Understanding Regulation

Facts, Analysis and Comment

Deregulation in the UK from 2007 to 2010

This note summarises the principal developments in the area of better regulation and deregulation under Gordon Brown's Government. (But see a separate note for information about the background to the 2008 Regulatory Enforcement and Sanctions Act 2008 which implemented many of the recommendation of the 2005 Hampton Report.)

As also noted in the separate web page mentioned above, the Hampton team recommended in 2005, and the Government quickly implemented, a dramatic strengthening of the Regulatory Impact Unit, which used to support the Better Regulation Task Force. To mark this change, the unit was renamed the Better Regulation Executive and given its own non-executive Chair recruited from outside the civil service. The BRE thus became much more powerful whilst the old Task Force, now renamed the Better Regulation Commission, became correspondingly weaker. But it carried on doing some very good wok, including publishing the excelent report 'Risk, Responsibility and Regulation - Whose risk is it anyway?'. Then, in June 2007, incoming Prime Minister Gordon Brown announced that the BRE, previously part of the Cabinet Office, was to be transferred to what had been the Department of Trade and Industry (DTI) and what was in consequence to be renamed "BERR" - the Department for Business, Enterprise and Regulatory Reform. This move had almost certainly been encouraged by Cabinet Secretary Gus O'Donnell who was very keen to reduce the number of operational units within the Cabinet Office.

It was not a wholly popular move. The move to BERR emphasised the increasingly pro-business (and hence anti-regulation) stance of the BRE and so increased the resistance of regulatory enthusiasts around Whitehall. It also caused problems within DTI/BERR whose Ministers had for many years been responsible for regulatory areas such as competition and employment law. They had been particularly successful in the employment area in balancing the needs of business against the needs of employees, especially those represented by the unions, which fund a large part of the Labour Party's expenditure. BERR Ministers were therefore unlikely to find it helpful to have in-house deregulatory lobby groups - especially when the civil servants in the BRE quickly showed that they were not willing to agree its policy submissions with colleagues in the rest of the department, in breach of normal Whitehall protocols. They even brought over to BERR their own part-time Executive Chair with the rank of Permanent Secretary (civil service head of department) in the form of William Sargent, who continued to be (also part-time) joint Chief Executive of Framestore, a successful private sector company. Rick Haythornthwaite meanwhile continued to be Chair of the Better Regulation Commission (BRC) - "the independent watchdog that will monitor the reform programme".

With the benefit of hindsight, the next move was perhaps inevitable. The BRE believed that it had become much too large and powerful to need advice or assistance from the BRC. The Commission was accordingly abolished in January 2008 and replaced by the Risk and Regulatory Advisory Council (RRAC), henceforth attached to BERR's Chief Economist rather than the BRE. The RRAC put a brave face on this, arguing that:

'The style of the new RRAC [will] move away from the traditional recommendation-led reports of the BRC and its predecessors towards discursive, broadly participative workshop-based programmes, designed to explore how better, evidence-based policy-making conversations and processes could lead to improved outcomes - more effective policies, fewer unnecessary burdens and more pervasive protection of civil liberties. The RRAC [will] act as convenor and catalyst, ensuring that preparation, participation and dialogue are of the highest possible quality and effectiveness. Should Ministers feel persuaded as a result of the workshops to embark on a reprise of the policies under scrutiny then the RRAC can play a critical role in supporting success - our neutral voice could be used to good effect to act as a buttress against the pressures that so often threaten to drown out constructive conversations and overwhelm good process.
The objectives are bold. Success can only be measured over time in terms of better policy outcomes and improved trust in policy-makers, both underpinned by a sustainable improvement in the culture of policy-making. This sounds like a long-term process but we have resisted the temptation to propose a protracted initiative. Its longevity must be a function of its success and need. We have recommended that the initiative last for only 18 months and then be subjected to review. We aim, over this period, to demonstrate that this new approach can be a very viable route to accelerating culture change within Whitehall.'

This was well-meaning, but naive. As one senior BERR official put it, "the cuckoo has finally thrown the adult bird out of the nest". The RRAC accordingly expired in 2009 after achieving very little indeed. (Interestingly, a BERR Minister, answering a PQ on 2 April 2009, said that the RRAC had been set up "for a time-limited period, with its period of full-scale operation due to end in April 2009". This made the Commission's short life span sound rather more definite than had been said at the beginning, but it may well have been true.)

Then, around the same time, the BRE's ambitions to introduce regulatory budgets across Whitehall were also binned by Ministers - see a separate note on this and related issues. According to the Financial Times on 3 April 2009, Secretary of State Lord Mandelson instead promised to set up new Ministerial committees and to introduce new (as yet unspecified) targets for cutting the total cost of regulation from 2010 onwards - assuming Labour was still in power, that is. At least he avoided promising yet another bonfire!

No-one in Whitehall expected the new Ministerial committees to be effective. They never had been in the past and they would probably on balance hinder the work of the previously somewhat buccaneering BRE. And the loss of regulatory budgets was probably the first clear evidence of the waning power of the BRE. This was probably inevitable given the looming election and the regulatory promises that would no doubt come out in the campaigning, as well as the post-credit crunch feeling that financial deregulation, at any rate, had gone too far. Be that as it may, the BRE had already previously been effectively demoted by being required to report to Minister of State Lord Carter who (a) had no political experience, and (b) was really only interested in communications issues, the digital revolution and all that. (He was previously Chief Exec of Ofcom.) But then, following the June 2009 reshuffle, (a) BRE was required to report to a mere Parliamentary Under Secretary - the lowest rung on the Ministerial ladder, (b) their Director General, who was previously asked to look after only the BRE - was given substantial additional responsibilities, and (c) they lost their Executive Chair William Sargent and would in future report direct to the Permanent Secretary in charge of the whole of the now renamed Department for Business, Innovation and Science. Note also the loss of the "Regulatory Reform" from the Department's former title.

The BRE then set up a Regulatory Policy Committee (RPC) comprised of independent experts from the business and academic communities, chaired by Michael Gibbons and supported by a staff of civil servants. The committee would examine and challenge Departments' regulatory proposals. It would thus look a bit like the old Better Regulation Task Force except that the task force gave public advice, including advice about process, and commented on existing regulations, whereas the new committee would look at regulations before they become law, and would give private advice to Ministers. Outside observers began to wait with interest to see what would happen when the committee criticised some powerful Minister's favourite vote-winning proposal.

But then there came the 2010 General Election. Click here to find out what happened next.

Impact Assessments

In parallel with all this, the National Audit Office (NAO) did its best to audit and improve the quality of Departments' Regulatory Impact Assessments. The quality slowly improved but, as the NAO reported in 2007: "All too often, however, RIAs were not an integral part of the policy making process as they were not used to inform and facilitate all stages of policy formation from initial development through to implementation and review." But the Government recognised the problem and announced, also in 2007, that Regulatory Impact Assessments would in future be known as Impact Assessments. Added detail included: