It is crunch time for regulators. They are coming under growing scrutiny and are increasingly being asked to justify their approach to regulation and ways of working. Many have been subject to formal review, some, such as Postcomm and Ofcom have merged, others have seen changes to their role and remit or anticipate guidance shortly.
A recently published paper by the Better Regulation Delivery Office (BRDO) aims to clarify and inform policy by highlighting three interlinked ways that regulatory delivery can impact on growth: by reducing costs, improving confidence and control and realising wider economic benefits<1>. In the meantime, rapid changes in science and technology are altering both the tools available to regulators, and the very industries they are regulating.
The Coalition Government's Red Tape Challenge and proposals announced in the Queen's Speech advocate less regulation<2>. Although it is yet to be decided how far and in what area the axe will fall, media coverage suggests that anything from employment law to public health are likely areas. Additionally, the government's review of the regulatory system challenges all regulators to ensure their regimes deliver efficiency, yet at the same time increase public protection. Evidence put forward below, based on qualitative research conducted by Ipsos MORI over the past year, illustrates some of the key issues facing regulators as well as some of the drivers of government plans for reform.
The need for a review of regulatory regimes
Recent qualitative research with frontline regulation staff indicates that maintaining current levels of public protection under current regulatory regimes may prove difficult. In particular, local budget cuts have led to down-sizing, making it harder for some regulators and inspectorates to achieve their planned programme of inspections. Indeed, fewer resources, both financial and staff, can also limit some of the additional work undertaken by regulators which is perceived by inspectors to be vital in achieving and sustaining standards. Similar to our findings for Zurich Municipal last year<3>, while there is general recognition that savings need to be made, there is some concern that the easiest areas to cut in the short term are not necessarily those that will lead to the best or most cost effective long term outcomes.
In some regulatory areas, re-structuring has seen the dilution of specialism and expertise and a growing concern among some regulators that, as a result, this could lead to diminished regulatory oversight. Additionally, qualitative research with inspectors has indicated that some are risk-averse out of fear of being held accountable if they 'miss something' and that, consequently, they spend far longer in organisations than is necessary (i.e. disproportionate to risk). This time would, arguably, be better spent targeting non-compliant organisations in order to increase consumer protection.
However, in other areas budget cuts have encouraged innovation and the development of risk-based approaches which have the potential to improve efficiency. Some regulators have already taken steps to refine their regulatory regimes to make delivery 'smarter' and better targeted. Providing a more flexible toolkit, thus allowing frontline inspectors greater freedoms, is intended to reduce the regulatory burden on compliant organisations. Yet there is some qualitative evidence to suggest that even where it was appropriate only a few inspectors selected a less burdensome intervention. It is also evident that more action (i.e. reassurance from national regulators and inspectorates) is needed to shift inspectors' mindsets from risk averse to risk proportionate, such as the assurances given in a recent speech by Secretary of State for Education, Michael Gove where he reflected that "far more important than any allocation of responsibility is a commitment to learn from the past so we can all do better in the future"<4>.
What could a different regulatory landscape look like?
Depending on whom you speak with, views surrounding the variability of regulation are mixed. In general, in recent qualitative research inspected organisations were frustrated that inconsistent decision-making was stifling growth, and even compliant organisations complained about heavy-handedness. Given the challenging economic climate at the time of the research, it is perhaps unsurprising that we observed strong views about the regulatory burden.
On the other hand, frontline inspectors felt that variation in the delivery of inspections can make it easier to develop localised solutions. They argued that being responsive to conditions on the ground enabled them to develop innovative regulatory approaches with successful outcomes for both regulator and regulated. Furthermore, they believed a 'top-down' and 'one-size fits all' regulatory regime could potentially limit innovation. Perhaps the answer then is to consider alternative regulatory models such as self-regulation: in essence rewarding organisations able to demonstrate sustained compliance with a reduced regulatory burden. As an example, the Coalition Government's expansion of the Earned Recognition scheme has the potential to help free up resources giving regulators extra time to focus on tackling the poor practices of non-compliant organisations and bringing them into line.
Our research has identified mixed views to changes in regulation. Deliberative workshops with the general public suggest they are open to regulators focussing on poor practise, and there is widespread demand for regulators to 'toughen up' and take strong action to pull organisations into line. But equally important is to give the public evidence that this has happened, and that enforcement action such as fines do not lead to higher costs being passed straight back to the consumer. In contrast, some are more comfortable with taking more personal responsibility and call for regulators to provide consumers with more information so that they can take action to protect themselves. Currently views of regulation are coloured by recent perceived failures, in the media, health, and banking and financial services. Lord Leveson's inquiry will be important with regard to public trust in self-regulation and it will be interesting to see to what extent this impacts, if at all, on the general public's trust in self-regulation across other industries.
The importance of dialogue
There is a genuine paradox at the heart of the debate about possible changes to regulation, and that is whether the general public is willing to accept a likely consequence of less (or more proportionate) regulation: a higher level of risk.
On one hand, our deliberative research has highlighted a lack of understanding among the general public about what regulators do beyond 'stop bad practices'. This low level of awareness combined with media reports of some aspects of regulation as 'health and safety gone mad' may, perhaps, go some way to warm public sentiment in favour of cutting regulation.
On the other, as indicated above, workshops with the general public tell us they want regulators to be seen to be taking more enforcement action. Also, while the press is keen to highlight over-regulation, it is also very quick to identify failures, particularly those that lead to actual harm. These conflicting expectations will make it difficult to have a conversation about introducing more risk-based approaches to regulation, especially in politically sensitive areas such as children's services.
But start a dialogue we must. Although there is some conservatism inherent in the system, changes to the world being regulated mean that standing still is not going to be an option. It is important to make the case for change clearly and persuasively. There are strong arguments for moving to a more risk-based and proportionate regime, but equally it will be important to debate what is an 'acceptable' level of risk. Only by having a frank and candid conversation in relation to regulatory change - beyond 'regulation is bad' - is the public likely to feel confident that reform is necessary to increase public safety without it being viewed as a cost-cutting exercise. ▣