Regulators of the future – is it time for more collaboration?

January 07, 2013


By David Lancefield, Economics and Policy Partner

In the wake of the Autumn Statement, regulators were hardly the centre of attention. But delve a little deeper and you’ll see some important signals the Government has sent to regulators, and to those investing in the regulated sectors.

Effective regulation is an important component of the Government’s Growth plans, particularly when it comes to supporting the £33bn worth of annual investment in infrastructure. But the Government believes that there has been scope creep by regulators moving into areas that are not required by legislation, insufficient consideration of the impact of regulation on companies and funding arrangements that haven’t stimulated efficiency or deregulation (where it makes sense to do so).  As a result, the Government announced a number of measures for economic (and non-economic) regulators to consider, see the full Autumn Statement (page 42, para 1.126).

Perhaps regulators should consider the Autumn Statement more than a nudge, following on from a clear statement in this BIS Paper on the Principles of Economic Regulation which stated that “The Government strongly encourages the Joint Regulators’ Group to adopt a more systematic approach to issues of cross-sector coherence and best practice”.

Communicated carefully, greater collaboration could send a positive signal to Government and investors that regulators are doing all they can to be innovative, efficient and effective – at a time when every part of the public sector is under pressure to up their game (see our Under Pressure book for more on this).  There are strong personal networks that run through regulators, as more and more people move jobs, providing a level of trust that’s critical in experimenting with new forms of collaboration.  And, finally, new developments in the regulatory landscape may be a catalyst for fresh thinking and momentum. We’ll see the development of the Office for Nuclear Regulation, the Office for Unconventional Gas, a new regime for airport regulation, and ongoing reform of the NHS, water and electricity sectors, to name but a few over the course of 2013.

There are precedents. At one end of the spectrum, there have been mergers of regulators - for example, Ofcom (see this NAO report on lessons for public sector mergers of regulators) and Ofgem. And there are joint regulatory processes (often facilitated through Memoranda of Understanding), working groups and committees (sharing insights on technical issues or approaches) in place.

But has it been enough? I’m not necessarily arguing for further mergers between regulators. Agreeing areas of collaboration won’t be easy.  And making it happen will be harder still.   Clear, focused roles and accountabilities are important, particularly where the scope of a regulator’s responsibilities appears broad (as discussed in our Under Pressure book).  Some regulators may struggle to find time to focus on such a ‘new’ activity at a time when they’re embarking on major programmes of reform, within an organisation that is stretched, and, in some cases, smaller than before. And they’re probably feeling under pressure to deliver more results, more quickly – in the form of more demonstrable outcomes for consumers and citizens – from a Government that is more engaged, and involved, in regulation than before.

But this is an opportunity for the leaders of regulators, faced with rising expectations from their stakeholders, to look through a new lens.  They can focus on doing things right, on their own, or they can focus on doing the right things (to use Peter Drucker’s words) by experimenting with new forms of collaboration.  The latter feels like a more inspiring and engaging form of leadership. It might unleash innovative solutions to common issues they face, and it might even engage the creativity of their people in new ways. In my view it’s certainly worth a try.

Contact:David Lancefield  |  +44 (0)20 7213 2263