Countries approached to Reform: Cases From Different Reformers – United Kingdom Donald Macrae, WBG Consultant Inspection Reform Conference, Amman, 3 June 2014 Day 2, Afternoon

♦ Tony Blair and Gordon Brown were united on one issue – regulatory reform. But they took different approaches: –Blair went for external challenge on rule-making, with the Better Regulation Commission –Brown went for implementation of regulation ♦ In 2004, Brown commissioned Sir Philip Hampton, an industrialist, to review Inspections and Enforcement. Blair, Brown and Hampton 2 The Hampton Review of 2005 was a “game-changer” for regulatory reform in the UK – and in many other countries!

♦ “Hampton” convinced the UK government that the delivery of regulation was as important as the creation of regulation. –(Many people were fully aware of that for a long time before but Hampton put their work on the political map.) ♦ So the government created a body to specialise in “regulatory delivery”, now called the Better Regulation Delivery Office (BRDO) which is a very high level unit in the Business Ministry (BIS). Fast Forward to BRDO 3 BRDO is the only internal government body in the world focusing on “making regulation happen” - a major UK contribution to reform.

IFC / USAID Inspection Reform ♦ In parallel to the UK (and Netherlands, who also followed the Hampton Review with their own programme), the International Finance Corporation (IFC) and USAID were promoting reforms of regulatory delivery in developing and transition economies. ♦ Both were based on developing a regulatory environment that would allow businesses to develop.

Coming Together – London 2012 IFC and BRDO jointly hosted a conference in London in November 2012 to bring together reforms in “regulatory delivery” – with 180 delegates from 37 countries, over three days of presentations, workshops and study tours. (Another is planned for September 2014)

UK Challenges – Local Government (1) There are 433 local government areas in the UK. Each has its own “regulatory services”. Each local authority has to determine its own enforcement policy, including inspection frequency. The UK also has a few national regulators, who cover the same areas as local inspection services but at a higher level. So, managing “vertical coordination” is a major challenge for the UK.

UK Challenges – Local Government (2) 7 Although there are many local regulatory services, most inspectors are members of two professional bodies – TSI and CIEH. They maintain professional standards and coherence of approach to inspections. BRDO work closely with them and the three organisations provide a modern professional context for inspections. This includes a common competency framework for inspectors, with core skills.

UK Challenges – Local Government (3) 8 “Primary Authority” is a major UK innovation and success for regulatory delivery across both vertical and horizontal boundaries. For example, Tesco has 2,500 stores across 433 local regulatory services but it has a legal agreement with one, Hertfordshire, which is its Primary Authority. It agrees a detailed compliance plan and implements that in every store. All other regulatory services must work to that plan when they inspect. BRDO has to approve a PA agreement to give it legal force.

Primary Authority – (2) There are now over 1500 businesses in PA agreements with 120 Local Authorities. The main advantage found by business was getting assured advice and therefore being able to develop compliance plans that they could rely on. This “personalisation” of regulation to the compliance issues of a business is a major innovation. Originally, a business needed to be regulated by two Local Authorities to apply for PA but the scheme has now been extended to allow business associations to apply on behalf of their members. So SMEs can now get assured advice and their associations can develop compliance plans.

The Regulator’s Code The UK has no special Law on Inspections. The Hampton “Principles” have been put into legislation as a Code for regulators but this has needed to be strengthened recently in a new Regulators’ Code. 1.Regulators should carry out their activities in a way that supports those they regulate to comply and grow 2.Regulators should provide simple and straightforward ways to engage with those they regulate and hear their views 3.Regulators should base their regulatory activities on risk 4.Regulators should share information about compliance and risk 5.Regulators should ensure clear information, guidance and advice is available to help those they regulate meet their responsibilities to comply 6.Regulators should ensure that their approach to their regulatory activities is transparent

Balancing safety and commerce The Hampton Review promoted the need to regulate in a way that did not unnecessarily damage business interests but this has always been a tension in UK enforcement. BRDO for many years had as its motto “Prosperity and Protection” and always argued that the two are compatible. The UK is now debating a “Growth Duty” on regulators to force them to take into account the economic impact on the business and on the sector of any of their decisions.

UK National Regulators The Hampton Review started a programme of merging national regulators down to a few major themes: Food Standards Agency Environment Agency Health and Safety Executive Financial Conduct Authority But there are still 69 national regulators covered by the Regulators’ Code, although many are small and specialised.

Coordination of Regulators The Regulatory Excellence Forum is a coordination group for UK regulatory bodies, including policy Ministries and the major national regulators, plus the professional bodies for inspectors. It is chaired and supported by BRDO and meets four times a year. It looks at coordination issues at more of an abstract than operational level. It does not, for example, co-ordinate annual inspection plans across inspectorates. Instead, it debates issues such as extension of the Primary Authority scheme. A further coordination initiative of BRDO has just been launched, on data-sharing across regulators.

Engaging with Business Engaging with business has always been important in UK reforms – but always difficult. The Red Tape Challenge has been “crowdsourcing” regulatory obstacles to businesses, over two years, with 30,000 responses. Better Business for All is BRDO’s latest campaign to connect local businesses, local and national regulators and Local Enterprise Partnerships. But BRDO has also built a Business Reference Panel over many years, with 60 organisations representing 750,000 businesses, meeting four times a year.

Links BRDO – CIEH TSI Food Standards Agency Environment Agency Health & Safety Executive Hampton Review – regulation/improving-regulatory-delivery/assessing-our-regulatory-system Red Tape Challenge Better Business for All - better-business-for-all better-business-for-all Primary Authority Register Regulators’ Code -

Thank you for listening. Donald Macrae