Examination of Witness (Questions 160
WEDNESDAY 26 FEBRUARY 2003
Lord Lang of Monkton
160. Following from that, I worry about
mission creep. You refer in your paper to the Secretary of State
issuing guidance on social and environmental matters. I can understand
for individual reasons why that should be so and, as I recall,
governments tend to put on the face of Bills now whether there
are any social or environmental implications. It is natural to
hand that down to regulators, but I worry about the regulator
becoming a lightning conductor for government and having difficult
and important issues to handletaking things off the balance
sheet to some extent. Can you see a danger of this? Can we guard
against it? You refer at one stage in something you have written
to regulators as "governments in miniature." Do you
see that danger as well?
(Professor Prosser) I do see that danger.
I used that phrase because I wanted to contradict the view that
the regulators can simply take decisions based on economic theory.
We have seen, I think very clearly, that that is not true, even
for example in price control decisions. To a considerable degree,
it is as much an art as a science determining what efficiency
savings are achievable, for example, within an enterprise. However,
the duties that have been given to the regulators, by both Conservative
and Labour governments, also include some social duties, paying
particular regard to the interests of the elderly, in some cases
those in rural areas, et cetera, and it is quite clear that there
are some responsibilities of this kind which the regulators are
expected to fulfil. For example, I think it is inconceivable that
it would have been acceptable for regulators not to consider the
social effect of liberalising retail energy markets and, in fact,
they were criticised by the Public Accounts Committee for not
considering this sufficiently. It seems to me that the advantage
of having that power of guidance given to the minister is that
it does shift general responsibility for determining non-economic
objectives onto the elected, accountable minister rather than
giving it to the regulator. On the other hand, detailed implementation
is for the regulator, who one hopes will be able to understand
his or her sector intimately and know what is practicable there.
161. Professor Prosser, you have covered
a substantial amount of ground in what you have told us this afternoon.
That has been extremely helpful. Can I thank you again for the
paper but also for your comments this afternoon. It has been extremely
helpful to us not only in analytical terms but also in identifying
what may be needed in the light of the particular problems identified
both from the paper and in our session this afternoon. We are
(Professor Prosser) Thank you very much,
my Lord. I found it most interesting.