Understanding Regulation

Too Much, Too Little, Too Hard to Understand?

Regulators are now a vital and powerful part of the public sector. But there have been some dreadful regulatory failures, and the burden of regulation is getting heavier, not only for business but also for the police, teachers etc. - and for taxpayers who have to foot the bill. Are we over-protecting our children? And is 'the regulatory state' now too powerful?

This website aims to provide information about, and to analyse, these issues. It focuses on regulation in the UK and is written for the general public, journalists, civil servants, students and other non-experts. It therefore seeks to avoid technicality, whilst offering broadly accurate information and a balanced range of views.

By way of background, Martin Sandbu helpfully identifies three key reasons why regulation wight be needed:- information, externalities and co-ordination.

Whether in our personal lives - driving for instance - or when spending money, information is vital. On the road, street markings and costly requirements to keep the surface at a certain standard help us predict the driving conditions and the behaviour of other drivers. Other regulations such as labelling requirements and minimum standards help us know what we are paying for. (The Mens Ponderaria on the left underpinned Pompeii's weights and measures regulations.) And information is increasingly important in many modern economic sectors - one reason why regulation is growing and why efficient economies will continue to regulate much commercial activity.

The need to limit many externalities is also pretty obvious. Reckless driving can harm others. Similarly, there are prohibitions on how businesses can behave, including environmental and employment legislation.

Finally, co-ordination. Why require cars to drive on a specific side of the street? Because the benefits to all of co-ordinating on right or left vastly outweighs any difference in the merit of which particular rule is chosen. This is particularly relevant to Single [European] Market regulations. The FT's Philip Stephens once regaled his readers with the tale of a British complaint about a European noise limit on lawnmowers. The supposed Brussels over-reach had, it turned out, been instigated and steered through the legislative process by the British government at the behest of UK manufacturers, who were finding their lawnmowers locked out of the German market because of Berlin’s national noise rules. The new, Europe-wide, decibel ceiling put the British producers back in the game.

You might next like to read this introduction to all the various forms of regulation and regulator.

For more detail, the main sections of this website are described below, and can be accessed via the links on the right, and there is a detailed index here.

Key Issues

This section looks at the key issues that might be considered during regulators' Effectiveness Reviews, including regulators' accountability and independence, the regulation of large organisations, recent failures of regulation and what might be done to make sure they don't happen again.

Getting the Balance Right

The regulatory burden, deregulation and regulatory budgets

Competition Policy

Price-fixing, abuse of dominant position, merger control, market investigations.

Utility and Network Regulation

Regulating monopolies, price controls etc.

Regulating Specific Activities and Industries

Airports, communications, consumer protection, education, energy prices, financial services, health, postal services, railways, supermarkets, water, etc.

Regulating Risks to Health and Safety

Science and risk, radiation and radioactivity, bse/vCJD and depleted uranium

An Introduction to UK Competition Policy (especially for economics students) is here.