New UK report recommends ‘rules about rules’ for regulation

In a new report, the Center for Policy Studies in the UK surveys that nation’s regulatory landscape – and doesn’t like what it sees. The report looks at the overall cost of regulation on businesses in the country, reviews what is known about those costs, and makes some recommendations for improvement. It’s an important document that needs to be read by both current Ministers and likely future Ministers alike.

What it says about the state of current regulatory impact assessments is damning. The authors found multiple instances of careless mistakes (including net costs being reported as net benefits) and slapdash accounting that suggests much of the cost assessment is guesswork. As a result, the authors conclude that the reported figures for the cost of regulation are likely considerable underestimates.

The report also criticizes the framework for how regulatory policy is conducted, with few clear “rules about rules” and, where they are in place, how they are shunted aside when inconvenient. The case study of an extremely costly rule mandating second staircases in even low height multi-occupancy buildings is a good example – the rule will likely kill off a traditional form of such building, with little to no justification.

The report recommends:

• Creating a new Regulatory Audit Office “to provide independent scrutiny of policy proposals – rather than departments and regulators being allowed to mark their own homework.” This echoes the original role of the Office of Information and Regulatory Affairs in the US, a role which is sadly being done away with under the current administration’s policy.
• Centralization of regulatory reform and monitoring under a senior government minister, “with the same oversight of regulation that the Chancellor has of fiscal policy.” This would give deregulation a voice (presumably) in the Cabinet where there currently is none.
• Establishment of a new form of regulatory budget with a narrower set of exemptions.
• A “comprehensive audit of the whole body of UK regulation” that would bring all regulation (presumably including guidance) into a centralized format that would also be subject to machine learning and other examination along the lines of the RegData project of our colleagues at the Mercatus Center.
• Elevating any decision to regulate to a central part of the policymaking process, not an afterthought.
• Five- and 10-year post-implementation reviews against agreed standards, with automatic sunsetting in many cases.

These are excellent recommendations. One thing that I would also recommend is a proper framework for oversight of and appeal against the decisions of unelected regulators. Lack of oversight has become an increasing problem with UK regulators that affects the rest of the world, as I have written about frequently.

Read the full report here.