Source · Select Committees · Public Accounts Committee
Sixteenth Report - Principles of effective regulation
Public Accounts Committee
HC 176
Published 15 September 2021
Conclusions (18)
2
Conclusion
The Department and regulators have been slow to follow best practice in facilitating innovation. The Government’s 2019 White Paper ‘Regulation for the 4th Industrial Revolution’ found that only 29% of businesses believed that government’s approach to regulation facilitates innovation. The Department aims to promote innovation in various ways, primarily through …
3
Conclusion
Regulators may fail to protect citizens, businesses and the environment if they do not successfully adapt to major changes in their sectors. To remain effective, 6 Principles of effective regulation regulators must adapt and respond to change. Rapid technological development is disrupting traditional business models, the climate emergency is driving …
4
Conclusion
Regulatory bodies do not have a good enough understanding of the costs and benefits of regulation, risking value for money. Robust analysis of the costs and benefits of regulatory activity is essential for effective regulation, value for money and accountability. The regulators we questioned were not able to put a …
5
Conclusion
Outcomes-based regulation comes with benefits, but also presents challenges for regulators in measuring their influence and compliance by industry. In general, setting goals and facilitating business to meet them can be both a more effective and a less burdensome approach to meeting regulatory objectives than laying down lists of rules. …
1
Conclusion
On the basis of a report by the National Audit Office, we took evidence from the Department for Business, Energy and Industrial Strategy (the Department), and from the Environment Agency, the Health and Safety Executive (HSE) and the Office of Communications (Ofcom).1
6
Conclusion
We asked the Department how lessons from the regulatory response to the pandemic, including effective cooperation between regulators, could be embedded in the regulatory system. It told us that encouraging dialogue between regulators and with ministers was important, and highlighted its role in convening regulatory forums such as a regulators’ …
7
Conclusion
The Government’s 2019 White Paper ‘Regulation for the 4th Industrial Revolution’ found that only 29% of businesses believed that “government’s approach to regulation facilitates innovative products and services being efficiently brought to market”.9 The Department explained that enabling innovation and innovative sectors to grow has been a central plank of …
8
Conclusion
The Department told us that the UK is ranked highly in terms of regulatory policy and competitiveness by international bodies such as the OECD, the World Bank and the World Economic Forum (WEF). We heard that the Department seeks to learn from 5 Q 39 6 Q 40 7 Q …
9
Conclusion
Rapid technological development is altering traditional business and commerce, the climate emergency is driving changes in business and consumer behaviour, and changing social attitudes are shifting citizens’ expectations of regulators. The UK’s exit from the EU has also created both risks and opportunities, as the UK takes on new regulatory …
10
Conclusion
Ofcom, the Environment Agency and the HSE all stated that mitigating the risks and maximising the opportunities of change in their sectors as a key challenge for them as regulators. For Ofcom, new technology has disrupted traditional business models and it is seeing a growth in the reach and power …
11
Conclusion
To meet these challenges and opportunities, regulators need to recruit and retain the right staff, collaborate effectively both domestically and internationally, and exploit new technology to improve their efficiency and effectiveness. Ofcom has recruited a new chief technology officer from industry and told us that recruiting the right skills was …
12
Conclusion
The Department views its role as supporting coordination and dissemination of best practice across the regulatory system. However, it told us it is the responsibility of individual sponsoring departments to provide appropriate governance of regulatory bodies, including oversight of value for money.23 It also confirmed that government has a role …
13
Conclusion
Robust performance measurement and evaluation, including analysis of the costs and benefits of regulatory activity, are essential for effective regulation. They can help evidence value for money, provide insight into unintended outcomes, and help to refine interventions to improve outcomes. Good monitoring and reporting can also support accountability to Parliament …
14
Conclusion
We questioned Ofcom, the Environment Agency and the HSE on the extent to which they are able to capture the cost of their regulations on their sectors. Ofcom told us it is stepping up its efforts to measure its impact since this committee’s 2019 report. But it also set out …
15
Conclusion
The government’s Business Impact Target is set each Parliament and aims to reduce the costs of regulation to business. Regulators must carry out Regulatory Impact Assessments (RIAs) on qualifying regulations to determine their impacts on business. Where these assessments identify an impact of more than £5 million, the analysis underpinning …
16
Conclusion
The Department told us that RIAs currently consider the cost impact of regulations without an adequate assessment of the benefits. For example, the costs of complying with gambling regulations for gambling companies are captured, but the benefits of those regulations in reducing crime are not. Similarly, the costs to landlords …
17
Conclusion
An outcomes-focused regulatory approach is one characterised by setting overall outcomes or principles expected of the regulated industry, rather than specifying rules. This has the benefit of often being more responsive to change because the regulatory objective or outcome remains the same even where the process or activity being regulated …
18
Conclusion
An outcomes-focused approach, however, can present a challenge for regulators and policymakers in measuring the influence or impact of regulation and the level of compliance by industry. A regulator’s influence over the industry it regulates—for example, how well businesses comply with standards—can be difficult to measure, particularly if there are …