Select Committee on Regulatory Reform Minutes of Evidence

Examination of Witnesses (Questions 69-79)


29 APRIL 2008

  Q69 Chairman: Unusually for this Place, we are ahead of time. Perhaps we could make best use of the time by asking you to introduce yourselves now, before we get on to the formal questions.

  Ms Veale: I am Sarah Veale, Head of the Equality and Employment rights Department of the Trades Union Congress.

  Mr Cullum: I am Philip Cullum. I am Acting Chief Executive of the National Consumer Council.

  Mr Brooker: Steve Brooker. I lead the NCC's work on regulation and consumer redress.

  Q70  Chairman: Thank you very much. Perhaps I could ask both organisations the same questions: What do you think the BRE's role should be? Should it be that of a policeman, think-tank, deliverer or teacher? Should the BRE concentrate on developing one major strategic vision or should it pursue a number of goals based on what is likely be a good use of its time? Do you believe the BRE has a good grip on its own objectives? We are asking questions similar to that of all our witnesses and we are particularly interested in your answers.

  Ms Veale: You suggested a combination of teacher, policeman, think-tank, and I suppose that fairly accurately sums up what their role is. I do not think there is anything particularly wrong with that. I think it is quite useful to have a body that combines those different mechanisms. I am not sure that I would really particularly describe it as a think-tank. I have not seen evidence of philosophical thought about the better regulation process in any obviously detectable way, but I think that is something that is needed in government. We do need an organisation that is capable of seeing regulation as something that is done cross-government and has a huge impact on all sorts of people. I think it is seen as being the police by some other government departments. I am not quite sure how that would work because I am not quite sure what sanctions they can impose in the end. That would depend entirely on how the Government see it and how seriously the Government intend to take it. My answer would boil down to: It can do all those things if it is given the support of the Government to do them, but it is a little bit hard to see, certainly on the think-tank point, how it has any serious role as a government think-tank on regulation.

  Q71  Chairman: Do I deduce from that you think they perhaps ought to act as a think-tank?

  Ms Veale: I am not sure they should. In a sense I regret the demise of the Better Regulation Commission which had a much clearer strategic role and encompassed a whole range of different organisations who were represented on it. Of course there is a successor body but that has a rather different, though not entirely detached role. I think the BRE now has been left on its own to an extent but also tucked into a particular government department. I think it is probably still rather finding its way.

  Q72  Chairman: Do you think it should concentrate on one strategic vision or pursue a number of goals?

  Ms Veale: They are not mutually exclusive. Any organisation like that should have a strategic vision and I think that is what it is struggling with at the moment. That is obviously going to be conditioned by political thinking and where the Government want the whole thing to go, but, also, it should have specific goals because within a strategy you need to have markers and aims and objectives that you work towards. Given that it is supposed to be pan governmental, you obviously have to have nuanced goals to cope with different departments' work. You cannot have a one-size-fits-all goal. You can have a strategy but the goals themselves have to be far more bite-size chunks and specific things to do. Different departments have different records in terms of success with regulation and they have very different types of regulation to administer and to produce. It is very different doing work that regulates business from doing work that regulates animal health or something: there is a connection but the two things would require a very different goal-setting, I would have thought.

  Q73  Chairman: Leaving aside where it fits in government—and we will come on to that in a moment—do you think it has a firm grip on its own objectives?

  Ms Veale: I would like to think it has. It strikes me, from the outside, as being a fairly self-confident organisation. We see what they publish. I think it is early days yet to assess how much of a grip they have on what are some relatively different objectives now they have moved into a different department, so I think it would be unfair of me at this early stage to comment on that.

  Q74  Chairman: Philip Cullum, would you like to go through the same three areas?

  Mr Cullum: Yes. In terms of the role, I agree with Sarah's view that perhaps policeman is not quite the right word, but we would agree with the idea of some sort of internal audit function trying to encourage the right kinds of culture and behaviour across government in terms of regulation and developing a sophisticated understanding of what better regulation is all about and how you create it. We see other roles for the BRE, certainly holding the ring between both people like central regulators and government departments, one of the things that constantly surprises us as a generic consumer body is the extent to which regulators do not seem to talk to each other. We are aware of some fairly good things that regulators are doing at times which other regulators are entirely unaware of and do not seem to be learning from. I know there is a joint regulators group for some of the sectoral regulators and economic regulators but there still does not seem to be that sort of sharing. It would be a real opportunity for the BRE to do it.

  Q75  Chairman: Could you give an example of what you mean?

  Mr Cullum: Some of the examples we see—and Steve my colleague is about to start work on a project called Rating Regulators, where we are going to look at seven regulators and see how effectively we think they are doing the business for consumers. In terms of some of the things we have already found: the way in which the Food Standards Agency is very open in terms of its governance—and we are not aware of any other regulator doing that; the extent to which the Financial Services Authority has embraced the principles of taking a more principles-based approach to regulation and Treating Customers Fairly; some of the work from Ofcom on additional charges and how they should be fair and transparent—and I say again, some of which is clearly applicable to other regulators but does not seem to have been adopted by them; the Human Fertilisation and Embryology Authority's fantastic programme of consumer engagement. There are lots of quite good things going on but there still does not seem to be that learning across the patch. We would not be as pessimistic as Sarah on the think-tank. I am not sure I would use the word "think-tank". Our paper talks about "ideas entrepreneurship"—which is perhaps a more pompous way of saying think-tank—but, having worked with the BRE, we do see signs of them trying to fulfil that role and doing it quite successfully. Steve led, with the BRE, a project called Too Much Information Can Harm, which was really about the way in which regulators often use information requirements as a default approach when, from a consumer perspective, sometimes the last thing you need is another load of bumph. It is about trying to say: How can we use information as a regulatory tool effectively? When is it right to use it and when is it not right to use it? We drew several things from that experience. One was the extent to which the BRE was becoming a more open and collaborative organisation but another was the extent to which they were rightly trying to change the way that all sorts of regulators, both in government departments and in sectors, think about how they regulate and what are the most effective tools.

  Q76  Chairman: A strategic vision, or should it pursue a number of goals?

  Mr Cullum: Clearly it does have some sort of vision about what it thinks better regulation is all about. How it then pursues that. I guess people running organisations would say, "You have one vision but you may have a number of goals beneath that which are consistent with the vision." We would say that the goals are: trying to change some of the culture; getting a better understanding of regulatory tools; opening up more understanding about what better regulation means; developing a real understanding of consumer and business behaviour and how people will respond to particular types of regulation. That all goes back to the vision of promoting better regulation. The issue we have—and it perhaps relates to the point about where it is based, so we will not go there just yet—is whether the integrity of the better regulation vision is being endangered in some way through the rhetoric at the moment. Having gone from a move, which we thought was correct, from deregulation into better regulation, better regulation is being slightly changed into being all about the business again. We feel the world moved on from that a couple of years ago but there seems to be a slight move backwards. It is not about saying, "Is it about one vision or a number of goals?" but about trying to get some sort of coherence or consistency.

  Q77  Chairman: Does it have a firm grip on its own objectives?

  Mr Cullum: I think it has. We have been quite impressed with working more closely with them over the last couple of years. Particularly Jitinder Kohli when he joined as Chief Executive has gradually tried to drive some sort of culture change in the organisation, so I think it does have a sense of what it is there for. But, subject to the comments I made earlier, I think some of the political pressures it is getting at the moment are not entirely consistent with what it has done in terms of developing a more sophisticated approach to better regulation.

  Mr Brooker: We perhaps hear a different message when we talk to civil servants on a day-to-day basis than we hear from the ministers when they read their speeches in Parliament and in the newspapers. One example I would give on this concerns the Regulatory Enforcement and Sanctions Bill. That was introduced by the Minister and in the second reading speech he mentioned businesses 56 times and consumers just once, but this Bill is about improving the way consumer protection is enforced locally and modernising the sanction and tool kit to offer consumers better protection in the market-place. The rhetoric we want to hear is how do you empower consumers to drive a competitive market whilst minimising burdens on business rather than how can you reduce the burdens on business while maintaining the necessary consumer protections? There is a difference in emphasis there.

  Chairman: We are going to move on to where it belongs.

  Q78  Judy Mallaber: Both organisations have touched on this in your evidence. Can you expand a bit on your views as to whether the move from the Cabinet Office to BERR was a good, bad, or uncertain move, and, also, where within government do you think the BRE should be placed in order to fulfil the better regulation role most effectively?

  Ms Veale: The first thing you need to try to understand, I suppose, is why it was moved out of the Cabinet Office. I still have not really understood why that happened. Really, if you want a body that is going to have that kind of rolling brief across all the other departments, it made much more sense for it to be located quite firmly within the centre. Going to BERR really did reinforce the TUC's worries that the agenda really is being set by business. It is still about de-regulation to an extent, really, if you scratch away, behind the rhetoric. The worry is that, because it has been tucked into a department at the same time as being renamed the Department of Business, Enterprise and Regulatory Reform, you automatically couple the regulatory reform part of the department with the business and enterprise part and they become twins. Even if that were to be a false fear, and in fact they were able to retain their roving brief and it did not make any substantial difference, public perception would be that the role of the Better Regulation Executive is to ensure that business is not (as they keep telling us they are) strangled with red tape. Certainly our dealings with the BRE have been almost entirely on business-focused issues. In a sense, that is understandable because we are the TUC and we are the other side of business, if you like, but, on the other hand, that is all they seem to spend their time doing. I have not really seen a huge amount of evidence so far that they are spending as much time or focusing as much on other aspects of society, of government work, of government policy. They do seem to be obsessed with delivering to the business agenda, and I think that has distorted what they do. Also, as Philip said a little bit earlier, they tend to look at other areas of work through the prism of how it is going to affect business and business comes first and everything else comes afterwards. It is hard to prove that is a direct result of their being located in BERR but I can only say that it cannot conceivably help. I think they are going to have to work extremely hard if they are going to stay in BERR to establish themselves as a reputable better regulation authority that is capable of understanding issues that are outside the context of the concerns of particularly small businesses. The short answer, I suppose, is there are some real worries about it being located in BERR. I have not seen anything yet to make me really confident that it is going to be able to escape from that.

  Mr Cullum: I suppose we want to see it being in some sort of cross-cutting department, which has some sort of leverage across the rest of government to try to empower the BRE to influence behaviour right across government. It is not obvious that BERR has that leverage particularly. If you thought the only benefit for moving from a cross-cutting department to a single department was if it was one that was incredibly powerful, so that other bits of government quaked in their boots when that department did something, that is not really a description of what most people would use about BERR. We share Sarah's concern about the self-confessed positioning of BERR as the department for business. As I noticed from reading the transcript of your previous session, our friends at the CBI miss no opportunity to describe BERR as the "Department of Business" and they miss out the "ERR" bit of the story, and it does seem in small ways to have had a different effect on the BRE. Looking at it positively, one might argue that the BRE will be a force for good within BERR rather than BERR being a negative force on the BRE, but looking at the BRE website this morning, on the front page it says, "Life's too short to be bogged down by rules and regulations. That is where the Better Regulation Executive comes in. The bottom line: we make a positive difference to you and your business" but that is not the whole better regulation story. After that, it asks for suggestions for how better regulation might work. One of the things we have argued for in the past is that there are plenty of areas where consumers suffer from regulatory burdens that should be swept away. The BRE, in its previous existence, agreed with that, and so the website did change to encompass an area for ideas from citizens, but the framing of that, if it were not so serious, is slightly funny. There are now sections, so that you click on a box as to whether you are private sector or public sector or third sector or something described as "citizen sector"—which I think means people—and then, if you do that it, there are lots of questions which all ask about the impact on "your organisation". As a member of the public, I do not have an organisation: it is just me. The whole framing is subtly rather business-focused and I do not think that is helpful because it does not convey the texture of better regulation which is about both the pros and cons of regulation, about the extent to which burdens, as Sarah might argue, fall sometimes on employees, and we would certainly say they sometimes fall on the consumers.

  Ms Veale: One example recently is the Green Paper on the discrimination law reform. We are told that the Better Regulation Executive has muscled in quite heavily because it eels that a lot of the proposals in the Green Paper would be a burden on business, but this particular piece of legislation does not belong to that department and is set out to benefit society in a much wider sense. I am not quite sure why the BRE feels that it has to look at that particular piece of legislation, which it has every right to do, but through the prism of how it is going to impact on employers, because it is much, much wider. That is a recent example of what I fear they see as their mission in the new department.

  Q79  Judy Mallaber: You have commented that your connections are primarily about employment of business, understandably, but has either organisation had any direct discussions with departmental officials, ministers or the BRE about this issue and about whether it will have a broader remit than looking at "burdens on business", which you are obviously anxious about?

  Ms Veale: In fairness to the BRE, the Chair comes in regularly to speak to the General Secretary of the TUC and a team of us, and we have expressed those concerns and he has gone to great lengths to reassure us. The trouble is that the proof of the pudding will be in the eating and at the moment, because of what they have done, for example, on the discrimination law issue, our concern is that they are talking the talk but they are not walking the walk. In practice, they are defaulting into taking an awful lot more notice of one very vociferous pressure group than they are of all sorts of other interests out there. They are not looking at other factors that come into developing a piece of legislation which are all about better regulation.

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