Select Committee on Public Accounts Minutes of Evidence


Examination of Witnesses (Questions 120 - 139)

MONDAY 26 NOVEMBER 2001

MR TIM BURR, MR BRIAN GLICKSMAN, MAVIS MCDONALD, CB AND MR DAVID ANDREWS

  120. Is that because you have been doing it internally, rather than internationally?
  (Mr Andrews) We are always open to any points. If someone makes a point to us about international competitiveness or whatever, we would certainly pick that up.

  121. If I come to you and say, quite honestly you are fiddling the books in the cost benefit analysis you have just done, because you want it through and the costs you are imposing on me are really ridiculous. How do I overcome that problem? Who do I appeal to? I cannot appeal to you because you set the costs.
  (Mr Andrews) No, you could certainly appeal to the Small Business Service in that case because we do not ourselves propose regulation. Our job is to make sure that in preparing regulatory impact assessments the regulating departments are indeed proceeding on the basis of very clear evidence. We should certainly feel free to challenge a department where there was evidence to the contrary.

  122. Who pays your running costs?
  (Mr Andrews) The Department of Trade and Industry.

  123. So the department pays your running costs, you are an employee of the department and I have to come to you to appeal against what I though was a departmental ruling.
  (Mr Andrews) Yes.

  124. I can have confidence in doing that.
  (Mr Andrews) Yes.

  125. Do you not think I might have a bit of doubt?
  (Mr Andrews) We have a very clear remit from Ministers to ensure that the view, the interests of small businesses are very clearly represented within government. We may not publicly state our differences, but we would not hesitate privately to challenge, of course not, no. That is our published remit; it is very clear.

  126. Fair enough. We all have published remits, but I suspect there may be a little doubt about appealing to you. Would you not feel that people out there might—might—feel more confident if there were a totally independent arbitrator with regard to these costs?
  (Mr Andrews) It is a fair point. I think I would refer you to a reply I gave earlier that we have to have credibility with regulating departments. They have to feel we are genuinely reflecting the interests of small businesses, the impact on small business, the way in which small businesses will respond to particular proposals. We also need to have credibility with small businesses themselves and the representative organisations. In so far as we can establish credibility with both, we can be effective. Where we are seen to swing too far in either direction, we lose our effectiveness. It is fair to say we are walking a tightrope.

  127. Believe me it is always difficult to swing in both directions at the same time. I notice on page 19, Figure 5, you have a nice little table and accountability is there, which I thought was marvellous. I like to see government departments being accountable, like we are. You are accountable to Ministers, to Parliament, to users and the public. How are you accountable to the public? Examples please?
  (Mr Andrews) We publish our annual report. We provide a lot of information, guidance to small businesses and small businesses can certainly feel free to come back to us with their views. We run an interactive website and we get 30,000 or 40,000 hits a week from people making points about regulation. We take that sort of communication process very seriously. We do have direct contact with a very large number of small businesses. From our point of view that generates a reasonable degree of accountability, but also of course we have relationships with Chambers of Commerce and the other representative organisations which is terribly important.

  128. In this instance "the public" means just small firms or employers.
  (Mr Andrews) The same would apply to larger businesses as well, but from an SBS point of view it is small businesses.

  129. In this regulatory setup we have, I know it is a wide area, but in some cases it does impinge on certain firms and it impinges on things like competitiveness of companies as I said before. The people who look after our competitiveness are probably to some degree the Office of Fair Trading. What input do they have with regard to looking at your regulatory setup? Where are their views taken into consideration?
  (Mavis McDonald) Currently their views are taken into consideration along with the rest of Whitehall's views as the policy process rolls forward and comments are made on the RIA. They have a new role which is to look specifically at the impact of any proposals on competitiveness and they will link back into the RIA process. They will have a more formal input into the RIA process to cover those particular areas.

  130. Do you feel that the Office of Fair Trading will therefore look after the consumer's interests effectively? I do not see how the consumers have any direct input into this setup at all?
  (Mavis McDonald) The whole process is about different kinds of groups and different consumers are relevant for different sets of proposals. We do of course have various other players in this arena, so we have the National Consumer Council for example represented on the Better Regulation Task Force and they will give us advice within the department on the way in which you might approach different kinds of consumer interests and we would expect the various competitions to target the consumers most affected by a particular RIA as part of the ongoing process.

  131. With regard to the regulatory bodies, I notice they were left out of this and the Treasury recently put out a note to say you must do these RIAs on some of your areas of operation, but they do not have the same rigour as the departments have, yet they can be quite important, they can have quite a devastating effect on the areas they control. Why do they not have the same standards, why do they not have the same rigour as the departments and why are they not accountable in the same manner?
  (Mavis McDonald) In terms of the independent regulators, it is because their framework is set up by their own legislation. What the Better Regulation Task Force—sorry about all the bodies—report said was that in taking forward their own decisions, which had an impact on the bodies they looked after, which was effectively potentially imposing heavier regulatory burdens on them, then they should adopt the principles of the approach which is adopted by the RIA, that is they should think only about the impact and consult the various stakeholders they are engaged with on the different ways in which they might approach that increased burden before they took final decisions to proceed. The Government have not given a final answer to that report yet. That is complementary to some work the Treasury have done separately on four specific regulators. There is a track still to be trodden there.

  132. Policy makers need access to good RIA processes. If they are going to make a decision at some time, particularly if it is across departments, they have access to this information in a ready form. This is quite common in business where you have a database where you can go and look up what costs were imposed on that regulation if you have a similar one, what benefits were in. Is this system in place? Do you have this database? Is it accessible to policy makers and accessible to anyone who is undertaking a study and is it updated?
  (Mavis McDonald) The Cabinet Office website effectively gives you entry into a database which is the regulations that have been done and the particular propositions which have been adopted in various ways. The actual process by which we help department is a much more interactive ongoing process of our having regular monthly meetings with the individual departments' regulatory units and also having individual seminars and workshops on particular aspects of the development of the RIA process. We have had 12 in the last 12 months.

  133. So your website will give me access to your cost benefit analysis, your equations, what costs you put in, what came out as benefit, what was evaluated.
  (Mavis McDonald) Each individual RIA goes through its own processes. The other kind of information you can get to help you do that will be things like the Treasury green book or material that the Centre for Policy Management Studies has on evaluation. There is a whole raft of backup information which people can access.

  134. I am not sure I got the answer yet. If I have a regulation, I can go and look at it to see what the costs were before I made a decision, I should have access to that before I made that policy decision, and you are saying I cannot get access to that quite easily.
  (Mavis McDonald) For any regulation you are developing within a department, you can get help on the process. You can get examples of what other people have tried. You can get advice and you can use your own economists to do your own cost benefit analysis and you can then work up your own proposals.

  The Committee suspended from 6.30 pm to 6.40 pm for a division in the House.

Mr Steinberg

  135. I get the impression that the pair of you are very keen and enthusiastic about this. With how much respect are RIAs held by civil servants generally would you say? Do you agree that if they are not respected, then they are not going to work, are they? Convince me that they do not just pay lip service to this?
  (Mavis McDonald) My personal perception, and it is partly based on personal experience in one area, is that when people realise they can actually be helpful to you in articulating very clearly what you are trying to do and why and to think through very carefully the impact of the implementation of any policy proposals you have, then civil servants find them a tool that it is good to use. They do enable you to bring all the external factors to bear and that is not necessarily always easy, particularly if at the initial point you do not have all the evidence you need to demonstrate what some of these impacts might be. My view is very much that set out in this report, that as part of a better policy-making tool it is increasingly part of a package, along with things like risk management and project management which is bringing the whole process of thinking about how a policy is followed through to there on the policy-making process as a whole and indeed we have done some work which was published when the NAO's work on better policy making was published. A lot of the principles in here about doing a rigorous, early analysis of what you are trying to do and what the options are and consulting widely are very much those which apply to the RIA when you are looking at different kinds of policy making.

  136. When I was a leader of the council in Durham many, many years ago, certainly before a policy was implemented we used to talk about the domino effect it would have: if you did this what would happen to that and that and that and so forth. At the end of the day you still wanted your policies through regardless. I am a bit loath to believe that Ministers, having agreed a policy between themselves, are then going to allow it to be disrupted at the end of the day.
  (Mavis McDonald) On a lot of policies the principle of the policy is well established and accepted but quite often there is still a lot of work to do to think through how you might follow it through, what the options are of following it through, who, for example, should be the lead body to implement programmes. I think that having a tool which enables you to demonstrate in a very clear and open way what the consequences are, not in order to make you back away from the policy, but to think about precisely how you want it to be implemented in order to achieve the effect you really want, should help Ministers or anybody else taking a decision rather than hinder them in that process.

  137. I would suggest that the last thing on a Minister's mind is an RIA when they are formulating policy or wanting policy to be brought into being. I should have thought that was the last thing on their mind.
  (Mavis McDonald) That is probably right in terms of thinking of the issues.

  138. On a civil servant's mind perhaps. They are basically faceless anyway, are they not? They are not accountable to anybody and at the end of the day they still have their jobs if it is wrong.
  (Mavis McDonald) The process of the RIA puts the responsibility on Ministers very clearly. There are no choices in certain circumstances about what you do here. If you have a big Bill which has a lot of impact externally, then the process will be followed through. I am sorry, but it is easier to quote from personal experience of working through things. With something like the Countryside Bill, which really had a very significant policy development in terms of access to the countryside, then there was a very clear decision in principle after the last election as to following through that principle on the part of the present Government, but there were real choices to be made about the way in which it was followed through in practice. The process of the RIA was helpful in articulating those policy options and getting them debated in the public domain.

  139. Right at the very beginning, two hours ago, when you were asked a question about the pre-budget statement from the Chancellor, you used the politician's excuse that you do not divulge information before it is divulged on the day. You more or less gave us the impression that there had been no dialogue about what he is going to say in terms of what regulations may be needed or not needed. At the end of the day he has not thought about it in terms of that, has he? He is going to announce his policy and then you will have to start to negotiate.
  (Mavis McDonald) I genuinely do not know the answer to that because I do not know what is going to be in the budget statement. It may well include some things on which there has been prior discussion.


 
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