Select Committee on Regulatory Reform Minutes of Evidence

Examination of Witnesses (Questions 224-239)


20 MAY 2008

  Q224 Chairman: Could I first of all welcome you both. You have been sitting there listening to our earlier exchange and we are going to follow some similar threads. Perhaps I could like to start off by asking you what your experience is of working with the BRE. What value does it add that would not be there under the general better regulation agenda? Does it talk and consult with regulators sufficiently? Is it organised in a way that is helpful to regulators? Does it have the right people?

  Ms Young: We have a robust relationship with the BRE. We quite enjoy working with them, though we think one of the main things that needs to happen is perhaps a period now of bedding down, because we have had quite a lot of activity and initiatives and the important thing now is to get those to happen practically out on the ground in the regulated community. We really need the BRE to help unlock some of the processes that we cannot unlock as individual regulators or, indeed, as groups of regulators working together; for example, getting better European legislation. We do work across the Environment Protection Agencies in Europe to try to influence European legislation, but we do need the BRE to be more active in Europe to try to get some of the very good philosophies of modern regulation that have been developed over time. The Environment Agency, for example, has been working for about ten years on better regulation, to try to get some of those philosophies that I think are probably well developed in some of the Northern European countries and in the UK into Europe as a whole at legislative level. Our experience certainly is that you cannot make silk purses out of sows' ears, and if what comes from Europe is a sow's ear, we can embroider it but it will still be an embroidered sow's ear when we come to implement it. We need the good raw material. The other thing we need from the Better Regulation Executive is a bit more co-ordination on data sharing. Individual regulators can get together with data sharing but I think there are some data sharing issues on a national scale that the BRE needs to harness the whole of the regulatory community around. That would be another area we would want them to focus on for the future. A third one relates to the value of regulation. Our concern—and it was voiced in the earlier session—is that there has been too much emphasis on deregulation rather than on better regulation, and on reducing administrative costs and the burdens on industry rather than getting the right balance between the hugely valuable social outcomes and public outcomes that regulation is there to deliver, in environment, health and safety or whatever. Now we need a joined-up communications process between the regulators and the BRE to get over the message that there has been major progress in improving regulation and making it more streamlined and risk-based, though there is more to do, but, also, that regulation is good for business. It reduces costs, it reduces risks, it opens up new markets, it creates a level playing field, and, therefore, the sense of disappointment that the business community has in the better regulation process so far is not borne out by the facts. We get good feedback from the people we regulate on how they value the regulatory processes that we are developing. We need to get a communications process jointly between the regulators and the BRE that sells the benefits of regulation and sells the real progress that has been made.

  Q225  Chairman: You mention the technical issues about dealing with EU regulation. In your particular field does the BRE have the right people to assist in that?

   Ms Young: I think they probably do need a few folk who are more adept at understanding the big picture of European regulation and wandering around the corridors of power in the Commission, and, also, harnessing the regulatory partnerships that already exist across Europe amongst individual regulatory functions. We have very strong links in the environment field and I know that the health and safety folk and some of the consumer interest folk as well have strong links. Getting these partnerships going to make sure, when there is a twinkle in a Eurocrat's eye, that it is captured very quickly in a modern regulation flavour and inserted very quickly right at the very start of the process of developing European legislation.

  Q226  Dr Naysmith: Good morning. We met at the Health Select Committee a couple of weeks ago. I hope you were satisfied with the outcome of that meeting.

  Ms Young: Thank you very much for your recommendation. I am very pleased about it.

  Judy Mallaber: Is this a love-in?

  Q227  Dr Naysmith: We exercised a new function: scrutinising an appointment. Anyway, to today's business: Do you think the BRE has a coherent strategy? Does it properly think through the consequences of what it does and does it have a proper plan for that?

  Ms Young: I think it has been very heavily driven by a need for business to be confident that there is real action and outcome happening from the better regulation process, that burdens are being reduced, that regulation is becoming more risk based and streamlined. In a way, that has perhaps had too much focus, to the detriment of also stating a clear case for the right balance between deregulatory approaches and delivering the goods from regulation. If you look at environmental improvement over the last 15 years, it has been almost entirely driven by regulatory processes and it has been hugely successful. What we need to do and what the BRE strategy needs to do is to get these public good outcomes and a better regulation process running alongside each other, so that there is a clear value for both.

  Q228  Dr Naysmith: Could you give us an example from your area of work where maybe you have the balance a little bit wrong?

  Ms Young: I think a symptom of it was the communication that went out around the Regulators' Compliance Code. We had hoped we were going to have a joint communication process on that which would stress the benefits of regulation as well as the fact that the Compliance Code was going to keep its heel on the throat of these damned out-of-control regulators. I think the flavour that went out in the communication was: "Here, business, is a mechanism for you to get your heel on the throat of these damned out-of-control regulators" without stressing the benefits that had already been delivered. The Compliance Code, to some extent, was simply a codification of the work that was already happening and things that regulators were already delivering. We were a bit disappointed in that but there may well be other mechanisms, regulatory mechanisms, but I am sure we could ponder on those and put in additional evidence.

  Q229  Dr Naysmith: If you have any, that would be helpful. It is clearly very important to the environment that regulation is good and that it is enforced.

  Mr Mitchell: Perhaps I could add that I think the BRE have not recognised that many businesses welcome inspection. There is some research done by the National Audit Office amongst the community that we regulate that says that they welcome us inspecting them because it gives them the reassurance that they are heading the right way if they do not have necessarily the resources themselves and all the rest of it. That did not come across at all in BRE's communications or evidence.

  Q230  Dr Naysmith: That is interesting because it leads on to my next question, which is what the role of the BRE should be. We have had various suggestions from customers and stakeholders. Should it be a policeman, a think tank, a deliverer, a teacher or a co-ordinator? What do you think?

  Ms Young: We certainly do not think it should be a policeman. I think there is a role for gathering together ideas in a sort of think-tank way. There is also a role in facilitation across government and regulators of thinking about regulatory approaches and helping us share good practice. There is a strong role in selling the benefits of both better regulation and regulation per se and, also, as we said, in influencing what comes from Europe. All of those things are very valuable roles that the BRE could carry out, but they need to carry them out jointly with business and with the regulators.

  Mr Mitchell: I would say their key role is to be a champion for better regulation not less regulation, and getting that balance right between better and more effective delivery of outcomes versus just cutting the burden would be key for them, I think.

  Q231  Dr Naysmith: Surely that is the role of being a policeman. We are building up quite a body now of regulators. Should the BRE scrutinise regulators?

  Ms Young: We have always had this big hang-up about who regulates the regulators because if you are not careful you end up asking who regulates the regulator of regulators. It seems to me that if governments have the confidence to set up properly constituted, well staffed, well governed regulatory bodies, they ought to be fairly confident that that is the control factor, that that is the reassurance that the regulatory process will be good. Our board, for example, is very clear that it is not prepared to have the BRE seen as an alternative accountability mechanism. The accountability to Parliament and to ministers has to be through the board that has been set up by a statutory mechanism to take that responsibility, to reflect the public interest, to reflect the interests of business, and to drive the regulator in the right direction. We think there is a role for the BRE in much more of a facilitation and championing role rather than that of a policeman or regulator of regulators. In fact we will resist the regulator of regulators role.

  Q232  Dr Naysmith: We are very clear now of what your views are on that. You heard a little of the discussion we had with the previous people giving evidence about the move from the Cabinet Office to BERR and whether it was a good one or not. Do you have a view on that? They were tending to say that it had lost a bit of status, I think, more than anything else. What is your view?

  Ms Young: We felt it was a bit like giving childcare into the charge of Herod. There were two very unfortunate signals given at the time of the transfer. One was that the department responsible for business and enterprise was in charge of a better regulation process aimed not just at reducing the burden on business but on delivering proper outcomes. The other was that for about three days at the beginning of all that one of the ministers was called the minister for "deregulation" until we kicked up a fuss and it was corrected to "better regulation"—which doesn't half give a bit of a clue. I think that signal was unfortunate. Whether they have lost power, I am not sure. While they were in the Cabinet Office, they could be marginalised. I do not think being in the Cabinet Office necessarily gave them additional leverage. BERR ministers are quite tough and powerful. They have good ministers who have a voice, providing they recognise that it has to deliver outcomes for the public as well as reductions in burden for business. That is always going to be a bit of an issue for a BERR minister because they have very clear objectives in terms of business.

  Q233  Judy Mallaber: Getting back to the Herod question, whether the BRE puts too much emphasis on deregulation and satisfying the business sector, do you have anything to add on the specific ways in which you think the BRE could move to redress the balance in ways that you have been describing could be better.

  Ms Young: There are a couple of things. We get a very strong message from business that they want streamlined and simplified regulation; not just a reduction in administrative burdens but much more consolidation of a variety of regulations on to a single model. That is part of the work we have been doing with Defra and there is more to do on that, getting a bit of support from the BRE to look at what common regulatory models might be and also influencing Europe's approach to that. We have additional evidence we could provide for the Committee on work we have been doing with the European Environment Protection Agencies on the barriers to good regulation in Europe and in the UK and on a vision for modern regulation for the future, as to what the prime objective ought to be that we are all approaching in terms of our model for good regulation for the future across the piece. It would be extremely useful for the BRE to help and support that work. Also, this common communications process would be extremely useful and would to some extent counteract the location issue in BERR because it would mean that the BRE and, indeed, BERR ministers would have to think a bit about what are the public benefits that modern regulation is promoting. I think that would be useful.

  Q234  Judy Mallaber: Are there any other ways they could move towards making it look like it was not just about business but about all the other areas you have talked about: the environment, the public, consumer protection, et cetera. Are there any other ways they could promote that? How far should that balance go? You say they are not in contradiction with each other.

  Ms Young: No. Not playing to the gallery would help. There is a bit of a feel that the messages are all about business appeasement. Having messages that are also about the benefits of regulation to business and the benefits of regulation to the public. We have done a lot of work, again with our environment protection groups across Europe, on the benefits of regulation to business. Again, we can provide additional evidence of that. I think getting those sorts of messages out, so that everybody is clear that we are involved in a twin-track approach of getting the outcomes and making that the most streamlined and joined-up and risk-based regulatory approach we can possibly deliver.

  Q235  Judy Mallaber: How far do you feel constrained? Do you always have to say how it is good for business, rather than being able to go full hell for leather and say that they are about everyone else and not just business? Do you always feel constrained to put that caveat on at the end?

  Ms Young: I think it helps sell the message but it is also true. That is the work we did with the EU Environment Protection Agencies, to get the evidence globally for good environmental regulation being good for business. I think business is going to listen better if you have a good evidence-based approach rather than just saying to them, "Stuff it, boys. This is good for the public." There will be occasions when, quite frankly, there is such a major public issue that we really have to take quite a tough approach and business may not like it. Then again, that is where the BRE needs to understand what the outcome requirements are, because, otherwise, we get loose talk about gold-plating but when you pick under the surface of the gold-plating claim it is not always the case. Most of the work that has been done so far in trying to find examples of gold-plating have come up with remarkably little.

  Mr Mitchell: I get the sense that the BRE accepts the word of the business community without much analysis; whereas if we say something about the balance between outcomes and burden then a huge pile of analysis is thrown at us and we have to defend our position very hard. I think they could rebalance simply by being seen to critically evaluate the evidence they get from both sides of the debate rather than predominantly one side.

  Q236  John Hemming: There seem to be different views on whether regulators each have their own unique client problems to deal with or whether there is a large degree of generic overlap between these problems. Do you think the major regulators already share best practice effectively? What improvements could be made? Should the BRE have a role in disseminating best practice or should that be left to the regulators to organise?

  Ms Young: We have got much better at sharing best practice, but we are a long way from being good at it—so I think that is a fair cop, quite frankly. It is something that the BRE has helped with. To some extent, the regulators now talk to each other more than they ever did, if only to gang up against the BRE. Certainly there is a strong role for the BRE in sharing good practice that needs to be developed. We all have distinctive flavours but there are a lot of common regulatory processes out there, and it is not just UK good practice it is international good practice. The BRE did some really good work on the administrative burden stuff, bringing together the folks from Holland, Denmark, and other parts of Europe to just tell us how they had done it. The scales fell from my eyes at that point on some of the things that were clearly of benefit to business that we had not quite clocked how important they were. I think there is a real role for the BRE in helping us all get together more and bringing in examples of good practice.

  Q237  John Hemming: That sort of teacher role, in other words.

  Ms Young: A sharer and a facilitator. We like to think we stand shoulder-to-shoulder with them rather than them teaching.

  Q238  John Hemming: You do not have any meetings at which regulators talk.

  Ms Young: There is a whole range of meetings. At Ed's level there is a thing called RHING—and I have never understood what RHING stands for. The heads of regulators get together. There is also a meeting that the BRE sponsors with the board level champions of regulators. Our organisations, particularly those where we have common clients, get together to talk about how we would regulate better together. For example, we have very close relationships with the Health and Safety Executive on a number of regulatory regimes. In the future we will have some relationships with the LBRO. We currently have some relationships with local authorities and other regulatory bodies but it is very particular to particular regulatory regimes.

  Mr Mitchell: We have made suggestions where we specifically think the BRE could help us work closer together. On occasion they have stepped back from that, so I think there is more we ought to be doing between the regulators but there is definitely more the BRE could be helping us to do as well.

  Q239  Phil Wilson: Do you think the BRE has the resources to engage in influencing EU legislation? Do you think it is up to the job? Does it have the resources to do it?

  Ms Young: I think they need to be pretty selective about what they do. Clearly there is a huge amount of legislation coming out of Europe and most of it is very particular to individual regulators. Where they can really play a role is in influencing the better regulation initiative across Europe. There is a clear programme. We think DG Enterprise has got the message better than some of the other Commission directorates. We have been doing some work with DG Enterprise to help sell this vision of better modern regulation that we are peddling around Europe at the moment. It is about getting some of the generic principles of regulation in Europe sorted. The big problem in getting better regulation in Europe is not just selling the principles and the model at a Commission-wide basis but how the parliament operates. The parliament comes in at a late stage and inserts quite a lot of checks and balances in the regulation and that often is the complicating factor. We just have to recognise that that is the political process. It is a difficult one to overcome, quite frankly, but certainly I find it difficult to judge whether the BRE has the right people there at the moment or not, to be honest. I do not think we could judge that.

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