Select Committee on Constitution Sixth Report


APPENDIX 10: SUMMARY OF BRIEFING BY PROFESSOR HOOD, ALL SOULS COLLEGE, OXFORD ON 25 FEBRUARY 2003

Professor Hood defined three different types of regulation, and outlined three studies. In particular, he discussed: (i) how OFTEL operated at the time of the study, including its relations with consumers and complainers; (ii) the growth of public-sector regulation within Whitehall; and (iii) the substantial variation in risk regulatory regimes, noting the influence of interest groups and the importance of 'blame-avoidance' within regulators as significant factors. This third study further incorporated a critique of the 'principles of better regulation' as being both proverbial and contradictory.

Professor Hood concluded that: (i) standard-setting was only one aspect of regulation; (ii) the accountability of regulatory regimes should take account of the multiple institutions within them; and (iii) prescriptions for better regulation, beyond simple criteria of economic efficiency, are unsophisticated.

In terms of composition and accountability of regulators, Professor Hood noted that:

  • regulators differed widely. For example, the Office of the Rail Regulator had a single head; OFGEM had a board (appointed by Ministers); and the FSA was constituted as a company with Directors appointed by the Treasury;
  • his study of public-sector regulation had identified eight main types of regulator and a number of different methods of oversight, including authorisation (giving approval before the event), and post hoc evaluation;
  • the use of the word 'regulation' for internal, public-sector control and auditing was controversial within Government, but studies showed that such activity had recently increased, whatever precise definition was used; and
  • regulators themselves considered that they had multiple accountability — they were under pressure from all sides.

In response to questions from members, Professor Hood further said that:

  • interest groups were often more influential than public opinion in shaping the creation and operation of regulatory regimes;
  • public-sector regulators rarely met, and often took little account of each other's work. This could lead to regulatory overlap (the need to provide the same information to different regulators in slightly different formats);
  • discretion was an intrinsic part of regulation, as conventionally understood;

Local Authorities exercised significant regulatory powers;

  • some regulators were accountable to devolved administrations; indeed, some had dual accountability; and
  • regulation was never 'value free', but involved trade-offs: arguments regarding a universal postal service, for example, had to balance community values and commercial efficiency.

Areas for further consideration

Professor Hood considered that the most profitable, constitutional issues for the Committee to focus on were:

  • the shifting balance between ministerial responsibility and the responsibility of regulators, for example in competition policy decisions (repatriated by the EU to national level, but to regulators rather than Ministers);
  • the advantages and disadvantages of a single regulator compared to the board model, particularly in regard to accountability; and
  • the different institutional forms that could be used for regulation, such as ministerial and non-ministerial departments, NDPBs, and companies; and how different forms of organisation affect accountability.

Other matters which the Committee could profitably consider were:

  • how regulators could be defined and mapped;
  • how recipes for, and attitudes to, regulation have altered over time (such as the move away from simple price-control regulation; and the merging of competition and utility regulation);
  • the extent of mutuality among regulators as a method of spreading best practice and avoiding overlap;
  • the extent to which principles of good regulation could provide a framework for balancing trade-offs in regulatory systems;
  • how compliance costs are understood and assessed (noting that companies tend to declare maximum costs, regulators minimum ones);
  • how citizens understand regulators, particularly with respect to their functions of setting standards, enforcement, and information gathering; and
  • the effectiveness of disputes mechanisms.



 
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