“If the integrity and legitimacy of the UK's regulatory
system is to be preserved, the findings and recommendations in
our report must be addressed by the Government, regulators and
Parliament.”
, Chair of the
inquiry
A House of Lords committee has raised significant
concerns over the role of UK regulators, their ability to operate
with genuine independence from Government, and how they are held
to account.
In its report, ‘Who watches the watchdogs?
Improving the performance, independence and accountability of UK
regulators’, the Industry and Regulators Committee
concludes that a fresh approach to overseeing UK regulation is
required, calling for the creation of an ‘Office for Regulatory
Performance’ to investigate and report on regulators’ performance
and support Parliament in holding regulators to account.
After hearing from a wide range of witnesses[1], the
committee also found that:
- there is a perception that some regulatory leaders have been
appointed on account of their political loyalty rather than their
experience and capability;
- there have been unacceptable Government delays of
appointments to regulators’ boards, which hampers the governance
of regulators and makes the positions less attractive;
- while some regulators can raise their own revenues through
levies and charges, others depend on the Government for their
funding. This inevitably influences their ability to carry out
their functions independently;
- some regulators are being overloaded with objectives, without
clear guidance on how they should prioritise between them;
- the waters have been muddied between regulatory and political
issues, resulting in the Government’s strategic guidance
effectively ducking decisions on which it should give a view;
- regulators face a challenge to recruit and retain more
specialised staff due to the higher rates of pay available for
the same skills in the private sector, particularly in areas of
rapid change such as digital and technological skills.
- there is a potential precedent for select committees to embed
Specialist Advisers within a regulator to review its activities,
created by the Treasury Select Committee following the 2008
financial crisis;
As a result, the committee is calling on the Government
to:
- streamline regulators’ duties and objectives and provide
prioritisation in the event of conflicts;
- be responsible for how policy priorities should be decided,
for example on matters of social or economic policy, such as the
size of bills, and give regulators’ boards the power to seek
explicit guidance on such decisions;
- allow Parliament to play a more prominent role in
scrutinising appointments to regulators;
- provide a public explanation if it chooses to make an
appointment that has not been endorsed by the relevant select
committee;
- state clearly what it has delegated to regulators to decide
independently, and in which areas it will be appropriate for the
Government to provide direction. If not, it should legislate to
end this delegation rather than attempting to influence
regulators’ decisions;
- ensure the consumer view is properly heard by regulators, by
expanding statutory provisions for independent consumer
advocacy;
- as a matter of principle, consider allowing relevant
regulators the power to raise their own revenues;
- tackle the challenges of, and insufficient investment in,
long-term infrastructure projects by placing the National
Infrastructure Commission (NIC) on a statutory footing;
- allow regulators greater discretion to move outside of
current payscales to attract the necessary staff.
, Chair of the inquiry[2] said:
“Our report raises concerns about the functioning of the
three-way relationship between the regulators, the Government,
and Parliament, particularly the role and performance of
regulators, their independence, and their accountability. We are
especially concerned at cases where the Government has failed to
resolve political or distributional questions facing regulators,
and instead interfered in their day-to-day workings.
Independent regulators must have the confidence to tell the
Government and the public about the serious problems facing their
sector and be able to set out proposals to meet them with
clarity, efficiency and transparency.
Ministers and Departments responsible for specific regulators
should be subject to scrutiny alongside these regulators. We were
therefore disappointed by the limited engagement in our inquiry
by the Department for Business and Trade, particularly when
transparency and accountability to Parliament were a central
theme of our work. The Department did not provide the Committee
with oral ministerial representation, despite ample notice, and
its written submission was brief and lacked detail.
If the integrity and legitimacy of the UK’s regulatory system is
to be preserved, the findings and recommendations in our report
must be addressed by the Government, regulators and Parliament.”
Notes to editors:
- According to the National Audit Office (NAO), there are
around 90 regulators in the UK. The UK's regulators cover a wide
range of policy areas, including but not limited to, financial
services, utilities, communications, transport, education,
healthcare and the environment. Their powers, responsibilities
and funding vary.
