Examination of Witness (Questions 460-467)|
WEDNESDAY 14 MAY 2003
460. Perhaps I may draw out a number of points
here. First of all, there should be a clear delineation of what
responsibilities of different bodies are in the process, because
if there is that degree of clarity it will reduce conflict and
the need for appeals.
(Ms Spottiswoode) Yes.
461. You stress this legitimacy of the process.
In part, that comes from transparency and, from what is in the
paper and what you have said this afternoon, part of that legitimacy
may come through a parliamentary route. So you place a lot of
emphasis on Parliament in that respect. On that particular point,
I wondered whether there was anything else that should be done
in terms of achieving the legitimacy you mention, because you
say that an awful lot rests on that. Is transparency, plus the
use of the parliamentary committee along the lines you have indicated,
(Ms Spottiswoode) Plus the appeals process.
462. Yes. You think if that change was made
. . .?
(Ms Spottiswoode) Yes, because effectively that then
says that, with any decision a regulator takes that is significant,
there is an appeals mechanism. If, for whatever reason, the general
conduct of the body, or the standard consultation, is not good
enough, there is somewhere that is outside the organisation that
can come and really criticise it which has an expertise in it.
The current select committee system tends to go for a particular
issuewhich is fine and that should continuebut there
is no institutional oversight of the organisation. I think that
is valuable. It is both to support the regulator as well as increasing
its legitimacy. I do not see it as being a burden on the regulator.
I see it as being a potential aid to the regulator. Then if you
have a legitimate system, a lot of the issues will fall away;
a lot of the contentious stuff tends to die down.
Lord Jauncey of Tullichettle
463. Do you favour the idea that, before or
at the time at which a regulator takes a significant policy decision
which will affect any consumers, and indeed suppliers, there should
be a regulatory impact assessment made by the regulatoreither
before taking the decision or immediately afterwards?
(Ms Spottiswoode) First of all, I do not think that
the regulator should ever take a decision without having first
started off the process by informally talking to all the relevant
parties, so that there is a very good understanding within the
organisation before you get too far down the line of what the
impact is likely to be. That might stop some things earlier in
the process and you cannot make them happen but, once you have
got so far down the line, I think that there really ought to be
a regulatory impact assessment. There are costs of implementing
a lot of these policies which are not just about the regulatory
costs; they are not just about the obvious costs of the organisation.
There are a whole lot of other costs that are often not fully
taken into account. I see it as a good discipline. I know that
some of my fellow regulators will disagree with me very strongly,
because some of them disagree with a cost benefit analysis. It
is very difficult to do, and a lot of other things are very difficult
to quantify; but what you can do is put bounds around it and then
say, "There is this amount of good. We have a huge amount
of question marks about what the numbers are. There is this amount
of bad. We have a huge amount of question marks". It gives
you a logical framework in which to analyse whether to do things.
I think that, done properly, they can be very beneficial. The
only downside is bureaucracy. You are asking for a great many
more staff, and it should not just be lip service. In other words,
it needs to be a real exercise that means something. Again, I
think that will add to the legitimacy.
Lord MacGregor of Pulham Market
464. Do I get the impression that you feel that
this regulatory impact aspect is not looked at enough by most
(Ms Spottiswoode) I do not think that any of them
do them at all, that I am aware of. It is part of the Ofcom Bill,
if it comes through. I think that David Curry intends to use it
for the organisation itself. He welcomes it. I see absolutely
no reason why a regulator should not welcome it.
465. In your overview of the system, if one
can generalise from the paper, there are a number of adjustments
that would be desirable to the process. Overall the process works
reasonably well but, if the changes were to be made along the
lines you have indicated, then we would have a system that was
going to be as smooth as one could expect.
(Ms Spottiswoode) Yes. It will never be perfect.
466. You have clearly indicated the direction
in which we should be going with some of those adjustments. I
just come back very quickly to the point that Lord MacGregor raised
with you. I took exactly the same point that he did in terms of
the interpretation of your paper, in respect of an individual
regulator versus a board, which was your point that there was
a wariness about an individual because too much power was concentrated
in the hands of that individual. Lord MacGregor's point was that,
as the system becomes more mature, you may need less regulation;
therefore, the motivation for not having the individual declines,
whereas the pressure at the moment is very much in favour of having
a board. I rather took the same implication as Lord MacGregor
didthat you were pointing us in the direction of taking
a sceptical eye to the use of boards.
(Ms Spottiswoode) The dynamics of boards vary enormously.
There is no doubt in my mind at all that it works very well in
the corporate world. I think that the regulatory world is slightly
different. There are academic, technical papers, which means that
it can be quite difficult for individuals who are not steeped
in the stuff, all day and every day, to contribute. They might
be able to contribute in a very particular area but not on a real
part of the policy decisions. I think that David Curry is a very
good appointment in the Ofcom arena. He can genuinely be anearly
full-time but not quitechairman who understands the issues.
If you have a part-time chairman just in order to have a separated
chairman and a chief executive, and that part-time chairman does
not have a background which would make him naturally able to understand
the technicalities, what are you doing? I am always against doing
things just for show. If they are genuinely there because they
are going to make a better organisation make better decisions,
then I am absolutely for it. In general, set up correctly, a board
is probably better than an individual; but I would not want it
to be, "Let's tick all the boxes".
467. Indeed, there is not just a tension between
the regulatory and the other bodies, but there might be tension
within the regulatory body itself if you have a board structure.
(Ms Spottiswoode) Yes.
Chairman: Thank you very much, Ms Spottiswoode. That
has been extremely helpful to us. We are most grateful for the
paper, as perhaps is reflected in the questions that it stimulated.
It has been very helpful to us in our inquiry and we are very
grateful to you.