Better Regulation for Regulators

Martin Stanley introduces his new ‘Understanding Regulation’ website

There can nowadays be very few policy makers whose work does not involve regulating something.  Indeed, delegation of policy making to regulators must rank alongside devolution and joining the EU as one of the three major constitutional changes over recent years.  Trading standards regulation can be traced back to the Romans, but the modern ‘regulatory state’ took off when economic regulators were tasked with controlling the newly privatised industries.  The subsequent creation of Ofsted, Ofcom, the Care Quality Commission, NICE and the rest have forced both Ministers and departmental officials to become intelligent customers of their regulatory arms length bodies.

Or has it? Where are the training materials and courses?  I vividly remember being asked to set up the postal regulator and finding little to guide me other than the experience of staff that I managed to poach from previously established bodies.  (Sorry Ofgem!)  We were sensibly sceptical about the motivation of large organisations and their executives, but I was personally unfamiliar with concepts such as principal-agent theory, group-think, cognitive dissonance, or the MacWhirr Syndrome – an understanding of which would certainly have helped us understand the organisations that we were regulating – nor was relevant educational material and training easily available.  And how exactly were price controls put together?

I was later asked to lead the Competition Commission but again found that there was no easily accessible material which could help departmental officials, as well as stakeholders such as journalists and politicians, understand our work. Lawyers and economists understood concepts such as market definition and abuse of dominance very well, but it was very hard for others to understand competition decisions – despite their sometimes enormous impact. Our inquiries included, for instance, those into Sky’s acquisition of shares in ITV, BAA’s ownership of Heathrow, Gatwick & Stansted, the London Stock Exchange, and Supermarkets.

And then came a series of regulatory disasters. Regulators failed to stop the 2008 financial crisis, the Deepwater Horizon disaster in the Gulf of Mexico, and the appalling neglect of patients at a Stafford hospital. How could this be? More importantly, what lessons could be learned and passed on to the next generation who are struggling to react to self-driving vehicles, or the ominous power of the internet giants – seemingly unconstrained in their willingness to broadcast murder, suicide and bomb-making instructions?

My answer was to collect together a wide range of comment, advice and information about effective and well-balanced regulation and deregulation on the ‘Understanding Regulation’ website ( www.regulation.org.uk ).  I hope that its publication will help all those who wish to understand a complex area, as well as those embarking on a regulatory career for the first time.

[This blog was first published in Civil Service World.]

 

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