That report had recommended a sessional (i.e. permanent) Joint Committee with representatives from both the House of Lords and the House of Commons. However, due to a lack of resources within Parliament the decision was taken to establish an ad hoc (i.e. exists for one parliamentary session) select committee with Lords members only. Although the Committee was given a very broad remit to "consider the regulatory process", they decided that given the time available, they would focus on regulators rather than regulation and in particular on the economic regulatory work of the regulators. For the purposes of the Report, the Committee looked at Ofwat (water), Ofgem (electricity and gas), the ORR (rail), the CAA (aviation), the FSA (financial services), Postcomm (postal service), Ofcom (communications), the Pensions Regulator, the OFT (Office of Fair Trading) and the Competition Commission.
Within the context of the report, the Committee considered the statutory remit of the regulators, their working methods and relationships and value for money as well as the promotion of competition and de-regulation and the need for a statutory duty to facilitate the competitiveness of UK firms.
The Committee decided that regulators' statutory remits should set out clear duties and that statutes should give guidance on the relative priorities of those duties. They were also firmly of the opinion that the Government should be careful not to rely on unelected regulators to take political policy decisions.
While the current legislation may not be ideal, the Committee considers that, in general, it appeared to be working well. The Report does not require any immediate changes but does suggest that it may be appropriate to gradually standardise the remit of the regulators so that they can be required by statute to follow best practice.
In addition, the Committee recommends that as legislative opportunities arise, statutory requirements be imposed on the regulators to promote competition and remove the regulatory burden from firms wherever possible.
Value for money
The Committee noted that while operating costs have increased across the board, this can largely be attributed to extensions in the various remits. Nevertheless, it is recommended that the operating costs of all regulators be kept under scrutiny by a sessional select committee and by the National Audit Office.
In addition, the Committee are looking to regulators for a commitment that they will evaluate their own work and follow the current best practice, as demonstrated by the OFT and the Competition Commission, by using methodologies to monitor the extent to which they provide value for money.
There is also a suggestion that regulators should be encouraged to adopt the principle of risk-based regulation, particularly in respect of the allocation of resources, with the aim of improving efficiency.
Agreeing with the recommendations of the National Audit Office's Review of Economic Regulators' Impact Assessments, the Committee found that the main strength of Impact Assessments (IAs) lay in the associated consultation. The Committee's report encourages regulators to strengthen their cost/benefit analyses and to use robust quantitative estimates where possible. However, it warns against using IAs to justify policy decisions stating that they should instead be used as a policy-making tool with IAs then being supplemented with post-implementation evaluation. Working relationships The development of relationships between the regulators is welcomed, but the Committee is firmly of the opinion that action needs to be taken to formalise the Joint Regulators Group in order to facilitate more structured co-operation.
In addition, the report contains recommendations relating to the need for improved communications between competition authorities and sectoral regulators over the timing and content of investigations. It further suggests that utility regulators should work towards ensuring that cases most likely to establish useful precedents are brought to the Competition Commission.
An interesting development is the suggestion that complainants should be given the opportunity to request that the OFT rather than the sectoral regulator take the lead in investigating a complaint. This is designed to deal with the situation where a regulator is so involved in regulating the industry that it is perceived to have insufficient regard to the importance of competition.
Promotion of competition and de-regulation
Ultimately the Report accepts that in most sectors the regulators play an important role in developing and promoting competition. However, more steps are required to move towards the possibility of eventual de-regulation.
The full Report can be viewed online at http://www.publications.parliamentuk/pa/ld/ldrgltrs.htm