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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