Memorandum submitted by Sir Christopher
My background relevant to the Committee's Inquiry
is first practical:
While temporarily on the BT management
board from 1985-1988, it was among my duties to handle its regulatory
business with Sir Bryan Carsberg at Oftel;
Before and after that as a partner
at Coopers and Lybrand I was concerned in advising on the regulatory
arrangements for airport and electricity privatisation. In particular
I advised Powergen during and after privatisation;
I was a special advisor to John Macgregor
on rail privatisation as which I advised him on setting up the
Office of the Rail Regulator and on OPRAF which became the SRA;
I also advised the then IBA on their
regulation. The issues raised were far wider than most utility
I organised a utility regulators'
dining club in the early 1990s at which we discussed many matters
of common interest; and
As a member of the Railtrack board
from 1994-2000 I took a special interest in regulatory matters.
I also have written on utility regulation, particularly
Privatisation, Public Ownership
and the control of Public Monopoly, Blackwell, 1992, in which
I discussed legal, political and administrative ideas as well
as economic ones.
I am currently writing a book on
constitution and government. Our seeming failure to develop legal
mechanisms to relate public bodies, including regulators, to parliament
and central government is a theme in it.
My professional background is as an economist
and administration specialist, not a lawyer or currently an administrator.
Therefore I am not the best person to give legal or otherwise
detailed answers to your questions.
However, both in my book and subsequently I
have developed strong views on several of them. In particular:
1. I believe the legal basis for utility
regulation has not proved adequate. From one standpoint regulators'
obligation to secure quasi-market conditions in their industry
needs strengthening and their independence safeguarding. But the
relation between their economic and social duties need clarifying.
In the process the very different considerations affecting the
second need clearer statement.
2. Quantitative measurement of regulators'
performance is rarely feasible. Some decisions could be subjected
by them to Cost Benefit Analysis in advance, and backchecked.
3. I have views on when a single regulator
is appropriate and when he or she should be supported by a board
and what relations between them are sensible.
4. What I believe regulators' objectives
should be is mostly covered by 1 above. Similarly for instances
where they have gone wrong.
5. There should always be rights of appeal
against regulators' decisions, but arguably in different directions
on economic and social matters. I believe there is now a stronger
case for a further right of appeal to the courts.
6. To some extent my views on accountability
are covered by what I have already said. But it is important to
distinguish between accountability and responsibility.
7. I have some further observations on the
limits to transparency.
8. On economic matters I am not sure that
accountability directly to the public should be a relevant consideration.
At least it should be limited to specific matters on which I can
9. I have no recent experience of public
consultation by regulators.
10. These are complicated issues. I do not
believe the second sentence ("are regulators instruments
of Government or representatives of the public") expresses
the choice before us.
11. There could not be a more important
or difficult issue than the independence of regulators from Government.
On economic and some other issues I believe they should be independent
of the government. On most social matters I believe their relations
should be arm's length. But there must be adequate arrangement
for appeal and comprehensive but plain descriptions of their powers
21 March 2003