Select Committee on Regulatory Reform Minutes of Evidence

Examination of Witnesses (Questions 260-279)


24 JUNE 2008

  Q260  Dr Naysmith: When we had the TUC here giving evidence they suggested that there was a need for a think-tank on regulation and they regretted the loss of the Better Regulation Commission. Do you think they are wrong about that? Do you think that there is enough of a think-tank presence there for it not to be required?

  Baroness Vadera: I would be very happy to talk to the TUC to see what they thought was missing and make sure that we covered that, but I believe that we do have that ability to think strategically, as you can see from the enterprise strategy and things that we have brought forward in the most recent round on initiatives to improve on regulatory reform. I think we certainly have the ability to do that think-tank work, but I would be very happy to speak to the TUC to make sure that they feel comfortable that we are not missing out something.

  Q261  Dr Naysmith: We also heard something similar when we were in Holland. They have an organisation called Actal, which has an independent function as well. From the business side, they were suggesting—

  Baroness Vadera: Actal obviously is not the think-tank; Actal is just the monitoring function for a narrow piece of work, which is the admin burdens verification.

  Q262  Gordon Banks: In evidence that we have taken the IoD has suggested that a real focus in Civil Service career paths should be on the experience within the effective use of regulation and the usage of legislative solutions. So do you think that the Civil Service training promotion sufficiently acknowledge the value of experience in promoting Better Regulation, as well as the more traditional area of working on Bills, et cetera? So how focused is that?

  Baroness Vadera: I am just smiling because I have had this discussion with the IoD and Miles Templeman for a long time—we have actually been bouncing ideas off each other because we have come to the collective conclusion that one of the things that we need to deal with is culture and change of culture across Whitehall, so Miles and I have had so many discussions around the subject. I think that it is fair to say that I think there has been a radical change in the culture, but I think that we have a long way to go still. Some of that is around training but I think some of it is also around the incentivisation—that people feel a sense of ownership of the Better Regulation Agenda that they did not before, and they feel that they will be rewarded for that in a way that perhaps they did not have before because there was a sense before that to get around the system you only needed to be doing a big Bill. But now it is slightly different; it is about looking at the overall competitiveness and improving both business and public sector and the third sector functioning more effectively. But I do think that we have a long way to go and I think that some of it is still around the incentivisation issues. But there are training courses; William, do you want to go through all the training courses?

  Sir William Sargent: To give you an example, about 35 of the courses at the National School of Government have better regulation, elements within them, which is something that people go through, right through to top management programmes and right through from the basic day to day policy making type courses through to the ones which are intended for the leadership of the Civil Service going forward. We ourselves as the BRE, for example, when a new form of impact assessment came forward last summer we ran quite a comprehensive number of training courses across government and within departments themselves it is quite common for them to have courses which are very specifically addressed to better regulation. If you go back a number of years this would not have been in there. So there is quite a comprehensive dotting throughout, and with that I am particularly pleased that it is right up to the top level, right up to the senior level.

  Q263  Mr Davies: May I just ask a very brief supplementary on that? On the matter of incentivisation, what you are describing is more training of people, giving them information about the importance of better regulation. Incentivisation would be something different; it would be giving individuals a personal interest and making it clear that promotion is dependent upon progress in this area, for example. Then there is the issue of institutional incentivisation: that is to say, whether the actual department has an interest. For example, you might say in so far as they can make bureaucratic savings by deregulating or better regulating they could keep a portion of these as an allocation to their own budget. Have you thought about going along these roads of individual incentivisation and institutional incentivisation because obviously they are much more powerful than simply giving people training courses?

  Baroness Vadera: I think that they are much more powerful. I would obviously encourage you to encourage Sir Gus O'Donnell to think about how he incentivises the Civil Service, but we have talked about this incentivisation before and he has certainly taken some of that on board, and I think that we could do more of it. Institutional incentivisation, obviously the Treasury has historically also looked at, for example, efficiency savings that come from the public sector, because the public sector regulation brings in quite an important element of competitiveness, and how the savings are shared, and people are incentivised to certainly deliver on that. I think that regulatory budgets will create a different incentive structure as well.

  Chairman: Which is precisely where we are going to go.

  Q264  Gordon Banks: Just to sum up what you have just said there, that the basis of that change has occurred it will take a long time for that change to become embedded and entrenched to the level that we would all wish it to be, would that be right?

  Baroness Vadera: I think you can never really get to where you want to be because it is always a work in progress, and I think we should be encouraging, in particular, the senior Civil Service to be looking at this further.

  Q265  Gordon Banks: Doug mentioned Actal in the Netherlands. The World Bank and the OECD have stressed the importance of independent monitoring of progress, and I was wondering whether you feel that there is a need for something like Actal to actually corroborate the figures on both regulatory budgets and impact assessments, or can we cope without?

  Baroness Vadera: I think that we have actually a different system and we have a very open system, so all of the impact assessments which have now been reformed again, which William is just pointing out to me, it is all available on one page and it is very easy to look at and see and they are all published. So actually they are open for scrutiny in a wider way. They are open to scrutiny from business and they are obviously open to scrutiny from this Committee, which would be a welcome and valuable thing; and also the BRE scrutinises it. I think the BRE has some advantages of being authoritative and expert but a little bit inside the tent so that people feel comfortable in having the discussion with them. So I think we have the balance about right and because of the level of transparency I think we do have quite a lot of independent scrutiny.

  Q266  Phil Wilson: There seems to be a perception that the BRE is concerned principally with business interests. In the Environment Agency's oral evidence session, Mr Mitchell from that organisation said: "I get the sense that the BRE accepts the word of the business community without much analysis." What is the government actually doing to try to counter that perception? And do you think that business has seized the agenda at the expense of proper protection for consumers?

  Baroness Vadera: No, I would not accept that view, although I can see how somebody from the regulator might think that. The reason I do not accept that view is because if you look at the way in which government makes decisions, policy decisions are made—not in the Environment Agency but made by Defra on that particular issue—collectively within government, so that we all have to sign off obviously it is made in a collective way with people representing different views and coming to a collective decision. The job of the BRE then is to look at whether this regulation proposal that might come out of that collective decision—which is where the consumer protection and environmental protection issues come in—are done in a proportionate way, being implemented in a proportionate way for impact in business in the third sector—and in the public sector as well, because it affects all three—but it is about the way in which government makes decisions that it might appear that way because actually the BRE's job is to ensure that the policy once decided is proportionate and is going to be implemented in the best way in terms of the principles of better regulation.

  Q267  Phil Wilson: That probably could happen, as you say, in government, but why is there still a perception that the BRE is primarily concerned with business interests?

  Baroness Vadera: There might be that perception. I would not claim that the BRE—no disrespect—is the most popular entity, but its job is to say, "But you have not thought this through properly." So somebody who is just focused on one thing, for it to bring another alternative view might make it appear that actually you are just thinking about the one thing, you are not thinking of the environment, but that is the way which we make collectively our decision and it is the BRE's job to be concerned to ensure that it is proportionate, which is not to say that the job is to say consumers should not be protected or the environment should not be protected at all—that is not its job.

  Q268  Chairman: Before we move on, can we take one step back to the proposed regulatory budgets. How do you see these budgets working and who is going to monitor compliance?

  Baroness Vadera: We have obviously not made a final decision, so I can give you some views we are going to consult and I would not want to pre-empt anything that comes out of the consultation process. We are trying to see if we can emulate—and again it is a world first, nobody has quite done it before so I cannot quote any immediate precedents—something as close as possible to, say, the Comprehensive Spending Review where there is a budget that is allocated and that people have a responsibility to live within it, and if they overstep the mark then we have to look at what sanction is available. It is more difficult to do it for regulation than it is to do it for funding because it is, by definition, more finite. So we will have to look and see how we actually monitor and ensure that people stay within the budgets.

  Q269  Mr Prisk: Minister, can I turn to the Administrative Burdens Reduction Programme? How committed is the government to this? After all, looking at your own statistics the latest figures show that your own department has only achieved a 1% reduction and the Treasury has shown a 7% increase in the period as shown in your most recent publication. How committed are you to this?

  Baroness Vadera: I would say very committed because this really has been our flagship project in terms of delivering results on the ground. I would also say that there has been £800 million so far that has been delivered.

  Q270  Mr Prisk: In percentage terms how much is that?

  Baroness Vadera: Six.

  Q271  Mr Prisk: Out of?

  Mr Kohli: Six per cent out of 25.

  Baroness Vadera: Because it is quite easy to get the lower hanging fruit and so on and then need procedural and process changes or IT changes in particular, it is true that by definition some of that has back-loaded towards the end of the programme. That is in the nature of the things that you have to change in order to achieve it. So I am confident that we will get there. I am actually talking about buy-in, and going back to earlier questions I think that there is a huge amount of buy-in across Whitehall on this—there really is—because of the way that government works in terms of incentivisation—"Here is the target, you have to do it." And if it is there in the process then they achieve it.

  Q272  Mr Prisk: I think that enthusiasm is encouraging. Can you tell me, Minister, I think the correction to the original document says that by now, this year, 2008-09, there should be an 18.7% reduction, can you just confirm that that is where we are at? Has that been achieved?

  Baroness Vadera: I cannot actually.

  Mr Kohli: The way we do the work—and we would welcome suggestions on this—is that at one point in the year we take a snapshot of how much progress each department has made. In autumn last year, December 11 when we published our document, that number was 6% across government and the table you have in front of you sets out what it was for each department. We will publish an equivalent table on roughly the same date this year and we have not done the work on that yet.

  Q273  Mr Prisk: So you do not know if you are anywhere near 18 yet?

  Mr Kohli: Let me just check the numbers, but we will not know whether we are near 18; 18 does not sound to me like the right number, but I will double-check.

  Baroness Vadera: I thought it was more back-loaded than that. But obviously the BRE have discussions regularly with departments that they feel that they are on track.

  Q274  Mr Prisk: You mentioned buy-in and that leads me on to the question in terms of the back-loaded nature of the programme. One of the issues here—and you have said that Whitehall has bought into this, and I understand that that certainly would be your hope—is the question is whether business has, and there is a lot of scepticism that there has been some progress in some departments, but obviously BERR itself has only achieved 1% there in its first full year. Given that the programme has some difficulties—you say there is some hope that it will be back-loaded—why should business believe that actually you will hit that target? What is the clincher that you can say directly to a small business, "And this is why we will achieve the target we have set ourselves"?

  Baroness Vadera: I am a great believer in actually delivery will be in the end the only way to show something. I would say two things. One of them is that for the first time—I have been working on better regulation on and off in government for a number of years—in the last month I have been to two or three meetings with small businesses where actually they have come and said, "Now that you mention it, yes, there is a difference." And it is quite interesting to me that you actually have to mention, "Have you noticed that you can do such and such?—"Oh, yes, I did notice that. Yes, I can do my planning application now within a matter of hours as opposed to days." It is just something about the nature of regulation where people absorb it differently and do not notice so much, and I think there is a communication issue that you are pointing to, which is quite important, quite interesting that we get right. But at the end we just have to deliver; they will notice whether we deliver. But there are already things that they are starting to deliver.

  Q275  Mr Prisk: Moving on to some other questions. Data reduction, the target of 30% is one with which we are familiar. By my reckoning of the figures as published, certainly in your own publication, my understanding from this is that there should be roughly £700 million of data reduction savings to date. What is the figure?

  Mr Kohli: There are different ways of measuring public sector reductions. What that is saying is that in relation to all measures which help the public sector there are £700 million of savings to date. You can also make a count of the number of instances where departments require frontline public sector workers to give information to the centre, and that count was conducted in the autumn of last year and came up with the number of about 800. The government is committing itself to reducing that number by 30% by April 2010, which is over a much shorter period than the admin burden.

  Baroness Vadera: It is the number of times that people go back for information; the 30% applies to that.

  Q276  Mr Prisk: Public savings, it says here, very briefly, Chairman, is 921 by this financial year—921 by now. Are we on course?

  Mr Kohli: I think the answer is the same as the one I gave earlier, which is that we do that snapshot check once a year. We are in continued dialogue with the department to see if anything looks off track; so in relation to BERR, to which you referred earlier, because BERR's numbers are low we have been talking to BERR ever since December to make sure that they will reach what they will need to reach in order to deliver those 25% targets.

  Q277  Mr Prisk: The Minister who is the Minister for that department would have heard you!

  Baroness Vadera: Can I just say that I have had meetings with BERR; I have had meetings with the other side of the department to check, on why we are where we are, and what we have to do to get there and how much work we have to do.

  Q278  Mr Prisk: So you are going to crack the whip, are you, Minister?

  Baroness Vadera: I think they probably feel I have done that already!

  Sir William Sargent: Can I just clarify, when you are talking about the public sector, those are—

  Baroness Vadera: Yes, those are different things. I am talking about the admin burdens.

  Q279  Judy Mallaber: Following on from the question of perceptions of business, how far do the initiatives that have been taken come from departments or the BRE and how far do they come from business? And is there any attraction in—I think it was the Swedish idea—that we should not just be looking at burdens that have a financial cost that you can identify—although obviously you do want to identify that—but we should also look at things that are irritating factors that drive businesses mad. How do you relate to that and do you take your lead from business or very much from departments seeing what might be possible?

  Baroness Vadera: I think that you have to start with the burden on business or the third sector or whatever it might be; you have to start from what is their feeling. The simplification plans were very much both people in departments going through and identifying what they thought was not necessary to them in policy terms or what could be reduced in terms of procedures and forms, et cetera, but there was an also an exercise of consultation with businesses during simplification plans which actually tried to identify what businesses felt most strongly about. We also research and work through quite a lot of what the particular areas that businesses are concerned about, both in terms of the overall impact, whether it is employment or health and safety, within that what elements are creating the most problems. So we have to do it from both angles. I think the irritant issue is very interesting and I am sure at some point somebody will want to ask me about HMRC so I may as well talk about HMRC. HMRC, for example, very much took the approach of identifying the irritants as well as perceptual issues in a way that was responding to what businesses were telling them, and they have a special group of businesses with whom they consult—because of confidentiality reasons they work with them—and identify those irritants. I think it is important both to look at the overall burden and to look at the irritants because there could be certain sectors in particular who have a very heavy burden, but if you spread the cost across the whole of the economy you would not find that to be significant.

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