Select Committee on Constitution Minutes of Evidence

Examination of Witness (Questions 460-467)



  460. Perhaps I may draw out a number of points here. First of all, there should be a clear delineation of what responsibilities of different bodies are in the process, because if there is that degree of clarity it will reduce conflict and the need for appeals.
  (Ms Spottiswoode) Yes.

  461. You stress this legitimacy of the process. In part, that comes from transparency and, from what is in the paper and what you have said this afternoon, part of that legitimacy may come through a parliamentary route. So you place a lot of emphasis on Parliament in that respect. On that particular point, I wondered whether there was anything else that should be done in terms of achieving the legitimacy you mention, because you say that an awful lot rests on that. Is transparency, plus the use of the parliamentary committee along the lines you have indicated, sufficient?
  (Ms Spottiswoode) Plus the appeals process.

  462. Yes. You think if that change was made . . .?
  (Ms Spottiswoode) Yes, because effectively that then says that, with any decision a regulator takes that is significant, there is an appeals mechanism. If, for whatever reason, the general conduct of the body, or the standard consultation, is not good enough, there is somewhere that is outside the organisation that can come and really criticise it which has an expertise in it. The current select committee system tends to go for a particular issue—which is fine and that should continue—but there is no institutional oversight of the organisation. I think that is valuable. It is both to support the regulator as well as increasing its legitimacy. I do not see it as being a burden on the regulator. I see it as being a potential aid to the regulator. Then if you have a legitimate system, a lot of the issues will fall away; a lot of the contentious stuff tends to die down.

Lord Jauncey of Tullichettle

  463. Do you favour the idea that, before or at the time at which a regulator takes a significant policy decision which will affect any consumers, and indeed suppliers, there should be a regulatory impact assessment made by the regulator—either before taking the decision or immediately afterwards?
  (Ms Spottiswoode) First of all, I do not think that the regulator should ever take a decision without having first started off the process by informally talking to all the relevant parties, so that there is a very good understanding within the organisation before you get too far down the line of what the impact is likely to be. That might stop some things earlier in the process and you cannot make them happen but, once you have got so far down the line, I think that there really ought to be a regulatory impact assessment. There are costs of implementing a lot of these policies which are not just about the regulatory costs; they are not just about the obvious costs of the organisation. There are a whole lot of other costs that are often not fully taken into account. I see it as a good discipline. I know that some of my fellow regulators will disagree with me very strongly, because some of them disagree with a cost benefit analysis. It is very difficult to do, and a lot of other things are very difficult to quantify; but what you can do is put bounds around it and then say, "There is this amount of good. We have a huge amount of question marks about what the numbers are. There is this amount of bad. We have a huge amount of question marks". It gives you a logical framework in which to analyse whether to do things. I think that, done properly, they can be very beneficial. The only downside is bureaucracy. You are asking for a great many more staff, and it should not just be lip service. In other words, it needs to be a real exercise that means something. Again, I think that will add to the legitimacy.

Lord MacGregor of Pulham Market

  464. Do I get the impression that you feel that this regulatory impact aspect is not looked at enough by most regulators?
  (Ms Spottiswoode) I do not think that any of them do them at all, that I am aware of. It is part of the Ofcom Bill, if it comes through. I think that David Curry intends to use it for the organisation itself. He welcomes it. I see absolutely no reason why a regulator should not welcome it.


  465. In your overview of the system, if one can generalise from the paper, there are a number of adjustments that would be desirable to the process. Overall the process works reasonably well but, if the changes were to be made along the lines you have indicated, then we would have a system that was going to be as smooth as one could expect.
  (Ms Spottiswoode) Yes. It will never be perfect.

  466. You have clearly indicated the direction in which we should be going with some of those adjustments. I just come back very quickly to the point that Lord MacGregor raised with you. I took exactly the same point that he did in terms of the interpretation of your paper, in respect of an individual regulator versus a board, which was your point that there was a wariness about an individual because too much power was concentrated in the hands of that individual. Lord MacGregor's point was that, as the system becomes more mature, you may need less regulation; therefore, the motivation for not having the individual declines, whereas the pressure at the moment is very much in favour of having a board. I rather took the same implication as Lord MacGregor did—that you were pointing us in the direction of taking a sceptical eye to the use of boards.
  (Ms Spottiswoode) The dynamics of boards vary enormously. There is no doubt in my mind at all that it works very well in the corporate world. I think that the regulatory world is slightly different. There are academic, technical papers, which means that it can be quite difficult for individuals who are not steeped in the stuff, all day and every day, to contribute. They might be able to contribute in a very particular area but not on a real part of the policy decisions. I think that David Curry is a very good appointment in the Ofcom arena. He can genuinely be a—nearly full-time but not quite—chairman who understands the issues. If you have a part-time chairman just in order to have a separated chairman and a chief executive, and that part-time chairman does not have a background which would make him naturally able to understand the technicalities, what are you doing? I am always against doing things just for show. If they are genuinely there because they are going to make a better organisation make better decisions, then I am absolutely for it. In general, set up correctly, a board is probably better than an individual; but I would not want it to be, "Let's tick all the boxes".

  467. Indeed, there is not just a tension between the regulatory and the other bodies, but there might be tension within the regulatory body itself if you have a board structure.
  (Ms Spottiswoode) Yes.

Chairman: Thank you very much, Ms Spottiswoode. That has been extremely helpful to us. We are most grateful for the paper, as perhaps is reflected in the questions that it stimulated. It has been very helpful to us in our inquiry and we are very grateful to you.

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