A recent government consultation document Reforming the Framework for Better Regulation looks important. The government itself says that one proposal [would] have far-reaching consequences – potentially both positive and negative. So here is the first of a two-part summary which might encourage you to read and respond to the document itself.
The fact that Lord (David) Frost is one of the joint authors gives a strong clue to the document’s ideological underpinning which is in part the (politically understandable) drive to demonstrate that Brexit will make a real difference. The post-Brexit policy focus has been on trade and the possibility/challenges of forging new trade deals, and there’s been less public debate about regulation and what exactly a new (less precautionary?, more flexible?) regulatory regime would allow the UK to do that it currently cannot.
The consultation is all about reforming the Better Regulation Framework. This was designed to ensure that government regulation is proportionate and is only used where alternative non-regulatory approaches would not achieve the desired policy outcomes. It is intended to ensure the Government is accountable for new regulation. Where government intervention requires a legislative or policy change, departments are expected to analyse and assess the impact of the change on the different groups affected. This generally takes the form of an impact assessment (IA) which is subject to review by the Regulatory Policy Committee.
The document begins with a useful summary (see Annex below) of post-2006 regulatory reforms. It then turns to the ideas to which ministers want reactions.
Cutting out Parliament
First, should we adopt a more UK ‘common law’ approach to regulation, abandoning that pesky European (Napoleonic, Roman Law?) approach? Should we, in other words, stop setting out detailed rules laid out in regulations and instead delegate more power and discretion to regulators and replace prescriptive statutory frameworks with outcomes to be achieved. Regulatory regimes would then be shaped more by case law rather than primary or secondary legislation.
Parliament would then…
‘… set out only what is prohibited or the outcomes to be achieved, in plain English, and set out any parameters within which regulators would need to operate to meet these outcomes, but then giving regulators appropriate powers and discretion over how to do so, rather than legislation setting out all of the rules that businesses have to comply with in detail.’
[This flexibility would] ‘allow regulators to do more through guidance, decisions and rules that could be adapted quickly outside of legislative frameworks. This could allow them to respond more quickly to disruptive new technologies and other changes in circumstances. Requirements could be set out in guidance in plain English that could be more easily understood than legislation, making them more accessible to the average reader. … regulators would still have to set out some detail in rules and guidance but would have the flexibility to change these without having to petition the Government to introduce further legislation.’
On the other hand, the document recognises that…
‘… this approach could lead to more uncertainty in the regulated markets and more litigation’. It could ultimately lead to more regulation being created overall, through mechanisms which are less responsive to public scrutiny and democratic accountability. Regulatory regimes need certainty to be effective and enforceable, so flexible regimes need to have safeguards in place to ensure that requirements are clearly framed in unambiguous terms to avoid uncertainty. It is also important that businesses and individuals have reasonable notice of changes so they can know what is required of them at any given time, and to ensure that breaches can be effectively enforced.
'A shift away from prescriptive statutory regimes, leaving regulators to shape the detail in individual regulatory areas, could mean more court time taken with regulated parties defending prosecutions or other sanctions – for example, if the requirements were too vague and uncertain. There would need to be clear outcomes, set out in legislation, for regulators to achieve and clear criteria for regulators on how they should achieve those outcomes. A further consideration for regulatory regimes where it is relevant is that criminal offences and penalties must be provided for in law.’
If adopted, this new approach would represent a remarkable transfer of power away from Parliament and away from ordinary citizens and consumers. Our MPs could no longer pass legislation to influence the detailed behaviour of regulators. Regulators could be challenged only in the courts which are generally inaccessible to the vast majority of the population, especially given recent governments’ hobbling of judicial review.
This approach does rather echo other moves this government has made (going back to Brexit but in other areas too), and will be seen by many as further evidence of its populist dislike of legislative and other constraints upon executive power. I doubt whether this is one of the animating motives of the government here. Perhaps naively, I hope that this is really about a different vision of how good regulation should operate and of the merits of a more discretionary model.
But the proposal surely exacerbates the concern that former Bank of England executive Paul Tucker and others have expressed about the already too weak accountability of regulators for decisions involving value judgments that should be in the political domain. The document addresses this concern by suggesting that there might be ‘a more direct form of accountability by regulators to Parliament’. But having to explain its decisions to easily distracted Parliamentarians would not, I suggest, be much of a constraint on a regulator with a mission – or indeed an incompetent or under-funded regulator.
To be fair, the document also says that …
‘This is a proposal that will have far-reaching consequences – potentially both positive and negative. … We are … considering whether the extent to which flexibility is delegated should vary by regulator based on what they are responsible for, as the pros and cons of this approach are likely to vary depending on the area of regulation, or whether regulators should have more limited flexibility to only exercise discretion in targeted ways.’
This is such an important (and apparently real) consultation that it deserves to generate lots of serious responses. It will be interesting to see how businesses, trade organisations, business groups etc. respond. What would it all mean to them? Is what is being proposed really what they/we need/want? Is it achievable?
It will be important, too, that there are high quality responses, including from regulators, that consider the impact on civic society.
Read second part: Reforming regulation: is it really what businesses need and want?
This is the document’s useful, if daunting, list of post-2006 regulatory reforms.
The length of this list suggests that successive governments have found it very difficult to improve the way in which they have developed and used their regulatory powers.
- The creation of the Better Regulation Executive (BRE)
- The current Better Regulation Framework
- The Administrative Burden Reduction Programme
- The One in, One/Two/Three Out policies
- Small and Micro Business Assessments
- The Small Business Enterprise and Employment Act 2015
- The Business Impact Target
- The 2019 Regulation for the Fourth Industrial Revolution white paper
- The Regulatory Horizons Council
- The Plan for Digital Regulation
- TIGGR – the Taskforce on Innovation, Growth and Regulatory Reform
- Improved and increased International Regulatory Cooperation
- The Open Regulation Platform
- The Digital Regulation Navigator
- The Smart Regulation project
- The National Data Strategy
- The Chancellor’s 2021 Mansion House speech focusing on reform for the financial services sector
- The [Financial Services] Future Regulatory Framework Review
About the author
Martin Stanley is the editor of Understanding Government - understanding-government.org.uk – a set of websites written for politicians, journalists, academics and others who wish to understand the role of the civil service and regulation in modern government. He is also the author of How to be a Civil Servant whose fourth edition will be published shortly. Martin was previously a senior civil servant, and Chief Executive of (what is now) the Better Regulation Executive, the Postal Services Commission and the Competition Commission.