We have consistently called for the UK’s regulatory regime to be improved in the interests of the economy and society. 

Our responses to recent government consultations on the regulatory landscape have demanded better transparency of the UK’s regulators and what they do, and better mechanisms for ensuring that they comply with the principles of good regulation. We have also highlighted the need for more robust oversight of regulators by Parliament. This call for improvements to the regime was reinforced in our recent Manifesto, setting out priorities for the next government.

However, not everyone is convinced of the need for reform – we can only assume they either see it as a hopeless cause or are unaware of the real cost of poor regulation. Nonetheless, a string of recent reports from various influential bodies published already this year continue to add significant weight to the arguments for overhaul.

In February, the House of Lords Industry and Regulators committee produced its report on UK regulators. It highlighted many concerns about the regime, including how regulators may be given multiple, sometimes conflicting, objectives, whether regulators are sufficiently independent of government and adequately resourced, and concluded that new mechanisms are needed to hold them to account. 

It suggests that, to plug the gap in regulatory accountability, “a fresh approach is required. The Government should create a new, independent statutory body – the ‘Office for Regulatory Performance’ – to advise and support Parliament and its committees in holding regulators to account on a much more systematic and thorough basis.”

Future of regulation

In April, meanwhile, the Centre for Policy Studies published its report on the future of regulation. Its analysis puts forward some startling estimates of the cost of regulation although – and rather worryingly – it also concludes that no one really knows. Its critique of regulatory impact assessments suggests that they have, essentially, failed to achieve their objectives:

“Both the data and anecdotal evidence show that regulatory impact assessments are generally produced by junior staff to justify decisions already taken. The figures they contain are often alarmingly woolly, or riddled with errors,” the report warns.

The centre recommends that a new Regulatory Audit Office be created to provide independent scrutiny of policy proposals – rather than departments and regulators being allowed to “mark their own homework”. It also proposes that regulatory reform and monitoring are centralised under a senior government minister and that the government should establish a new regulatory budget.

That same month, the Institute for Government (IfG) published its report on Parliament and regulators. The report not only highlights that there is currently no list of UK regulators, but bravely attempts to provide such a list. Its in-depth analysis concludes that current mechanisms for Parliament to hold regulators to account are inadequate.

“A clear majority of regulators are almost never examined in a meaningful way by parliamentarians on vital issues such as their objectives, performance, and plans to mitigate future risks, with regulators often only called in front of parliament once a problem hits the front pages,” the IfG warns.

Committee reform

IfG suggests that existing parliamentary committees could be reformed to be more effective and that a joint Commons/Lords Regulatory Oversight Support Unit could be established in Parliament to provide expert resource for both Commons and Lords committees. Meanwhile, the National Audit Office could be given an increased role to oversee regulators, it says.

Together, these reports leave little doubt that improvements to the UK’s regulatory regime are not only needed but that this is a matter of great importance for the UK’s economic prospects. Admittedly, some of the suggestions for change would be more straightforward to implement than others. Nonetheless, they illustrate that change is possible and it should not be seen as a hopeless cause.

As we await the outcome of the government’s consultation on smarter regulation, the consensus seems to be that the UK’s regulatory regime is not as smart as we would like it to be. Ideas for improvement are by no means lacking – as the aforementioned reports and ICAEW’s own response to the consultation demonstrate. 

We hope that the government will take up the challenge and propose significant reforms for consideration by all stakeholders. Anything less would be a missed opportunity – for the economy and for society. 

• ICAEW’s Better Regulation hub includes a briefing on the UK’s regulatory regime and articles and other materials on the regulatory issues of concern to ICAEW.