Regulation

Have Regulators become too Large?

Super-Regulators

The Gordon Brown/Treasury-controlled 2005 Hampton Review recommended the consolidation of 31 national regulators into seven thematic bodies. These were in due course to include the Equality and Human Rights Commission and the Care Quality Commission. But this was in practice just one further step along the Big is Beautiful road which had begun with the creation of bodies such as the Financial Services Authority and Ofcom. It was nevertheless probably inevitable that some or all of the "super-regulators" would in due course be accused of being one or more of over-large, over-bearing, out of touch, over-expensive and employing front-line staff who are unfamiliar with the full breadth of the organisation's regulatory remit. The main difficulty is that there is no way that the Boards, Chairs or Chief Executives of these large organisations (most of whom are excellent individuals) can sensibly lead such complex and diverse institutions where there are negligible economies of scale and arguably severe diseconomies.

The Chairs and Chief Executives of super-regulators do not, in particular, have sufficient time to offer the strong, politically aware but risk-averse leadership that is needed within regulatory institutions - nor can they sensible monitor the detailed implementation of their strategies even though a principal characteristic of regulation is that 'the devil is in the detail'. Ofgem (itself the result of a merger of the previously independent gas and electricity regulators) is still a relative minnow (at c.300 staff) compared with some other regulators but it alone published 17 documents and had 8 live consultations in one week in late 2009 just before this webpage was first published. There was no way that their Board could have been taking a serious interest in this activity. Imagine, then, the difficulty of managing the Financial Services Authority (2600 staff), Ofsted (2300 staff) or even the Commission for Human Rights and Equality (EHRC - 500 staff). It was therefore perhaps no surprise that:

• The Credit Crunch highlighted the ineffectiveness of the Financial Services Authority which had surely got just too big and had been asked to handle just too many issues, so that its reactions had become too slow and bureaucratic and risk-averse.

• Ofsted came under severe scrutiny in the light of its role in monitoring the performance of Haringey's Children's services in the run up to the death of 'Baby P". As The Guardian reported in December 2008: " ... questions are also being asked - by the public and social workers put on the defensive - about Ofsted's part in the scandal. Next week [Ofsted's chief inspector of children's services] will appear before a Commons committee to explain how inspectors judged Haringey to be improving two years ago, under exactly the same process that reported such a devastating a judgment this week. Last year a largely data-based review of the entire council judged it "good". In her first interview since the verdict on Baby P was returned, [the Chief Inspector] admits for the first time to failings in Ofsted's oversight of Haringey council, acknowledging that officials in the local authority where Baby P died were able to "hide behind" data last year to earn themselves a good rating from inspectors just weeks after his death.

• Ofsted then hit the headlines once again November 2009 when The Guardian reported that the super-regulator "is facing a crisis in public confidence as it comes under a series of attacks on its authority this week, with the watchdog accused of being "flawed, wasteful and failing" ... Its new inspection regime is accused of forcing social work departments to focus on passing inspections instead of looking after children, giving good schools mediocre ratings on routine technical matters Ð such as fences not being high enough Ð and more claims that sub-contracted inspectors are not fit for the job. Pressure further intensifies on the watchdog as a former chief inspector of Ofsted, Sir Mike Tomlinson, today suggests it is struggling after a major expansion two years ago to include responsibility for inspecting children's services as well as schools and childcare."

• The early years of the EHRC were dogged with controversy and several of its Commissioners resigned.

Oversight Regulators

A perhaps more sensible development has been the creation of two new regulators to oversee the activities of certain (to some extent self-regulating) professional bodies. The first of these was the Commission for Healthcare Regulatory Excellence (CHRE) which was set up in 2003 to keep an eye on healthcare regulators such as the General Medical Council and the Nursing and Midwifery Council. This was followed in 2008 by the creation of the Legal Services Board (modelled on the CHRE) to oversee the legal professions. Both of these bodies are themselves quite small, thus allowing them to consider a wide range of regulatory and consumer issues without suffering the disadvantages of super-regulation (see above) or the demolition of the principle of self-regulation.

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