Deregulation from 2017

The Grenfell Tower Fire

This terrible tower block fire in June 2017 caused many to ask whether building deregulation, and reduced inspection and enforcement, may have led to the initial fire spreading in such a devastating way. A detailed examination of the issues will be found here, updated from time to time as more facts and analysis become available.  See also the Fire Brigade Union's thorough and detailed paper arguing that the tragedy was ultimately caused by political decisions driven by an agenda of cuts, deregulation and privatisation.

Regulation and Disruptive Innovation

Alan Mak MP and others argue that the world stands on the verge of a significant Industrial Revolution, bridging the gap between the physical, biological and digital worlds through new technologies like machine learning, big data, robotics and gene editing. There was an interesting Policy Exchange roundtable in July 2017 which considered how regulation might keep up with disruptive regulation. Follow this link to read a note of the discussion.

Regulatory Policy Committee

The Committee published its review of 2016 impact assessment capability in February 2017 and then its 2016-17 Annual Report in July 2017. Two comments stood out in the second document:

"... departments and regulators overall satisfaction with the RPC process has fallen to the lowest level since the start of the 2015-17 parliament. ... The most common complaints concerned the length of the process and the overall burden the system places on policy teams (especially in relation to small measures).

... next year the RPC will aim to work closely with Government on developing the business impact target and associated framework ... we would especially recommend:

  • more emphasis on the importance of wider societal impacts and scrutiny of the quality of overall appraisal, ...
  • a more transparent and more proportionate system for regulatory appraisal, which has fewer exclusions but focuses on the most significant measures at an early stage – this is especially important in the context of exiting the EU."

Food Standards Agency - 'Regulating Our Future'

The first of the regulators' responses to the Regulatory Futures Review was the FSA's Regulating Our Future published in July 2017. Consistent with the recommendations of that review, the FSA announced the following:

  • There was to be much greater emphasis on acquiring a complete picture of the industry so that the regulator can make better informed decisions and respond more effectively to food-related crises.
  • Increased use of risk indicators would enable the FSA to develop a better targeted inspection regime.
  • Although the law makes businesses responsible for producing food that is safe and accurately described, the regulator would in future set standards so that "food businesses of all types would understand what is required of them".
  • The FSA recommended that the government should introduce legislation requiring all businesses to have a 'permit to trade'.
  • In the meantime, the FSA would "create a hostile environment for those that don't want to proactively register".
  • The FSA will where possible rely more heavily on larger businesses' quality assurance processes, and saw "an expanded, formal role for private (multi company) assurance schemes".
  • 'Primary (local) authorities' would be primarily responsible for ensuring multi-site businesses such as supermarkets were meeting their responsibilities via their assurance schemes. This "raises the stakes if a business fails to perform. Rather than a single outlet being the focus of extra attention to get things right, it will be the whole business that needs to respond effectively." This would also reduce the costs falling on all of the FSA, the business and the non-primary authorities.
  • Some regulatory activity might also be delegated to private sector 'Certified Regulatory Auditors'.
  • And there would be "a new funding model to ensure the future sustainability of the system. ... The businesses that require the most intervention ... will bear the highest costs."

Comment: The FSA's measured prose attracted little attention, but there seems little doubt that its proposals involve fundamental changes to this important area of regulation. The delegation of regulatory activity to the private sector may be sound in principle, but it will require the FSA and primary authorities to be both vigilant and sceptical, for our old friend the 'principal agent problem' is sure to raise its ugly head. And permits to trade, 'hostile environments', and increased business expenditure on assurance schemes and auditors, do not seem to be in tune with the government's regulatory stance.

Austerity and Enforcement Activity

It was hardly surprising that regulators’ enforcement activity fell during the UK's several years of post-2008 austerity.  But the scale of the reduction was astonishing.   From 2009/10 to 2016/17, real terms funding for the environmental and social protection work of ten key national regulators fell on average by 50%.  The consequential falls in enforcement activity are summarised in this chart prepared by unchecked, an organisation launched in the summer of 2019:

There is much more detail in unchecked‘s first briefing paper The UK’s Enforcement Gap  but a couple of sentences stand out:-

  • The number of Local Authority food safety improvement notices fell by 50%.
    • It has subsequently been reported that 15,000 restaurants etc. would fail hygiene tests.  (The Times 5 October 2019)  The cost of consequential sickness falls on employers and the NHS.
  • Fire safety audits in England fell by 30%.
  • Environment Agency prosecutions of businesses fell by 80%.
    • The agency had no specific budget to enforce legislation introduced in 2018 to protect waterways from fertiliser and manure pollution which is one of the main reasons why more than 80% of England’s rivers fail to meet EU minimum standards.  (The Times 17 August 2019)

(Proposed) Brexit Red Tape Challenge

Against the above background, it was ‘interesting’ to hear Chancellor of the Exchequer Sajid Javid announce a (post-)Brexit Red Tape Challenge at the 2019 Conservative Party Conference - even though Brexiteers had been noticeably coy in refusing to say what sort of regulations and enforcement might be cut further if the UK were to leave the EU.  Expert reaction, remembering the limited success of the previous Red Tape Challenge,  was unenthusiastic.

 

Martin Stanley

 

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