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REGULATORY REFORM COMMITTEE INQUIRY: GETTING RESULTS: THE BETTER REGULATION EXECUTIVE AND THE IMPACT OF THE BETTER REGULATION AGENDA
MEMORANDUM FROM THE DEPARTMENT FOR ENVIRONMENT, FOOD AND RURAL AFFAIRS
EXECUTIVE SUMMARY
Defra welcomes the Regulatory Reform Committee Inquiry into the Better Regulation Executive (BRE) and the Impact of the Better Regulation Agenda. The inquiry will help to assess progress, identify success and inform developments.
Regulatory reform is central to Defra's drive to improve and modernise the way we identify, develop and deliver our policies to stakeholders in pursuit of our key high-;level objectives to tackle dangerous climate change and restore, maintain and enhance a healthy, resilient natural environment. An essential part of this is to stimulate real behaviour change and innovation by reducing non-productive administrative burdens, using market-based instruments, targeting inspection on high risk operations, and improving comprehension. In 2006, 80 simplification initiatives were identified which were scheduled to deliver an estimated £158 million per year reduction in the administrative burdens placed on our business stakeholders by 2010. In 2007, 31 of those initiatives were delivered, 4 of which produced savings of more than £200,000 per year each. An additional 100 initiatives were also identified which are projected to deliver an additional £39 million per year savings by 2010. While many individual initiatives are relatively small, their cumulative impact is high and will deliver important improvements for the businesses they affect. Our 2007 Simplification Plan, Cutting Red Tape, which was published in December 2007 (copies have been provided to the Committee) provides more detail on these initiatives and our overall approach to better regulation. It updated our 2006 Plan, Maximising Outcomes, Minimising Burdens (available from http://www.defra.gov.uk/corporate/regulat/pdf/simplification-plan.pdf). The Department has in place a major review of its working practices (Renew Defra) and is designing a new policy-cycle process. This incorporates existing tools, refined as necessary, and more fully integrates relevant Project and Programme Management techniques. At various stages in the policy-cycle there will be approvals and assurance processes to challenge policy-makers and get them to review their thinking against better regulation principles.
The Department recognises the importance of its inter-dependent relationship with the BRE which is helping us to develop and deliver our regulatory reform agenda mentioned above. We have a "Partnership Agreement" (Annex A) which sets out a clear purpose and direction and includes mechanisms intended to focus resources on strategic priorities and enable Defra to regulate better to improve outcomes for our stakeholders.
Other mechanisms, considered in more detail later on in this Memorandum, are in place which ensure a continuous and two-way dialogue is maintained. Nevertheless, there is always room for improvement and the Department is committed to working to improve current working arrangements as we look to maximise the impact of the better regulation agenda driven by the BRE.
Our views on the four areas identified in the Committee's terms of reference are summarised below.
The extent to which the BRE developed a coherent strategy for implementing regulatory reform:
The BRE's strategy has evolved from the two major policy reviews commissioned by the Government in 2005: The Hampton Review and Less is More. Although this assists coherence and direction of travel, we should not be complacent and continuous interaction between the BRE and Government Departments will help focus activity on tackling the major regulatory irritants.
Whether the BRE works effectively with other areas of government to implement regulatory initiatives:
There is an effective working partnership between the BRE and Defra. A number of proven mechanisms exist for challenge, discussion and identification of complementary initiatives. The pace and scope of change can often be daunting and there should be flexibility to look in more detail at balancing competing demands.
If the approach to measuring and reporting on performance and outcomes is sufficiently robust:
Mechanisms like the Standard Cost Model, the Performance Assessment Framework and the Simplification planning process (including reducing administrative burdens) are becoming fully integrated across Defra. We need to build on these approaches to ensure transparency and increased reliance on a robust evidence-base.
Whether the approach to regulatory reform is delivering genuine results:
Defra is on target to deliver, and exceed, the 25% administrative burden reduction target by 2010. We are introducing a sea-change in the policy-cycle process to challenge the need for regulation and promote identification of alternative (e.g. voluntary approaches). The process will more effectively quality assure policy development against better regulation outcomes. INTRODUCTION
1. In terms of the number of regulations introduced, Defra is the largest regulator in Whitehall. A recently undertaken project, which is still being validated, found that from 2000-2007 the Department introduced over 1,050 Statutory Instruments (SIs). However, against this the Department also revoked around 800 SIs, dating to 2000 or earlier. Once the data from the project has been fully validated we will place in the Libraries of both Houses of Parliament a short report on the outcomes.
2. The Department has undergone major re-organisational change over the last few years and is in the final stages of our "Renew" change programme to reinvigorate our approach to managing our business, people and policy-making. Pivotal to these structural changes has been our commitment to build on work already undertaken to ensure we are amongst the leading Departments in being an efficient and fair regulator which minimises the regulatory burden on business, the public and the third sector.
3. Defra pre-empted the Government's cross-Whitehall Administrative Burden Measurement Exercise (ABME) by carrying out our own independent assessment of the administrative burdens imposed by our stock of Regulations in 2003/4. We set our own target of a 25% reduction in those burdens - in advance of the same target being generally adopted across Government - by 2009 (later changed to 2010 in line with the cross-Government target). This provided a solid foundation for us to assess the Department's administrative burden baseline through the ABME.
4. The baseline study found that the total indicative administrative burden imposed by Defra's stock of regulations, as of May 2005, was £527.8 million broken-down as follows:
5. Since May 2005, we have published three annual Simplification Plans. The latest "Cutting Red Tape", December 2007, includes initiatives which are projected to deliver a net decrease of 29% in the administrative burdens imposed on business (i.e. net decrease takes into account new regulations that have, or will, come into force between June 2005 and May 2010).
6. To enable us to achieve the reductions underway, to identify new initiatives, and to ensure that we regulate only where absolutely necessary, the Department has in place a number of internal procedures that help to provide a thorough scrutiny of all policy proposals.
7. In July 2004, we set up the Ministerial Challenge Panel on Regulation following the publication of our internal Regulation Task Force report (April 2004). The report made a number of recommendations for improving the Department's regulatory performance, including a Panel for effective challenge and scrutiny of policies to assess their adherence better regulation principles. The Panel is currently Chaired by Lord Rooker (Minister for Regulation). BRE is a member of the Panel. Further details on panel membership and functions are at Annex B to this memorandum.
8. We have established Regulatory Improvement Units within the Department's main policy Groups which, working with specialist Legal Advisers who support individual policy teams, advise policy officials on the regulatory process from conception through to implementation. RIUs duties include scrutinising Impact Assessments (IAs), maintaining details of progress on policies under development and those in the pipeline, challenging policy-makers to think in innovative ways, and liaising with the Department's central Regulation Division which is responsible for corporate strategy and guidance on the overall better regulation agenda, including direct liaison with the BRE.
9. We have also established a Better Regulation Programme Board. The Board's overall purpose is to assess Defra's performance against all aspects of the better regulation agenda - including simplification, risk-based interventions, and performance assessment - to ensure we are delivering real outcomes for our stakeholders. Better regulation is also one of the core areas that Defra's Management Board reviews and mechanisms are being put in place to formally report to the Management Board on a regular basis.
10. As described earlier in this Memorandum, under the "Renew Defra" Programme, we are developing a new policy-cycle process. This sets out the key stages of policy development and includes a number of checkpoints to ensure the individual policy complies with better regulation principles and procedures. An integral part of the approach is to more rigorously define and address 'risk' and to ensure it is a key consideration before policy decisions are made on the need for Government intervention. On-line guidance will help policy-makers to better factor the concept of risk into their work and will address the origin and type of policy risks, how they can be assessed, managed and communicated, and, importantly, to learn lessons from both good and poor practice.
11. In addition to the internal mechanisms set out in paragraphs 7-10 above, all of which are being integrated into the new policy-cycle, we have established an Economist Peer Group to quality assure Impact Assessments. Each IA will be reviewed by an economist unconnected with the policy area under development and Policy officials and their dedicated economists are required to amend and improve the IA in line with recommendations put forward. Defra's Chief Economist's sign-off to an IA is only given once an IA has been cleared through this process.
12. We recognise the importance our delivery partners play in delivering the better regulation agenda. To cement that importance we hold regular bilaterals with them at which we discuss progress on identifying and delivering initiatives in the Simplification Plan and further opportunities for reducing the administrative burden on business, progress on legislative issues, such as the Regulatory Enforcement and Sanctions Bill, plans for meeting the Compliance Code, and progress on the Hampton Implementation Reviews. Some delivery partners are also represented on our Better Regulation Programme Board.
13. We also engage regularly with external stakeholders through a range of mechanisms including meetings, workshops and customer satisfaction questionnaires. Our 2007 Simplification Plan, for example, which was produced following workshops involving business representatives, was sent to around 300 businesses and business organisations. In addition, a targeted questionnaire obtained positive feedback on the perceived impact of better regulation initiatives in Defra. More broadly, we are reviewing Defra's approach to stakeholder engagement with a view to focusing on mutually beneficial interactions at strategic level rather than relying too heavily on single or narrow issue contacts.
14. The Department's relationship with BRE has been important in helping us to develop and deliver the regulatory reform agenda. Both organisations recognise the importance of co-operation as a means to facilitate policy and business objectives. Defra operates under the concept of "earned autonomy". This gives us scope to determine how we go about improving the regulatory environment across the Department to ensure the best possible outcomes for our stakeholders, while delivering our essential policy aims on the environment, animal health and welfare, and biodiversity.
COMMENTS ON ISSUES THE COMMITTEE MAY WISH TO CONSIDER IN RESPECT OF DEFRA'S RELATIONSHIP WITH THE BRE AND DELIVERY OF BETTER REGULATION OUTCOMES
15. Defra recognises the importance of, and its contribution to, the better regulation agenda set by the BRE. Defra welcomes a wide range of initiatives introduced by the BRE which have improved, and will continue to improve, the better regulation drive. For example:
- the new Impact Assessment process is a major improvement which requires policy-makers to more fully and accurately calculate, in a transparent and upfront way, the costs and benefits of policies and to provide robust evidence to support their proposals;
- the training and guidance provided by BRE on the new IA process has been invaluable in enabling the Department to roll it out to policy officials and in providing online advice on IA completion;
- the 90 Day Simplification Portal, which allows business to identify regulatory areas which might be simplified and on which departments must respond within 90 days, is an effective means by which business can point to potentially burdensome requirements and interact with officials on the regulatory reform agenda - although we accept that the Portal needs to be kept under constant review to ensure it is effective;
- the introduction of annual Simplification Plans to measure departments' progress in delivering the overall Government target of reducing administrative burdens by 25% by 2010 has focused attention on improving the regulatory framework and provides a means of holding departments to account publicly;
- the proposed new Code of Practice on producing guidance will, once finalised, help to ensure that departments apply best practice standards in producing user friendly guidance to support new regulations, in good time;
- the proposed new Code of Practice on consultation which builds on, and modifies, the existing Code and will help to ensure more targeted, user friendly, timely and effective consultation with business and others;
- meetings of senior civil service Board Level Champions to identify, discuss and resolve cross-cutting and specific regulatory issues and to assist in setting the approach across Government;
- the proposed development of a new central IA Library for all published IAs will be an invaluable resource for business and policy officials providing a comprehensive, centrally stored database of IAs to aid understanding and development of new assessments;
- the Compliance Code will formalise and give a statutory base to the Hampton better regulation principles and ensure that delivery bodies can be held to account in the way that they introduce and administer regulatory requirements and supporting processes; and
- the Hampton Implementation Reviews of regulators, and the review led by Prof. Macrory (who reported on applying civil penalties for regulatory breaches), will demonstrate where the recommendations of Hampton have been successfully implemented, highlight areas for development, and assist the sharing of good practice between regulators.
16. Defra also believes that since 1997 the better regulation agenda, led by the BRE, has gained a higher profile not only across government but within and across all industry sectors.
17. Overall, better regulation thinking and culture is increasingly becoming an integral part of policy development and annual Departmental Reports include, as a matter of course rather than an afterthought, a clear focus on better regulation achievements and plans.
18. Defra also believes that broadly effective challenge and scrutiny arrangements are being put in place and would argue that Parliament is provided with more analytical and focused IAs, as well as better regulation information in supporting Explanatory Memoranda, as a matter of course.
19. Wherever possible, Defra continues to ensure Common Commencement Dates are met - to ease both the Parliamentary burden and the burden on business - but we would make the point that around 60-70% of our regulation is EU-based and timing is dictated by EU requirements.
20. In respect of evaluation, we accept that the Standard Cost Model, which has been adopted for recording and monitoring progress towards the 25% administrative burden reduction target, is not a statistically reliable model. However, it does provide an indicative figure of the burden associated with interventions and BRE has recently launched an on-line calculator to capture the burdens and simplifications more centrally, which is a helpful development.
21. When the BRE replaced the Regulatory Impact Unit in 2005, there was an increase in its size and a corresponding increase in the scope of its activities. This produced heightened action across a broader range of areas and has meant a far greater number of initiatives which are invariably time-bound. Resource is clearly a consideration in such circumstances. We also need to ensure our core priorities continue to be clearly understood by business.
22. We believe there is scope to work together with the BRE, and other Government departments, to address these issues and look to develop a longer-term plan, with a strategic direction set for the future, that would identify what the post-2010 better regulation climate might comprise. This could enable, for example, longer-term planning to ensure BRE and departments undertook shared evidence gathering and analysis of the impact of proposed initiatives on the delivery of existing activity.
23. In support of this, we would propose more frequent discussions between Defra policy-makers, BRE and business interests to ensure a balanced view is obtained. Policy-makers might also welcome more collaborative interaction with BRE.
24. It is important to note that the BRE's account manager based structure has assisted two-way communications and raised the standard and regularity of cross-organisation interactions. Bilateral meetings are now more common and focused on joint priorities and they complement other mechanisms such as the MCPR and the Department's Better Regulation Programme Board.
25. The BRE's primary function is to champion good policy-making, embed better regulation principles, promote early engagement with stakeholders, and integrate rigorous cost-benefit analysis into the development of polices and legislation in Whitehall. This role requires the BRE to maintain the highest possible standards of best practice in designing and implementing workable cross-cutting laws and policies, and we will continue to support them in that.
CONCLUSION
26. In conclusion, Defra believes the regulatory reform agenda is working well and producing clear results and benefits to our stakeholders. As Defra's Simplification Plans demonstrate, we are delivering a wide range of meaningful reforms that are having a significant impact on business and improving the overall regulatory framework for which we are responsible.
27. The BRE is pivotal in driving the better regulation agenda and contributes effectively to promoting and enhancing the better regulation philosophy both nationally and within the EU. We have in place a number of proven mechanisms for identifying jointly what our priorities should be for working in tandem and for measuring and reviewing success.
28. However, we should continue to review working practices to ensure that we focus action and attention on those initiatives which have the capacity to deliver the greatest outcomes. This would enable us to reinforce the need for early engagement between the BRE and Departments, and the importance of collecting full and balanced evidence which takes account of the practical, as well as the well-intentioned, impact of Government initiatives.
ANNEX B
REGULATORY REFORM COMMITTEE INQUIRY: GETTING RESULTS: THE BETTER REGULATION EXECUTIVE AND THE IMPACT OF THE BETTER REGULATION AGENDA
Ministerial Challenge Panel on Regulation:
Defra established the Ministerial Challenge Panel on Regulation (MCPR) in July 2004 following the publication of Defra's Regulation Task Force report (April 2004).
Membership:
Chaired by Lord Rooker (Minister for Regulation) the Panel comprises representatives from: Better Regulation Executive; Environment Agency; Department for Business, Enterprise and Regulatory Reform; National Farmers Union; Confederation of British Industry; Royal Society for the Protection of Birds; RSPBA; and the Engineering Employers' Federation as well as senior officials and a Defra Non-Executive.
MCPR's Role:
· To engage with Defra officials to improve the quality of Defra regulations; · To consider Impact Assessments (IAs) for Defra policy proposals in the pipeline and determine whether further analysis be undertaken · To examine proposed Legislative Reform Orders (RROs)
The Panel can also request papers from policy divisions on Defra regulation generally. It receives other information about Defra regulatory performance, such as progress on transposition of EU Legislation.
Meetings and papers before the panel
The Panel meets approximately every eight weeks. Between two and four policies will be scrutinised and recommendations made on them by the Panel. Policies are selected on the basis of their potential to alter the regulatory burden on stakeholders, either in a positive or negative direction.
The Panel met 2 times in 2004, 6 times in 2005, 7 times in 2006, 4 times in 2007, and once to date in 2008. In that time it has considered over 50 different policy issues including the Environmental Liability Directive, Sheep Electronic Identification and the Animal Welfare Bill.
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