Foreword by Christopher Haskins, Chairman Better Regulation Task Force.

Governments affect their citizens in three ways:

1. they provide a range of services for them;
2. they raise taxes to pay for the services;
3. and they regulate them.

Government regulations have an impact on us all, and our perceptions of government are influenced by how we view its regulatory activities. Generally, businesses complain because they consider regulations impose excessive costs on them. Consumers, workers, environmentalists and the general public on the other hand, tend to feel that they are inadequately protected through regulation. The job of government is to get the balance right between providing citizens with proper protection and ensuring that the impact on those being regulated is not such as to be counter productive. When the Better Regulation Task Force was established in September 1997 we produced a pamphlet suggesting some principles that could be used as a template for judging and improving the quality of regulation. We thought it useful to revise this document in the light of three years’ experience. Our five principles of good regulation have been accepted by policy makers. We have used them successfully to measure the quality of regulation we have scrutinised during this period. They have been incorporated into the Government’s Guide to Regulatory Impact Assessment, and both government departments and outside organisations have found them useful when assessing the likely effectiveness of new and existing regulations.

1. Introduction

Regulation may be widely defined as any government measure or intervention that seeks to change the behaviour of individuals or groups. Government regulation can both promote the rights and liberties of citizens, and impose restrictions on their behaviour. Most citizens recognise the need for governments to intervene, address market failures, or to deliver social equity. Politicians differ about the appropriate level of intervention needed to achieve such objectives. Whilst recognising that there are differences about the levels of intervention, all governments should seek to ensure that regulations are necessary, fair, effective, affordable and enjoy a broad degree of public confidence. To achieve all this, good regulations and their enforcement should meet the following five principles:

1. Transparency
2. Accountability
3. Proportionality
4. Consistency
5. Targeting

These principles should be applied to state regulation, both national and European, as well as alternatives to state regulation such as self-regulation. The regulatory process in the European Parliament and Commission should apply similar principles and tests to their proposals as are suggested in this pamphlet.

2. Policy Objectives which can be achieved through State Regulation

We have identified seven main policy objectives which can justify regulation.

1. To protect and enhance the rights and liberty of citizens Equal opportunities and anti-discrimination rules, dataprotection, freedom of information, human rights legislation.
2. To promote a safe and peaceful society Public order legislation, criminal law.
3. To collect taxes and ensure that they are spent in accordance with policy objectives Income tax and other tax legislation, administration of public services - including provision of health care, education and social security payments.
4. To safeguard health and safety or protect citizens from ‘harming’ themselves Drink-drive legislation, the Children Act 1989, health and safety at work legislation, food safety legislation, age restrictions on film/video access and the sale of cigarettes, restrictions on the sale of drink and drugs, and compulsory use of seat belts.
5. To protect consumers, employees and vulnerable groups from abuse Employment protection, consumer protection, company law, labelling and product-testing requirements.
6. To promote the efficient working of markets Competition law, telecommunications regulation, utility regulation, company law, patent protection.
7. To protect the environment and promote sustainable development Conservation legislation, species protection, pollution control and land use planning regulation.

3. Achieving Policy Objectives without recourse to State Regulation

However, many of the same objectives can be achieved with little or no state intervention. We want alternatives to be considered before regulations are introduced, because alternatives may be more flexible, cheaper and more effective. Alternatives to state regulation include:

Self-regulation by private groups and institutions: Self-regulation spans an enormous range of regimes, from schemes without government involvement (such as farm assurance schemes or industry codes of practice), to those- like the General Medical Council - that are created by government, but stop short of direct government regulation enforced through the courts. They can be adopted and enforced by private groups and institutions including trade bodies, professional bodies and independent institutions. Examples include the Association of British Travel Agents (ABTA), the Law Society, the General Dental Council, the Stock Exchange, the Football Association and the Press Complaints Commission.

The advantages of self-regulatory schemes are that they make use of the expertise of those being regulated and their desire to maintain their reputation, as well as being cheaper to run, more flexible and easier to update. The danger is that self-interest may take precedence over the public interest, and that schemes may create barriers against those wanting to enter a market. As with state intervention, self-regulation needs to enjoy the confidence of the public if it is to be effective.

Advice, information and education: Government can give advice, rather than regulate, as it does in areas such as the promotion of a healthy diet, the Green Cross Code and warnings about smoking.

Partnership between public, private and voluntary sectors: In some circumstances, especially when protecting vulnerable people, government may chose to use partners from the voluntary sector or elsewhere as a more effective way of delivering targeted services.

Financial incentives: Incentives can be used to promote a range of practices, for example, discounts for filing tax returns over the internet, lower road tax for small cars, tax exemptions for charities, lower taxes for small companies and high levels of duty on cigarettes.

4. Tests of Good Regulation, and Pitfalls to be Avoided

These tests build upon our principles of transparency, accountability, proportionality, consistency and targeting. They should be applied to the alternatives mentioned above as well as to direct, state regulation.

Regulations must:

1. have broad public support. Broad public support for a policy or regulation is a good indicator that the public sees it as necessary. Where such support is absent, compliance is likely to be low. There was widespread hostility to the poll tax and it had to be abandoned; The ‘beef on the bone’ ban was considered to be excessive, with people preferring to judge the risks for themselves. However, the public’s view can change over time resulting in better compliance or in a gradual disregard for previously accepted regulations. Drink-driving laws, which were ineffective for many years, are now working well; Sunday shopping restrictions, on the other hand, which had been well respected for over a century, suddenly lost credibility, and were substantially reduced. Some policies, such as the ban on the use of cannabis, continue to have widespread support even though they are largely ineffective.
2. be enforceable. To be effective, regulation not only needs public support, it must also be practical to enforce. Rules aimed at banning under-age sales of tobacco, drink and lottery tickets are generally ineffective in the absence of identity cards; The police and other enforcers must use their commonsense when seeking to enforce restrictions such as curfews on problem young people.
3. be easy to understand. People know that they must pay a TV licence fee or are entitled to a minimum wage because the legislation is straightforward. But the complexity of some regulations can undermine their effectiveness. Many people do not claim benefits to which they are entitled; The total package of employment legislation is complex and in aspects, such as the Working Time Directive, burdensome to employers.
4. be balanced and avoid impetuous knee-jerk reaction. Ministers can come under pressure to regulate immediately in response to high profile public concerns. The Adventure Activities Licensing Scheme, introduced in response to the Lyme Bay canoeing tragedy, is now being amended to reduce the administrative burden it imposed.
5. avoid unintended consequences In regulating in one area, regulators may unintentionally create problems elsewhere. High animal welfare standards in the UK put British farmers at a competitive disadvantage compared to their counterparts elsewhere; Expensive new rail safety systems might increase the cost of train travel, encouraging people to use their cars more - at greater risk to personal safety; Excessive red tape often places small businesses and voluntary sector groups at a disadvantage against largeorganisations; A minimum wage set at too high a level could destroy jobs and defeat its purpose.
6. balance risk, cost and practical benefits. It is neither practical nor desirable for regulators to seek to remove all risk. Trade-offs between the risk, cost, and benefit of regulation need to be assessed, and citizens allowed, within reason, to make their own judgements about the risks in question. Vulnerable people should be protected whilst allowing others to decide for themselves how to deal with a problem; Enforcers can allow a business under scrutiny formal practice to continue to trade if they are satisfied that the benefits outweigh any potential risk to the public; People can decide for themselves if they wish to buy unpasteurised milk from farms in England and Wales (but not in Scotland); Rehabilitating criminals into society carries some risk that they will re-offend, but this must be assessed against the potential benefits.
7. seek to reconcile contradictory policy objectives. Clear assessments of the likely impact of regulations are essential for identifying and reconciling contradictory objectives. Additional costs of food safety regulation might make food too expensive for people on low incomes; Animal welfare must be assessed against human welfare when testing medicines; Environmental protection must be balanced against economic need when taking planning decisions; ‘Moral’ regulation must be assessed against personal liberty when regulating hunting or Sunday trading; Personal pleasure must be measured against public nuisance when licensing drinking and gaming.
8. identify accountability. When things go wrong there must be clear accountability without resorting to unfair retribution. Failures of accountability arose between the Home Office and the Prison Service over security problems; There is a risk of blurred accountability for safety between Railtrack, the train operators and the Health and Safety Commission; Relatively junior social workers are often made scapegoats by the media when mistakes are made, even though they are not necessarily the ones at fault.

5. Checklist - Measuring regulations against our five Principles of Good Regulation

1. Transparency: The case for a regulation should be clearly made and the purpose clearly communicated. Proper consultation should take place before creating and implementing a regulation. Penalties for non-compliance should be clearly spelt out. Regulations should be simple and clear, and come with guidance in plain English. Those being regulated should be made aware of their obligations and given support and time to comply by the enforcing authorities with examples of methods of compliance.
2. Accountability: Regulators and enforcers should be clearly accountable to government and citizens and to parliaments and assemblies. Those being regulated must understand their responsibility for their actions. There should be a well-publicised, accessible, fair and efficient appeals procedure. Enforcers should be given the powers to be effective but fair.
3. Proportionality. Any enforcement action (i.e. inspection, sanctions etc.) should be in proportion to the risk, with penalties proportionate to the harm done. Compliance should be affordable to those regulated-regulators should ‘think small first’. Alternatives to state regulation should be fully considered, as they might be more effective and cheaper to apply.
4. Consistency. New regulations should be consistent with existing regulations. Departmental regulators should be consistent with each other. Enforcement agencies should apply regulations consistently across the country. Regulations should be compatible with international trade rules, EC law and competition policy. EC Directives, once agreed, should be consistently applied across the Union and transposed without ‘gold-plating’.
5. Targeting. Regulations should be aimed at the problem and avoid a scattergun approach. Where possible, a goals-based approach should be used, with enforcers and those being regulated given flexibility in deciding how best to achieve clear, unambiguous targets. Regulations should be reviewed from time to time to test whether they are still necessary and effective. If not, they should be modified or eliminated. Where regulation disproportionately affects small businesses, the state should consider support options for those who are disadvantaged, including direct compensation.

The Chancellor of the Duchy of Lancaster appointed the Better Regulation Task Force in September 1997. It is an independent body that advises the Government on action which improves the effectiveness of government regulation, taking particular account of the needs of small businesses and ordinary people. This is done by ensuring that regulation is necessary, fair, affordable and simple to understand and administer. The current Task Force members are from a variety of backgrounds but all have experience of regulatory issues. Members are drawn from large and small businesses, citizen and consumer groups, the trade union movement, the voluntary sector and those responsible for enforcing regulations. The Chair is Christopher Haskins. A full list of the members, along with a Register of Members Interests is on our website (http://www.cabinetoffice.gov.uk/regulation/index/task.htm) and available on request.

Better Regulation Task Force Room 1.235 Great Smith Street London SW1P 3BQTel: 020 7276 2142

Email: taskforce@cabinet-office.x.gsi.gov.uk

Website: www.cabinet-office.gov.uk/regulation/task.htm

© Crown Copyright 2000Produced by the Cabinet Office Publications & Publicity Team. October 2000

http://www.cabinet-office.gov.uk/regulation/taskforce/2000/PrinciplesLeaflet.pdf