ukcivilservant

Articles about the UK Civil Service and Regulation

West Wylam Colliery Medal

I would be delighted to hear from anyone who can help explain the background to this 1894 medal.

It was awarded by the men (not the owners) of West Wylam Colliery, (near Newcastle upon Tyne) to a fellow miner, Thomas Gribben, who saved another man’s life.

If you can help, please email me at 68rtsw8@gmail.com .

Martin Stanley

thomas gribben full

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Would Civil Servants Refuse To Tax Non-EU Imports following a Hard Brexit?

There has been an interesting exchange between Dr Richard North and George Peretz QC concerning the implications of Brexit without a prior withdrawal agreement.  It is clear that it is now far too late for us to be able to apply border controls and charge tariffs on post-Brexit imports from the EU, even if we wanted to.  But would we then also have to allow all other imports to arrive duty-free?

In short:

  • Both Dr North and Mr Peretz agree that WTO treaties require the UK to remove tariffs from all its imports if we continue to import goods from the EU without tariffs and customs checks. This would no doubt be disastrous for many UK industries – and maybe for the Exchequer.
  • But Dr North says that the UK could ignore the WTO until the successful conclusion – many years later – of other countries’ challenges to our decisions.
  • Mr Peretz says that the UK could not and should not act in such flagrant breach of its international commitments.

I would add that UK civil servants may not accept instructions to do things which are very  likely to be illegal or improper, and this includes actions which would contravene our treaty obligations. So I do not think that HMRC and other officials could be asked to impose tariffs on, say, Chinese imports whilst simultaneously allowing EU imports to arrive duty free.

In more detail:

Here is Dr North’s argument:

“[Mr Peretz notes that WTO rules] “make it hard for the EU to give the UK benefits that it doesn’t give other third countries”. … if the UK’s policy response to the problems of ‘no deal’ is to waive tariffs and checks on imports from the EU, it will also have to waive them for imports from (for example) China and the US in order to avoid well-founded claims of discrimination”.  Noting that this is “unlikely to be politically attractive” (as well as potentially hazardous), what he doesn’t take on board is the very nature of the WTO as a body dedicated to facilitating international trade. As such, the WTO relies on negotiation as its main tool and regards the treaty law as a adjunct, to be used when all else fails and then only to achieve an effect. It is not a legal authority which regards the rule of law as a sacred principle or any part of its duty implementing the letter of the law.

Reflecting this, many of the WTO treaty provisions (and their predecessors in GATT) are not actionable merely on evidence of a breach. The WTO Agreement sets the additional test of requiring the aggrieved party (or parties) to have suffered injury – known in technical terms as “nullification or impairment”.  Given this requirement, one can imagine a post-Brexit UK which, in order to keep goods flowing and to prevent the ports being clogged, decides to maintain its existing checks on what were EU third countries but decides to waive checks on EU produce which, until very recently it did not check at all.

In those circumstances, where the UK is maintaining the status quo, one has to ask whether any of the erstwhile third countries are materially disadvantaged. And, if they feel they are, their option is to go through the dispute procedures, potentially taking several years before an actional judgement is made, which in any event only allows the aggrieved parties to impose sanctions which have an effect on the target county similar to the damage originally sustained.

One can easily imagine the situation where the UK will take the political judgement that it should waive WTO rules. And even if it is later found to be in breach, such modest sanctions as may then apply – some time in the distant future – are nothing compared to the damage that might otherwise have been caused.

Similarly, if the UK decides to invoke the national security exemption, its lawyers will doubtless be able to keep any complainants tied up in the minutia of international law and WTO precedents so that, by the time anything is resolve – if, indeed, it is – the crisis will have been long past.

Crucially, this means that many of the headline effects of Brexit will not materialise – or are capable of mitigation to such an extent that they will scarcely register as much more than minor perturbations. The really damaging effects will be longer-term and far less visible, the cumulative effect discernible only from periodic trade statistics.

Here is Mr Peretz’s argument:

[Dr North] is of course right to point out that WTO enforcement requires a complaint showing harm, takes years, and results only in permission to take action if the defendant government fails to respond. … But … he ignores three important political points …

First, the UK Government has always had a firm policy of complying with its international obligations, whether enforceable or not. That is a real constraint on policy.

Second, there will be real political consequences for the UK if it proceeds in a way that is in breach of its WTO obligations. Such conduct is not consistent with the Government’s stated aim of being a leading free-trade voice in the WTO. And nor is ignoring your international obligations a good look when negotiating free-trade agreements with numerous third countries in a hurry (as the UK will have to do in the weeks after a no deal, given that it will have fallen out of all the EU’s existing FTAs).

Third, his suggestion that the UK might seek to take advantage of the “national security” provisions of GATT – when the UK has, rightly, been one of the leading critics of President Trump’s abuse of that provision – is pretty odd in political, as well as legal, terms.

I would add only that a fundamental element of the UK constitution is that government departments are headed by ‘Accounting Officers’ who are directly responsible to Parliament (not to Ministers) for ensuring “regularity, propriety, and value for money” – and the first of their basic “dos and don’ts” is “don’t break the rules”. I would accordingly be very surprised if any Accounting Officer has told Ministers that tariffs could be imposed on non-EU imports in the circumstances described earlier in this blog.

Some further reading may be found on my “No! Minister” web page and, more generally, in the “Speaking Truth to Power” area of the UK Civil Servant website.

Martin Stanley

Free Trade is Not Always the Right Answer

Parts of the current Brexit debate remind me of a similar Michael Heseltine inspired debate back in 1994, when I and others were advising him on industrial policy. One of my contributions to the debate can be found by clicking here.

In short, I was concerned that the most ardent free traders did not recognise that it had often made sense for the UK and other countries to protect ands subsidise our industries:

  • in the face of imperfect markets, foreign protection, and overseas product standardisation, and
  • so as to help industry get to market first, and to overcome barriers such as high research costs.

I concluded that “Our consideration of trade issues needs to be more thoughtful.  We need to analyse our success and our failures, and the success and failures of our competitors … Above all we need to think in dynamic and strategic terms, deploying negotiating and tactical skills, rather than starting from static and unreal assumptions and assertions.”

For the avoidance of doubt, the paper was for internal use only, and contains the unspoken assumptions that the Single Market – driven forward so strongly by Mrs Thatcher – was an unalloyed blessing as it removed so many non-tariff barriers which had previously locked us out of many European markets. It also assumes that the EU’s State Aids regime was generally very sensible. If it has any modern relevance, it may help explain why post-Brexit trace negotiations will be complex and difficult, and will need to involve industrialists and officials who have deep knowledge of their sectors both at home and abroad.

(A previous blog explains how non-tariff barriers such as product standards can be such effective weapons in the hands of governments that want to exclude competitors from their markets.)

Martin Stanley

Editor – Understand Regulation website

 

 

 

Regulating Schools, Hospitals etc.

I have published a new web page focusing on the regulation of the UK public sector.

The public sector is – quite rightly – very highly regulated. But this regulation comes with great cost and may often have gone too far, or have been badly designed.

This problem was recognised by the Cabinet Office in the late 1990s when its Regulatory Impact Unit, working closely with other departments, began to publish a good deal of useful guidance and other material.

Baroness O’Neill then drew attention to the pervasive tendency of government to allow holding to account to morph into managing from afar. Managers of many hospitals, schools etc. had begun to focus almost exclusively on meeting targets as distinct from providing excellent and locally appropriate health care and education.

She also stressed that, in this area as well as others, there is a crucial difference between releasing information and informing the public. The wholesale release of vast amounts of data does not of itself inform anyone.

Follow this link to read the web page … Understanding Regulation: The Public Sector

And please do send me any information or publications which might usefully be added to this web page.

Martin Stanley

Editor, Understanding Regulation
@ukregulation

Can Civil Servants Really Speak Truth to Power?

Civil servants are proud of their duty to ‘speak truth to power’ – that is to provide honest, impartial and sensible advice to Ministers. But it can be difficult to do this without damaging the official’s  relationship with Ministers.

There is little or no internal training or advice on how to offer persuasive advice, not least because no official training material can admit that some Minsters can be very difficult clients. I have therefore added a new section to my Civil Service website.

The first set of pages explain why it can be difficult it can be to speak truth to power, and in particular why it might have become more difficult in recent years:

There are then some hints and tips about:

Last, but not least, I examine the extent to which civil servants are free – or even under a duty – to say “No! Minister”.

Those particularly interested in these last three pages might also like to read and respond to the IfG’s current discussion paper on Accountability in Government.

As ever, comments and corrections would be very welcome – to 68rtsw8@gmail.com please.

Martin Stanley

Sainsbury, Asda & Yellow Pages

There’s a perceptive piece by Ed Conway in Today’s Times, but he unfairly suggests that regulators don’t understand digital disruption.

The misunderstanding begins with his misinterpretation of the 2006 ‘Yellow Pages’ investigation. The Competition Commission was well aware – to quote Ed – that “the Internet was fast disrupting everything”. But the CC recognised that Yellow Pages were still an important advertising channel for many small businesses – and faced limited competition.  The CC did not therefore “impose a pretty aggressive price cap”.  The CC in fact inherited an aggressive (RPI-6) price cap which had been in place since 2001 and, reporting in December 2006, ordained that this should end in 2008 and be replaced by RPI only.  I think that hindsight would give this decision pretty good marks.

Fast forward to 2018, and we see the competition from the Internet everywhere – and Ed’s piece summarises the problems very well.  The tech giants raise all sorts of regulatory problems (which I summarise here) but I am not convinced that competition policy (aka anti-trust) has become irrelevant. Ed himself notes that “Every other industry has seen what happened to newspapers and music. They are on the defensive, and what is the most straightforward way of defending yourself? Size”.  But agglomeration is a short term fix.  It reduces competitive pressure and in particular reduces the pressure to innovate.  The Amazons of this world will not be beaten sluggish conglomerations of incumbents.

Which is why the Sainsbury’s/Asda merger is so fascinating.  There is an argument that it will not substantially reduce competition because there is already new competition from Aldi, Lidl and others. If so, then let the merger happen.  But, if not, it would be unwise to allow the merger and reduce the competitive pressure on the incumbents just when they need to be ramping up their efforts to stop their customers defecting to Amazon.

Either way, I am sure that the regulators understand the issues very well.

Martin Stanley

Editor, Understanding Regulation

Twitter:-  @ukregulation

 

 

Dear Mr Gauke. Sacking Independent Decision Makers Encourages Cowardice and Indecision

All British governments from – and including – Mrs Thatcher’s have recognised that it makes sense to hand much tricky decision-making to independent bodies.

Lower energy prices are politically popular, but damage investment. Liberal prescribing of new expensive drugs is welcomed by patients, but unaffordable by the NHS. Parole cuts prison costs and is often humane, but carries risk of re-offending.  These judgment calls are best made by independent bodies, not least so that you – Minister – cannot be criticised. Their decisions can of course be challenged on appeal or by judicial review brought by those affected.

You absolutely do not want such regulators and other agencies to be scared of being challenged in court and/or upset by media criticism when they lose an appeal.  You want them to take difficult decisions involving fine judgments and to learn whenever they are over-ruled.   A regulator who always wins on appeal is a regulator who always shrinks from difficult decisions, and  who never takes on a big company with a large army of lawyers.

The problem in the UK is that (with some honourable exceptions) we have too often suffered from regulators and other decision makers who have been too scared of challenge and so too indecisive – remember Private Eye’s ‘Fundamentally Supine Authority‘ – and possible Ofgem’s previous management’s reluctance to tackle the big energy companies?

The courts found that the Parole Board had erred in the Warboys case because

  • The (criminal court) judge’s sentencing remarks were not in the Parole Board dossier (not their fault)
  • Information about the other 80 possible victims was also not in the dossier (not their fault)
  • In particular, the (civil court) judge’s decision was not in the dossier (not their fault). (He found Warboys to be ‘clinical and conniving’, and noted that the rape kit in Warboys’ car suggested there would have been other later victims.  But Warboys never accepted such responsibility.)
  • The Parole Board had not made detailed inquiries about the other possible offences.  This was their error albeit made to some extent on advice, fearing that it would be wrong to imply guilt for an offence for which he had not been charged.

None of these reasons suggest that the Parole Board was badly run or incompetent.  They made a close-call decision which was rightly challenged and overturned.   That is the way the system is supposed to work.  You should have supported the Board, not criticised nor sacked its highly respected Chair.

(Secret Barrister’s  very clear summary of, and comment on, the Warboys decision is here.)

Martin Stanley

Understanding Regulation

 

 

The Problem is Smuggling

Brexit is all about having different import duties and/or regulations on either side of the UK/EU border.

As soon as there is divergence, there will need to be bureaucracy, much of which – and maybe most of which – can be automated.  Legitimate, organised, compliant traders might face little or no monitoring, even if they find ‘rules of origin’ to be a right pain.

But there will be an incentive to evade higher tariffs and/or higher regulation by smuggling food, livestock and other goods across the border.  The incentive will be in proportion to the difference between the UK and EU regimes.  Low import tariff UK food, for instance, might be smuggled into the Irish Republic over any of the >200 current crossing points.  But smuggling needs to be identified at the border, or else there will be little deterrent and no sound evidence trail which can be used by prosecutors .

Some traffic and some people will therefore need to be stopped and searched.  This is why a so-called ‘hard border’ will be needed – in Ireland as much as in Dover and Calais.

 

Martin Stanley

The UK Civil Service
Understanding Regulation

£10+ Billion Deregulation since 2010 – or ‘Alice in Wonderland’ Statistics?

I was not the only commentator who found it difficult to understand Ministers’ claims that they had ‘reduced regulatory costs for business by £10 billion during the 2010-15 Parliament’. But I have recently re-read an excellent NAO report which explained how this was calculated and – just as important – what it did and did not include.

First, the £10bn is calculated as follows. Let’s say a regulation which costs business £20m a year was abolished in 2010. The saving over the coming five year Parliament is assumed to be 5 times this amount – £100m. Fair enough! But what happens if it was abolished in 2015 – during the last year of the Parliament? It is then still reported as £100m over the Parliament. That is a seriously weird way of reporting the figure.

A much better way of reporting the savings would be to take the annual savings as perceived by business – which started quite low but had built up to around £2.2bn over the five years to 2015. That is still a worthwhile saving – except ….

There are major exclusions before the net savings are calculated. These include massive areas such as:

  • tax administration (particularly Income Tax, Corporation Tax and VAT),
  • European Union regulation,
  • the National Minimum Wage (see further below),
  • the Living Wage (ditto),
  • the Apprenticeship Levy,
  • compulsory Workplace Pensions,
  • fees and charges imposed by government or regulators, such as the fees paid by care homes to the Care Quality Commission.

The result of these exclusions is as follows.

2010-15: The NAO reckon that almost half (46%) of the 951 regulatory decisions made during the 2010-15 Parliament were not included in the estimated savings of £10bn. These 46% were estimated to have imposed annual costs of £2.8bn, rather more than the £2.2bn annual savings that had been achieved by the end of that period. In other words, the burden of regulation increased over those five years, not decreased.

2015-16: The Government claimed net savings of £0.9m during the period from the beginning of the next Parliament through to the date the NAO prepared its report. This however excluded the cost of the introduction of the National Living Wage (£4.1bn) as well as the increased minimum wage  – adding another £3.1bn to businesses’ costs. This was clear cherry picking of the measures that HMG chose to include in its targets. Other exclusions added up to around £0.8bn bringing the total to £8.0bn, a good deal more than the savings of £0.9bn!

The inclusions – those savings that are claimed by the Government – are interesting, too. Over 90% of the £10bn claimed savings 2010-15 were due to 10 changes, including:

  • changing the inflation index used to increase pension benefits,
  • reducing audit requirements for small companies, and
  • streamlining the guidance relating to contaminated land.

These were hardly the sort of deregulation that would be appreciated by a typical SME.

The inclusion – as deregulation – of the new law requiring larger retailers to charge £0.05 per plastic bag was particularly odd. This was counted as a regulatory saving amounting to £1.0bn over five years because the shops would now spend less on buying the plastic bags. But was this really deregulation? As one MP noted: “we imposed this regulation on business to [make them] do something they were not previously doing, [and yet] we are claiming £1bn towards our target. That is like something out of Alice in Wonderland.”

And note, by the way, that if this £1.0bn figure is excluded from the net saving of £0.9bn, there was in fact no progress at all towards the government’s target during the 2015-16.

Note too that subsequent research showed that the gross proceeds from the plastic bag charge had been around half of the Government’s first estimate, so the true five year saving to business (if it was a saving) was only £0.5bn. But the reported figures will not be revised.

Indeed, the NAO also pointed out that departments seldom monitor the ongoing impact of their regulatory decisions, And departments are supposed to evaluate their new regulations within five years of implementation – but they don’t. 83 regulatory decisions were made in 2011. By 2016, only seven reviews had been scheduled of which only two had been completed.

A detailed history of deregulation in the UK may be found here.

Martin Stanley

Editor Understanding Regulation

How to Earn Loads of Money in Whitehall – Senior Salaries Analysed

I have annotated the government’s fascinating list of 442 central government public servants paid more than £150k a year. Click here to download the spreadsheet. 

First, I have re-ordered the list so that the highest paid appear at the top of the spreadsheet.

I have then highlighted in BOLD those civil servants who work in Whitehall departments reporting directly to Ministers.  I have thus excluded those (mainly non-civil servants) who work in:

  • semi-commercial organisations such as Network Rail
  • the NHS
  • the Armed Forces
  • Parliamentary Counsel’s Office
  • ‘Next Steps Agencies’, and
  • various regulators.

Within this EMBOLDENED category, I have then highlighted in red those who seem to me to have traditional civil service roles as distinct from having been recruited (probably at a senior level) as commercial, procurement and other specialists.  There are only 26 of these.

Enjoy!

Martin Stanley

Editor, the UK Civil Service and Understanding Regulation

Notes

  1. The original spreadsheet lists those jobs whose salaries are set by Ministers (or by the Treasury on behalf of Ministers).  It thus excludes much of the public sector, such as local authorities, the police, the BBC etc. Click here if you want to read a definition of the civil service and a description of the various sorts of public body in the UK.
  2. It is interesting that, apart from the Permanent Secretaries, the highest paid central government public servants all have an engineering or commercial background, or are senior lawyers or medics.  And those engineering /commercial specialists who work in Whitehall will all, I suspect, have been direct entrants at a senior level and will not have risen through the ranks.
  3. Click here to see the original spreadsheet, which includes more detail than my version.
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