For example:

    —  at the start of 2007 we created the Regulatory Services Team to give more coherence to our work on culture change with the arms-length regulators;

    —  recently we have strengthened our organisational focus on external communications by strengthening our Communications Team and positioning it so that it reports direct to the Chief Executive; and

    —  we are currently looking at how best to adjust the organisation to provide a government focus on issues of economic regulation as highlighted in the House of Lords recent report.

  40.  We continue to reshape the organisation as needs change.

What are your key priorities for improvement?

  41.  Our current key priorities are to:

    —  make a step change in the effectiveness of our communications with business and our other external stakeholders. (We have recently appointed a Senior Civil Service Director of Strategic Communications to lead our communications programme);

    —  strengthen the level of engagement with other government departments. The Better Regulation Executive leads the regulatory reform agenda across government, but successful delivery requires the involvement of Ministers and Civil Servants across Whitehall; and

    —  strengthen our relationships with Parliament and help build parliamentarians' awareness and understanding of regulatory reform.

How do you plan to assist the new Local Better Regulation Office?

  42.  The Local Better Regulation Office was set up as a company fully owned by Government last year, based in Birmingham. The BRE is taking the Regulatory Enforcement and Sanctions Bill through Parliament, which will dissolve LBRO in its current, company, form and convert it into a fully independent statutory corporation with a range of statutory powers.

  43.  The BRE has seconded two full time members of staff, with expertise in better regulation, to the LBRO to help establish their programmes.

  44.  In addition, we have established a sponsorship team within BRE consisting of two part-time members of staff. The team works with LBRO to ensure its effectiveness, liaising on matters including finance, objectives, and projects.

  45.  The relationship between LBRO and the Government will be one of mutual assistance as they strive to achieve a common goal of better, risk based regulatory enforcement at the local level.

  46.  For instance:

    —  the BRE has close contact with LBRO in taking forward various initiatives, including the National Indicator set, the Retail Enforcement Pilot, the Regulators Compliance Code, and the Beacons scheme. This ensures that LBRO have opportunities to feed into policy making, as well as preparing local authorities for the effects of implementation;

    —  the Government will provide LBRO with its programme spend, which LBRO will in turn use to encourage best practice in local authority enforcement; and

    —  the Government will ask LBRO to provide it with expert advice regarding local authority regulatory enforcement. This will be essential as regulatory policies are developed and revised, and in many cases it will be for the Government to take forward the recommendations of LBRO.

How do you see your role developing?

  47.  The Better Regulation Executive has been charged with delivering an ambitious programme of regulatory reform.

  48.  For the first two years of our existence, our agenda has been focused on identifying and gaining agreement to a set of reforms designed to change the way government and regulators implement and deliver regulation to give greater emphasis to cost-effectiveness.

  49.  In future we expect our priorities increasingly to be:

    —  ensuring the effective delivery of, and benefits realisation from, the changes that have been introduced, and the effective communication of the benefits;

    —  monitoring and evaluating the effectiveness of the changes that have been introduced in the UK, and promoting further changes where necessary to make sure we have a strong system for managing the impact of regulation; and

    —  further work on reforming the management of regulation within the European Union, where some useful progress has been made, but the systems lag behind those in the UK.

APPENDIX A

KEY ELEMENTS OF THE BETTER REGULATION PROGRAMME
Stock of regulation Flow of regulationCulture Change
Systems reform

Domestic
Administrative Burdens reduction programme.

www.betterregulation.gov.uk website.

Programme for reducing data requests on front-line public sector workers.
Embedding Impact Assessment

Review of Consultation Policy

Commitment to publish total costs of new regulations from April 2008.

Code of Practice for government guidance.

Improved communications around new regulations introduced on Common Commencement Dates.
Mergers of national regulators/inspectorates

Reviews of Independent Regulators

Regulators Compliance Code

Statutory Duty on Regulators to Address Burdens

Clarifying regulatory priorities for local authorities

Establishing LBRO



EU
25% EU Admin burdens target

Davidson Review for reducing burdens in stock of EU legislation

Ongoing work to improve impact assessment in the EU
Building on relationship with other members states to promote overall improvements in European regulatory reform


Interventions around
specific policy areas


Domestic
Consumer Law Review

Review of Impact of Health & Safety regulations on low-risk businesses

Support for Flanagan Review of Policing


Ongoing engagement between BRE staff and departments on the development of new domestic and EU policy


Retail Enforcement Pilot
EUWill potentially follow from EU Admin burdens work PRA clearance of new regulations
Our communications programme is cross-cutting and spans all elements of the programme.
January 2008







 
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