Memorandum Submitted by the Department for Work and Pensions March 2008 to the Regulatory Reform Committee inquiry on the Better Regulation Executive and the Better Regulation Agenda

 

1 INTRODUCTION

 

This memorandum provides the Department for Work and Pensions' written contribution to the Regulatory Reform Committee's inquiry into the Better Regulation Executive and the impact of the Better Regulation Agenda.

The Department welcomes this opportunity to set out its position on the work of the Better Regulation Executive in providing a coherent strategy for implementing regulatory reform and simplification.

 

The Department has set in place processes to deliver its target of a 25 per cent reduction in the administrative burdens of regulation on business and also to reduce the burdens that it places on the third sector, its customers and on its own front line.

 

The success of these processes in reducing burdens will be enhanced through building on the current relationship with all the Department's stakeholders including the Better Regulation Executive.

 

2 HAS BRE DEVELOPED A COHERENT STRATEGY FOR IMPLEMENTING REGULATORY REFORM?

 

The main points of the Better Regulation Executive strategy this memorandum addresses are:

 

The Administrative Burdens Exercise;

The Public Sector Strategy;

Reduction in data requests;

Reduction in burdens on the third sector;

Legislative Reform Orders;

Common Commencement Dates; and

The Better Regulation Website.

 

The Department for Work and Pensions believes that this is a significant and coherent body of work that is helping to drive culture change in Whitehall and this Department. The Department also recognises the Better Regulation Executive has to influence departments, and that the challenge this provides to departments is a core purpose of having a central function.

 

The Department also welcomes the regular engagement to discuss the substance of the strategy which ensures that decisions on future work will be a collaborative exercise. The Department recognises the Better Regulation Executive will continue to develop the scope of work to ensure the increasingly effective management of regulatory burdens.

 

Administrative Burdens Measurement Exercise.

 

2.1.1 The Department for Work and Pensions has fully supported the Administrative Burdens Reduction Programme in principle and in practice. The Department has delivered a net reduction of 67 million per year so far and expects to exceed its 25 per cent reduction target in 2008. This would mean that the Department would have exceeded its target two years ahead of the deadline of 2010.

 

2.1.2 The measurement of administrative burdens from regulation introduced before 31 May 2005 took place between autumn 2005 and spring 2006. The Department has applied the same methodology to calculating the administrative burden of regulation introduced since 1 June 2005 with the assistance of business experts to ensure the accuracy of the figures.

 

The Public Sector Strategy

2.1.3 In June 2007, the Government published a strategy for Cutting Bureaucracy for our Public Services. The Department is fully supportive of the aims of the strategy. The Better Regulation Executive has shown flexibility in this area for which the Department is grateful. Internal processes were already in place in June 2007 and the acknowledgement that the Department's programmes were likely to deliver the desired results has allowed for uninterrupted progress towards the shared aims.

 

2.1.4 The Department's Benefit Simplification Unit has been effective at ensuring that efforts to remove complexity, for both staff and customers, are integrated in Departmental decision making. The Unit has identified a range of simplification measures to the benefit system.

 

2.1.5 The Department is also in the early stages of a major change programme that aims to improve the effectiveness of policies, the efficiency of operations and the level of customer service provided for the millions of people the Department interacts with every year. Over the previous 12 months the Department has started to engage in continuous improvement using Lean techniques. This approach, in which customers, and the knowledge and insights of staff, are the focus of service improvement, is being used to streamline processes across the Department.

 

Reduction in data streams

 

2.1.6 Along with other government departments, the Department has agreed to reduce the number of data requests required from local authorities by 30 per cent by 31 May 2010. Progress has already been made on reducing the number of data requests and the Department is confident that it will deliver reductions in excess of 30 per cent by the 2010 deadline.

 

Reduction in burdens on the third sector

 

2.1.7 The Department is working with New Philanthropy Capital, a charity that advises donors and funders on how to ensure their money has high impact. The aim is to provide case study evidence of the burden from monitoring and reporting requirements experienced by the third sector when engaging with the Department's contracts.

 

Legislative Reform Orders

 

2.1.8 Although one of the first departments to make use of Regulatory Reform Orders, to date the Department has not undertaken regulatory reforms that have made use of a Legislative Reform Order. However work is being undertaken to investigate further administrative burden reductions to private pensions legislation which might be suitable for a Legislative Reform Order.

 

Common Commencement Dates

 

2.1.9 Although comparatively little Department for Work and Pensions regulation impacts on business, the Department was one of the first to adopt the Government's policy that domestic regulation which impacts on business should commence on one of two dates (6 April and 1 October) each year. This limits the dates when regulatory changes can be made, enabling business to plan for new measures and to implement them effectively. It has occasionally been necessary to introduce some legislation slightly earlier than 6 April in order to tie-in with commencement of the Pension Protection Fund's accounting year (1 April).

 

The Better Regulation Website

 

2.1.10 The Better Regulation Executive has improved the Better Regulation website to include suggestions for savings to the public sector, third sector and the citizen. The Department for Work and Pensions has only received a small number of suggestions and is taking forward one suggestion in part.

 

2.1.11 The Department recognises the importance of the site in connecting with members of the public, allowing them to identify their major regulatory irritants. The imposition of deadlines for response and the ability for the public to monitor progress of their suggestions is an important step in ensuring that there is a tangible link to government and that issues raised are being considered.

 

3 DOES THE BRE WORK EFFECTIVELY WITH OTHER AREAS OF GOVERNMENT TO IMPLEMENT REGULATORY REFORM INITIATIVES?

 

The relationship between the Department for Work and Pensions Better Regulation Unit and the Better Regulation Executive is on a strong footing. The Department recognises the difficulties any central function has in establishing itself and ensuring that there is traction for its initiatives. The Department and Better Regulation Executive have built up a collaborative way of working that helps to ensure they are pushing in the same direction.

 

The Department for Work and Pensions sees the relationship as one where the Department is the focus for its own work on regulation and that the Better Regulation Executive provides support and challenge.

 

The team within the Better Regulation Executive that shadows the Department for Work and Pensions is benefiting from greater inclusion and influence over the direction and development of policy within the Department. The Department recognised that for the Better Regulation Executive to provide an effective challenge, it needed to give it more exposure within the Department to ensure there is a greater understanding of the policy and engagement context of the Department.

 

This involvement has enabled the Better Regulation Executive to develop a better understanding of the Department's priorities and it is important that the Department facilitates the continuation of this process.

 

The Better Regulation Executive has a representative on the Department's Better Regulation Stakeholder Group. This group, chaired by the Department's Better Regulation Minister, provides a mechanism for working with representatives of its major stakeholders on better regulation and issues around the benefits structure.

 

4 IS THE APPROACH TO MEASURING AND REPORTING ON PERFORMANCE AND OUTCOMES SUFFICIENTLY ROBUST?

 

There has been significant pressure for a number of years on government to reduce the burden of regulation impacting on business. In response to this, the Department has been rigorously applying the better regulation principles to its policy development process.

 

The development of a consistent and robust administrative burdens reduction measure and framework has been crucial to success. The measurement of administrative burdens was carried out in accordance with the framework and methodology set out in the Standard Cost Model.

 

The model relies on the input of a limited number of experts and/or businesses and as such does not produce a statistically representative measurement of costs. Rather, it is a pragmatic approach to measurement that gives an indicative estimate of the size of costs and provides a starting point for setting reduction targets and highlighting the areas to focus upon.

 

The Department believes that targeting the administrative burdens of regulation placed on business is the most effective method for reducing the cost and that setting a challenging target is necessary to drive reform and to demonstrate the commitment of government to this issue.

 

The Department for Work and Pensions has welcomed the new Impact Assessment process with the improved focus on the costs and benefits analysis of new policy proposals. The Departmental Better Regulation Unit has arranged for policy and analytical colleagues to undertake training in the new impact assessment process. The Department has fully implemented the Impact Assessment into its policy development process and is finding it a useful tool for streamlining the design of policy compliance costs.

5 IS THE CURRENT APPROACH TO REGULATORY REFORM DELIVERING GENUINE RESULTS?

The success of regulatory reform is measurable in its impact through the Departmental simplification plan. A 25 per cent reduction in administrative burdens of regulation provides a sound base for the Department's wider programme of reform. In addition, the exercise has assisted in developing a culture within the Department that considers the possible administrative burden of new policy proposals and uses the Impact Assessment process to design simpler compliance processes.

 

The Department will have reduced the administrative burden of its regulation on business by 129 million per year, net of new burdens, by October 2008. This is a 27 per cent reduction but is viewed within the Department as an ongoing process rather than a completed process. Additional work is underway to seek further reductions in regulation relating to pensions and Statutory Sick Pay. Two measures arising from the rolling deregulatory review of private pensions legislation are included in the current Pensions Bill - the average annual savings resulting from those measures are estimated to be in the region of 250 million (2007/08 prices). Total savings up to 2050 are estimated to be 4.4 billion. Work on other areas of pension legislation continues.

 

The Department recognises that, in some cases, the removal of individual burdens may not be significant for individual businesses as the total administrative burden of some regulations is cumulative across all businesses rather than a large burden on a few. However, this should not deflect departments from reducing administrative burdens as the cumulative effect of this could be substantial. This can also assist in embedding the principles of better regulation into policy development processes.

 

The Department for Work and Pensions welcomes the recognition of the Better Regulation Executive that work needs to be undertaken to ensure that business understands regulatory reform and simplification initiatives. The Department will work closely with the Better Regulation Executive to ensure that all stakeholders have an understanding of the simplification measures that have been made and what they mean for them.

 

The Department also thinks the approach is one which has wider application. In particular to deliver visible simplifications to citizens, the public sector and the third sector, the Department is changing the way services are provided by embedding a culture of simplification. The Department appreciates that its staff are well placed to recommend areas for simplification and therefore they are at the forefront of the Department's change programme and benefit simplification work. The Better Regulation Executive has acknowledged this and has introduced a similar programme across other departments.