Select Committee on Constitution Minutes of Evidence


Examination of Witness (Questions 160-161)

WEDNESDAY 26 FEBRUARY 2003

PROFESSOR TONY PROSSER

Lord Lang of Monkton

  160. Following from that, I worry about mission creep. You refer in your paper to the Secretary of State issuing guidance on social and environmental matters. I can understand for individual reasons why that should be so and, as I recall, governments tend to put on the face of Bills now whether there are any social or environmental implications. It is natural to hand that down to regulators, but I worry about the regulator becoming a lightning conductor for government and having difficult and important issues to handle—taking things off the balance sheet to some extent. Can you see a danger of this? Can we guard against it? You refer at one stage in something you have written to regulators as "governments in miniature." Do you see that danger as well?

   (Professor Prosser) I do see that danger. I used that phrase because I wanted to contradict the view that the regulators can simply take decisions based on economic theory. We have seen, I think very clearly, that that is not true, even for example in price control decisions. To a considerable degree, it is as much an art as a science determining what efficiency savings are achievable, for example, within an enterprise. However, the duties that have been given to the regulators, by both Conservative and Labour governments, also include some social duties, paying particular regard to the interests of the elderly, in some cases those in rural areas, et cetera, and it is quite clear that there are some responsibilities of this kind which the regulators are expected to fulfil. For example, I think it is inconceivable that it would have been acceptable for regulators not to consider the social effect of liberalising retail energy markets and, in fact, they were criticised by the Public Accounts Committee for not considering this sufficiently. It seems to me that the advantage of having that power of guidance given to the minister is that it does shift general responsibility for determining non-economic objectives onto the elected, accountable minister rather than giving it to the regulator. On the other hand, detailed implementation is for the regulator, who one hopes will be able to understand his or her sector intimately and know what is practicable there.

Chairman

  161. Professor Prosser, you have covered a substantial amount of ground in what you have told us this afternoon. That has been extremely helpful. Can I thank you again for the paper but also for your comments this afternoon. It has been extremely helpful to us not only in analytical terms but also in identifying what may be needed in the light of the particular problems identified both from the paper and in our session this afternoon. We are extremely grateful.

   (Professor Prosser) Thank you very much, my Lord. I found it most interesting.





 
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