Transcript BERR and Better Regulation Executive congratulate

Public Governance in Russia:
The Present & the Future
22-23 March 2012
Advanced Regulatory Practices
Risk & Regulation
Julie Monk
Deputy Director
Outline for next 25 mins
• History & Context of risk based regulation in the UK.
• Future Strategy & advanced regulatory practices.
• Examples & case studies of good practice.
• Where next?
• Questions / Discussion.
Who’s who in Government Regulation
Who’s who in Government regulation
EU
Parliament
Devolved Administrations (3)
Government Departments(24)
Regulators &
Inspectorates (122)
Local Authorities
Business, Voluntary Sector, Public
Sector Front Line, Citizens
(460)
History & Context
Government accepts 2 key reports in the Budget of 2005:
Reducing administrative Burdens: Effective inspection and
Enforcement Sir Philip Hampton
Less is more: Reducing Burdens, improving outcomes Better
Regulation Task Force
Established the 5 principles of better regulation which are still
very relevant in the UK:-
– Proportionality
– Accountability
– Consistency
– Transparency
– Targeted: (The Hampton Principles)
Hampton Principles
Framework and criteria upon which to judge performance of
regulators included:• comprehensive risk assessment to concentrate
resources where most needed;
• accountability for the efficiency & effectiveness of their
activities;
• no inspection should take place without a reason;
• business should not have to give unnecessary
information
• provision of authoritative, accessible advice easily &
cheaply; and
• recognition to allow, or encourage economic progress.
Hampton Reviews
Reviews took place between 2007-2010
• 36 National Regulators
• Peer review
• Published recommendations
• Action plans for improvement
http://www.berr.gov.uk/whatwedo/bre/inspection
enforcement/implementing-principles/reviewingregulators/page44054.html
Hampton Reviews Results:
Common high level problems with risk
•
Lack of transparency of different risk models.
•
Regulators working outside of their respective fields
needed to share risk models and good practice.
•
Some overly prescriptive legislation hampers the
regulators ability to be truly risk based.
•
Resources are not always efficiently aligned to risk.
•
Lack of evidence that the regulatory activity affects the
risk or delivers outcomes.
•
Reliance on inspection reducing risk.
Risk Models:
Simple problems with risk models
Over regulation
•
Too great an emphasis placed on the Hazard and not
the likelihood.
•
Evidence base weak showing link between hazard and
severity.
Under regulation
•
Hazard not identified or ignored.
•
Not Reviewed or adjusted to adapt to a changing
environment or market.
Future strategy & advanced regulatory
practice:
Transforming Regulatory Enforcement: Freeing up
business growth - Discussion Paper June 2011
http://www.bis.gov.uk/Consultations/transforming-regulatoryenforcement-discussion?cat=closedawaitingresponse
Government Response December 2011
http://www.bis.gov.uk/assets/biscore/better-regulation/docs/t/11-1408transforming-regulatory-enforcement-government-response.pdf
Practical case studies:
Co-regulation – transfer of risk
Transfer more responsibility for managing the risk from the
state to the private sector e.g. Accreditation for the welfare
of greyhounds at racing stadia in UK.
Works because it is proportionate to the problem. UKAS
set standards and provide independence/credibility to the
system to avoid conflicts of interest, regulatory capture.
Practical case studies:
Earned Recognition – recognising & rewarding low
risk
The state recognises business efforts to comply by reducing the level
of enforcement activity e.g. in UK the Pig & Poultry farm assurance
scheme applies to 1000 farms. British Columbia Safety Authority
inspect companies less if they have better compliance. If they fail,
sanctions are much higher 1
Works because it is proportionate to the problem for low risk
businesses. Accreditation bodies set standards and provide assurance
to the regulator which prevents duplication of effort, saving the state
money.
1 García Villarreal, J. P. (2010), “Successful Practices and Policies to Promote Regulatory Reform
and Entrepreneurship at the Sub-national Level”, OECD
Working Papers on Public Governance, No. 18, OECD Publishing.doi: 10.1787/5kmh2r7qpstj-en
Practical case studies:
Working with the grain of the market – driving down
risk
Use the existing market to drive improvements in
standards and reduce risk e.g. ‘Scores on the doors’
scheme for 600,000 food businesses in UK.
Regulator has a national database of inspection ratings
(food.gov.uk/ratings) Equivalent systems in Canada &
Netherlands.
Works because it is transparent and deals with
information asymmetry. Consumers shop with their feet
and stimulate competition for higher standards in the
market rather than the state.
Practical case studies:
Increasing the Efficiency of the state – consistency in
handling risk
Primary Authority principle where one local authority co-ordinates the
enforcement activity of 450 other local authorities for one business with
many outlets across the country ([email protected]). In Jalisco Mexico
there is a multi task inspection unit which forms a single body of
inspectors to reduce inconsistency1.
Works because it increases consistency across the country for
handling risk – collective agreement on what is a risk and how to deal
with it. Appeal and arbitration mechanism provides challenge to the
process
466
Businesses
81 Local
Authorities
1527
partnerships
What Next?
Reviews of all regulators
• Based on the good work of Hampton moving towards a sector
specific approach from the business perspective.
• Based on the principles within the strategy (transparency) and
regulatory practices. Are they using co-regulation, earned
recognition or alternative models to traditional command & control
approach Is there a shift from state to private sector?.
• Public website for regulators their size, remit, level of regulatory
activity etc.
Strengthened role for Primary Authority
• To benefit small businesses (through trade associations).
• Extend the scope to include joining up inspection plans of Local
Authorities and to cover more legislation: Fire & underage sales.
Questions Discussion?
Thank You.