Examination of Witnesses (Questions 80-99)|
29 APRIL 2008
Q80 Judy Mallaber: Have you talked
to them about consumer protection and that part of their remit?
Mr Brooker: They have shown greater
interest in consumer issues recently. We did a joint project on
regulated information, as Philip mentioned earlier, and that is
a good example of the BRE being prepared to open up to working
with new organisations. I think that is a sign of maturity and
a welcome approach to open up the closed world of regulation.
They have worked with us on the information project and Jitinder
Kohli chaired a seminar that we hosted on consumer engagement
last year and they did work with the National Audit Office on
the Hampton Implementation Review. They are prepared to open up
to new ways of thinking. The next big test is going to be the
Consumer Law Review and the sorts of proposals that come out of
there. That is going to be jointly promoted by the Business Minister
and the Consumer Minister, so we will be interested to see how
those natural tensions are resolved.
Q81 Judy Mallaber: Is it legitimate
for them to "interfere with other departments". I see
in the evidence we have had from the Department, it has Public
Sector as one of the headings, which I can imagine creating a
few tensions with some of the big spending departments. Should
that be part of their role? Are you concerned about them engaging
Mr Cullum: The role of the BRE
must be to be cross-cutting and to look at all sorts of regulation.
I mentioned earlier the extent to which we find regulators operate
in silos. In fact one regulator only last week was expounding
enthusiastically on why the challenges they face are completely
different from the challenges that everybody else faces, and we
find that regulators and, indeed, other organisations tell us
that all the time, but in fact there are far more similarities
than there are differences and there are lessons to be learned.
The idea of making the BRE much, much narrower would be a real
mistake. Certainly that would be a problem if being a part of
BERR resulted in that. The National Consumer Council is a non-departmental
public body, our sponsors are BERR, and our interests go way beyond
just business. We look at sustainability and public services.
There are quite a lot of issues which fall out of the BERR patch.
I am not sure they enthusiastically embrace the idea of us doing
all that stuff, but we are independent and we get on with it.
I guess that is the challenge as to what extent the BERR corporate
push will narrow the focus of the BRE rather than allowing them
to make independent decisions about where they look at in terms
of better regulation.
Q82 Chairman: You have mentioned
your own sponsoring department there. Does the fact that you are
there not undermine the reality that there is not really an appropriate
place, because the Cabinet Office is not seen outside as having
the necessary teeth to do the job?
Mr Cullum: That may be true. Certainly
we have grappled over the years as to what would be the most appropriate
place for the National Consumer Council to be. We operate as a
very independent body. Our governance is through an independent
board, so the relations with BERR are sometimes quite helpful
in having a look into government, but which part we belong to
is not really a major influence on what we do. My concern with
the BRE would be if they have taken over the regulatory side of
BERR's work, which I understand they have, then there is a corporateness
which is sort of different. I would agree with the general point
that there is never a perfect solution.
Q83 Chairman: So it is what they
do rather than where they are?
Mr Cullum: I am not sure this
is the ideal place for them but if everybody behaves in the right
way, you could make it work.
Q84 Judy Mallaber: If they are the
home department for business, employment, consumer protection,
you can argue that that is quite a bit swathe of what they should
be involved in and any other department would have difficulty
because they do not cover those areas. Would that not be the case?
Mr Cullum: I can see the argument
for saying that if it were going to be in a department which is
an issue-focused department rather than a cross-cutting department
then it might be one of the better choices.
Q85 Chairman: Just explain what you
mean by "ideas entrepreneurship" in your paper, if you
Mr Brooker: I suppose the warning
"Too much information can harm" was an example of ideas
entrepreneurship. There is a kind of assumption in government
that giving consumers more information is always a good thing.
That is an assumption we wanted to challenge. We found in our
research an information overload; information that is presented
in an unhelpful way; and information that is written by company
lawyers to protect businesses from liability rather than helping
consumers to use a product safely or to exercise their rights
in the market-place. This points to the BRE holding the ring across
the regulatory state, taking an issue that affects all of us in
our lives and is relevant not just to BERR but to the Department
of Health, the Department of Transport, other government departments,
and coming up with a practical tool kit, a Guide for Policymakers,
on when and how people should use regulated information, which
we hope has the potential to make a real difference to the way
in which these sorts of issues are addressed in future.
Q86 Chairman: What incentives do
you think would make real change?
Mr Brooker: That is one question
that is open for us: Does the BRE have the levers to force through
the change agenda across government? We are not in a position
to judge whether that is the case or not but that is certainly
a pertinent question that we have and which this committee could
provide some answers to.
Mr Cullum: When we worked on the
information report with them, there were effectively two outputs
from it, as Steve has alluded to. One was a classic policy report,
of the type that we would publish (setting out our research, analysing
the issues) but the other was a Guide to Policymakers which I
think was a rather good piece of work, in terms of trying to help
people who do regulate think about when information tools are
appropriate and how they might work. The bit of the story we are
less aware of is what has happened to that and how the BRE plays
that into the right bits of helping the departments. From the
outside, it is quite hard to tell on that. One of our comments
in our written evidencewhich I think you may be alluding
tois that there may be scope for the BRE to do a bit more
of an annual stock take: How do they perceive the overall picture
in terms of better regulation? And a little bit in terms of their
own accountability: What difference have they made to regulatory
Q87 Dr Naysmith: Mr Cullum, I was
intrigued by the NCC memorandum that referred to "some progress
towards greater sophistication about what better regulation means"
and to the need for less regulation in some areas, more regulation
in others, and better regulations in lots of areas. What would
a more sophisticated approach to better regulation look like?
I must apologise, first of all, if this has already been mentioned
because I did have to pop out.
Mr Cullum: Better regulation is
looking at the diverse types and objectives of regulation, taking
a hard look at what is working and what is not working and either
improving the stuff that is not working or getting rid of it.
It is often seen as a very stereotypical debate, in which business
is always arguing for better regulation and we are always arguing
for more regulation, but it is much more complicated than that.
Businesses, certainly individual businesses, will often argue
for more regulation if they think it will protect them from competition;
we will sometimes argue for less regulation or different regulation
if we think that will benefit consumers. We have produced a list
of things in the past where we think consumers face an absurd
regulatory burden and they should be got rid of. It is trying
to understand the nuances of that a bit more and taking a more
balanced approach to what are the benefits and are the problems
Q88 Dr Naysmith: How would you define
better regulation? Could you define it or does it require all
these things you have just been talking about?
Mr Cullum: It is something to
do with regulatory cultures and how people who are regulating
or might regulate think through: When is it appropriate and what
is the tool kit? What is the behaviour change that we are trying
to achieve, either amongst consumers or amongst businesses? One
of the things we observe often with regulators is that, although
they may often require other organisations to produce metrics
on how they are doing, they quite often do not have very many
indicators themselves on how they are doing. When they introduce
individual bits of regulation, it is sometimes rather vague about
what it is they are really trying to achieve. Yet, if you try
to nail what you are trying to do and what change you are trying
to bring about, there is an opportunity for people to scrutinise
and say: "Did that work?" If there are further changes
to the consumer law regime, what is the underpinning of that?
What is the ultimate objective? What does success look like? The
Financial Services Authority, I think have done that a bit with
their Treating Customers Fairly initiative, where they have said,
"We've gone for this much more principles-based approach.
It is less rules-based but here is our vision if all these comes
off. This is what the world would look like." We think that
is quite a good thing in terms of being clear about ambition.
Q89 Dr Naysmith: Sarah, the TUC referred
in their evidence to the assessment of the impact of regulation
by the "crude measure of quantity" rather than by a
consideration of how regulation actually works". How would
you make it more sophisticated?
Ms Veale: It would certainly be
a more difficult exercise to do, but I would get rid of the rather
crude indicators that they use, which are tempting obviously for
the officials who are trying to do these kind of exercise of more
or less weighing things or looking at the sell-by date on them
because that is not necessarily going to indicate whether a piece
of regulation is fit-for-purpose or necessary. I think you need
to do far more at the beginning of the process to work out a system
for assessing whether or not you need regulation at alland
that would involve some quite sophisticated conversations with
those affected by the regulation, those who had to apply itand
a look at whether there are alternatives, because quite often
there are other ways of achieving the same goal without having
to put something on the statute book. It is doing all that intelligent
research work before you ever get to that stage.
Q90 Dr Naysmith: You really need
to know what you are trying to achieve before you set out.
Ms Veale: Precisely. I think there
is a lot of common ground between us on this. When it comes to
looking at existing stock, the last thing you should do is look
at the volume or the sell-by date on it. You have to talk to people
who are affected by it but, also, weight the responses you get.
Obviously if you talk to a particularly lobby group, they have
an end in mind, and they will use evidence quite cleverly to suggest
that something is a burden, when, if you look at it from someone
else's perspective, it might not be. The BRE needs to get better
at talking to the right people and getting different groups in
the room at the same time and developing some sort of synthesised
thinking about things. Often, in dialogue, something will emerge
from the Third Way (if I might put it like that) or some other
possibly consensual way of doing something.
Q91 Dr Naysmith: And that does not
happen at the moment?
Ms Veale: We have suggested this.
Again in fairness to them, they have held consultation sessions
on consultation in how they can do things better. I hope they
will absorb some of the thoughts that were coming out of that
process and the contributions made, but there is quite a long
way to go with that. I am not saying it is easy. The other thing
we are particularly concerned with is the fact that they tend
very much to look at the coststo business usually or to
anybody elsewithout having any sophisticated tools for
measuring the benefits. We give in our evidence the example of
the national minimum wage, which obviously is a cost in two ways
to employers. If you look at the social good, the good to the
economy, and nowand they will admit it themselvesthe
good to employers that has done, that is a very good example of
not having knee-jerk reactions and looking rather more adventurously
at organisations that you would not straight away think of, who
have benefited enormously. Consumers are an obvious example: they
do not necessarily have an articulate voice at any particular
time (with the greatest of respect) on one issue but do have very
strongly held views. It is getting into that and not doing it
through the prism of the Daily Mail as well but getting
some proper feedback from people on the ground. It would take
an awful lot of time and energy to be able to do that. I can see
why officials more easily resort to rather cruder indicators.
Mr Cullum: One of the areas we
are both agreed has a rather malign influence on the debate is
the British Chamber of Commerce's burdens' barometer, which is
a bizarre way of looking at how to better regulation issues, particularly
because it is cumulative. It is a bit like saying it was 15°
yesterday and it is 15° today, so the temperature is 30°.
It is extraordinary and, actually, quite unhelpful in terms of
the push across government to change, because if you start with
billions of pounds of previous regulation on the stocks, a little
bit more is not going to make very much difference. As a cultural
force, that way of thinking is really unhelpful. I do think, as
Sarah says, there is an opportunity for a more sophisticated debate.
We know from talking to colleagues in business organisations,
particularly in businesses rather than necessarily their representative
organisations, that there is more sophisticated thinking about
it but it is just a question of drawing it out.
Q92 Gordon Banks: The questions I
have to ask you are really about your experience of working with
the BRE and some of these issues have been touched on already,
but does the BRE have the right focus? Does it have the right
people? Is it well organised? Linking back to the last question:
Does it have enough new ideas? How well does it communicate between
itself and the two organisations? How could these communications
be improved, not just to you but also to the business and individuals
that the regulation impacts on? That is an issue that I do not
think is done particularly well, the dissemination of information
to individuals or to businesses of how different regulations may
impact on their walk of life.
Ms Veale: Possibly one legitimate
criticism businesses have is in the area of communication. I think
things could be done much better in terms of describing how a
set of regulations will work and, again, how to manage the regulations.
One particularly good example of that is that small businesses
got very anxious about the written statement of employment particulars,
which is a small EU requirement on businesses: every employee
has to be told six simple things; for example, how much they will
be paid, when they will be paid. They decided this was an enormously
costly burden on them, but it turned out there was nothing burdensome
about the requirement; the burden on them financially was that
they all went and got employment lawyers to advise them on every
single written statement. If the Better Regulation Executive had
got its act together on that, they would have said, "You
do not need a lawyer. This is how you do it: five facts and that
is that." If that had been communicated to the small firms,
I think the sting would have been taken out of that particular
issue. I am sure there are many, many others where you could say
the same thing. Another thing they are not doing terribly well
is communicating the views of other organisations to the loudest
lobbyists. We are toldand I suspect the NCC is toldwhat
small businesses think, over and over again, and why we cannot
have this and why we cannot have that, but small businesses do
not have it explained to them in a very convincing way what all
the benefits are going to be and how other organisations see it.
When I have suggested putting us all into a room, the suggestion
is met with,. "Yes, that's a good idea" with a terrified
look at the same time. I wonder whether they ought to be a bit
more adventurous and let the grown-ups have a chat to each other.
Q93 Gordon Banks: So communication
might not be a strong point.
Ms Veale: Precisely. Communication
might not be a strong pointexactly that. In fairnessand
we see them as an outsider, so I have never sat in there and watched
a group of them doing a day's workI get the impression
that they are well-organised, they are well managed. I share Philip's
respect for Jitinder who has done and is doing a good job in a
fairly difficult situation. My worry is that, although they clearly
do have their support in BERR, I am not really sure how much buy-in
they have managed to acquire in some of the other government departments.
I do not have any proof of this, but you get the impression that
civil servants regard interventions by the BRE as being rather
a crude necessity, which they do not really think their way through,
that if you can just get rid of them, satisfy them that something
is going on that will produce better regulationI am not
sure they are allowed in actually or that they have managed to
have the level of engagement they need with senor officials elsewhere.
That is speculation, I cannot prove that, but you get the impression
back from other departments you deal with that their view of the
BRE occasionally is that it is a bit of an irritant that is going
to have to be dealt with because there is a politician in a fairly
senior place who thinks it is all a good idea. I hope that is
not the case, because I am a keen supporter of better regulation.
Certainly the trade unions have suffered very badly from very
old, appalling regulation, which we keep on trying to persuade
the BRE needs to be looked at. We are no fans of excessive regulation
at all; we want good, fit-for-purpose regulation, also, primarily,
to protect employees. It does not do employees any good to have
bad regulation in an organisation that is not doing its job properly,
because, in the long run, employers will then say, "This
is rubbish regulation, I can get around it," and it starts
not doing what it should be doing and being avoided. That is the
last thing we want.
Mr Cullum: We have had two close-up
experiences. One is the information project which we have both
alluded to; the other was the Hampton Implementation Review process.
I was on the small team which looked at the Financial Services
Authority. That was a joint BRE/National Audit Office initiative.
From both those things we have been very impressed with the quality
of the people, not just at the Jitinder level but throughout the
organisation. They were very, very effective and good. The model
that they seem to operate, which is to have people for a relatively
short period of time and then move on to other things and other
government departments, seems like quite an interesting way of
getting a bit of diversity of experience and a bit of
Q94 Gordon Banks: Filtering in.
Mr Cullum: -- an alumni network
of better regulators across government. As to how well they are
organised: like Sarah, we are not really close enough to the internal
machine to know the answer. As to the right focus: Sarah and I
were both members of the Better Regulation Commission, me more
briefly than her, and are now members of the Risk and Regulation
Advisory Council, and, from my brief sight of it, I never thought
that the relationship between the BRE and the BRC was the right
one. The BRE bent was very much on the weighing, on the simplification
plans, admin burdens, with a bizarre definition of what an admin
burden was. Some of the things alluded to, under no commonsense
view at all would count as an admin burden. There were policy
decisions about things, but some of those exercises were a bit
odd and the way that they wanted to use the BRC to scrutinise
some of it was a bit strange, so I am pleased that they moved
away from that. Some of the more sort of "ideas" stuff
that we talked about is a good move. On communications, I suppose
there are two parts. One is the relationship with departments.
I agree that in some departments you hear rather sniffy comments
about them from time to time; on the other hand, I think that
is consistent with what we know about the people who regulate,
which is that they are quite happy to dish it out but they maybe
do not enjoy being subject to anybody else's scrutiny. That may
just be part and parcel of what they do; on the other hand, it
does go back to the point we were making earlier about the leverage
and it is really important that it feels like the BRE have some
sort of backing at the high level within government so that they
can go in and influence so far as possible and be a little bit
heavier if necessary. The final thing I would say on communications
is not so much just in the BRE's patchbecause I do not
think it is really their responsibilitybut there are issues
about the communication of regulation and the extent to which
businesses and consumers who are affected by regulation or, indeed,
employees are ever told about it. The great example at the moment
is the Consumer Protection Regulations which come into effect
on 26 May, introducing the duty not to trade unfairly, which is
something for which the National Consumer Council has argued for
about 20 years. We are huge supporters of this initiative, but,
until last week, BERR had not done any press work at all and seemed
to have done little or no work with businesses behind the scenes.
This is quite a fundamental change and a very new style of regulation
where it is much more principles-based, sweeping away lots of
detailed statutes. There are two things. One is that, hopefully,
there will be a big success story to tell about a more sophisticated
approach and a less burdensome approach to regulation for everybody,
but, also, just to make it work, people will need to know that
it is there. You need to be able to march into your local shop
and say, "You're not allowed to trade unfairly and you are.
I know what my rights are" or companies need to be able to
prepare for it. If you do not tell them, it is not going to work.
Q95 Gordon Banks: This question is
for the NCC. How is the BRE working on your rating regulation
regime with you? When will that be published?
Mr Brooker: Jitinder Kohli sits
on the advisory panel for the Rating Regulators project, along
with representatives from the NAO, academics and a couple of our
board members. We hope to publish that towards the end of this
year. The whole reason for doing this projectwhich really
goes back to what we were talking about earlieris that
the focus of the better regulation debate is too much on the benefits
to business of regulation, and of course Parliament set up these
regulations to do the job of protecting consumers in the market-place.
We will look at the seven regulators: the two FSAs, Ofgem, Ofcom,
Postcomm, Ofwat and the Water Industry Commission for Scotland.
We are going to identify the essential DNA, if you like, of a
consumer-focused regulator and then measure those seven regulators
against those criteria which cover areas such as the legal framework,
organisational culture, the way they understand the consumer interest,
do they intervene proactively in markets or are they too passive.
We hope that will be a tool kit that all regulators can use as
a self-diagnostic check but, also, organisations like the NAO
or even select committees can use to inform their assessments
of whether these regulators are serving consumers well.
Q96 John Hemming: There is of course
a retail enforcement pilot, which potentially has the ability
to improve protections for consumers. The question is whether
it has achieved any of its potential objectives or made life easier
for businesses whilst either improving or not losing safeguards
Mr Brooker: We welcome what the
retail enforcement pilot is trying to do, which is trying to change
the culture from one of top-down enforcement to encouraging compliance
based on education and advice. We also welcome an approach which
tries to join up different inspection regimes, which will hopefully
lead to an improved consistency in the way that consumer protection
is enforced locally and which can only benefit consumers. We have
not seen any evaluations of whether that has really had that effect
on the ground. We have heard of some figures around savings to
business which are around the £10 million markwhich,
in our view, is really quite a low figure if you are talking about
quite huge investment in that project. I would say it is too early
days to tell whether it has had the effect it was designed to,
but we support the aims.
Mr Cullum: We were very surprised
by the figure that came out. Sarah is still a member and I was
a member of the BERR Better Regulation Ministerial Challenge Panela
longwinded titlelooking at better regulation initiatives
across BERR and it had a number of presentations from the retail
enforcement pilot team. We have met the team a few times and have
been very impressed with the leadership of the team. It is certainly
a very well intentioned initiative, but I am very surprised that
it was perhaps only going to save £10 million. It seemed
like a drop in the ocean and, I guess, an interesting example
of where sometimes the rhetoric around "burdens on business"
is not really justified by the facts in terms of how much regulation
is costing business.
Q97 John Hemming: How do you assess
estimated costs? It is a very complex process. Is there a TUC
angle on this one?
Ms Veale: I was similarly impressed,
as a novice in this area, at the challenge power on the presentation,
and I think instinctively we ought to go along with that, but
it is not an area that I confess to know a huge amount about.
Q98 John Hemming: The NCC did talk
about "regulatory silos". Where are these most obviously
found? I suppose retail enforcement is a good case.
Mr Cullum: It goes back to the
point I made right at the start, when talking about some of the
good examples in terms of openness, or principles-based regulation,
or how to analyse particular issues which are common to sectors,
in that they do not seem to have spread. I am still waiting for
the second regulator to have its board meetings on podcasts, as
the Food Standards Agency does. People do not seem to have engaged
much with the idea of principles-based regulation, even though
Treating Customers Fairly has now been in place for a while in
the financial services industry and the Consumer Protection Regulations
are about to be introduced. It is surprising that other regulators
are not learning from some of these sorts of tools in some of
the areas of consumer engagement. There are some particularly
good examples and then there are a lot of rather mediocre examples,
and we are surprised that the regulators are not rather enthusiastically
searching out what would be the interesting things to do.
Q99 John Hemming: How do you think
the major regulators could share best practice more effectively?
Do you give any examples of obvious failings because they are
not sharing best practice? Should the BRE get involved in that?
Mr Cullum: There is a role for
somebody to try to create a forum in which regulators can exchange
ideas more. We are aware of the mission of the Joint Regulators
Group but our sense is that it does not encompass all regulators
by any means and does not have that sort of ideas exchange. If
it is, it is clearly not working, because they are not exchanging