OECD Recommendation on Regulatory Policy and Governance: Challenges in Implementation

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1 OECD Recommendation on Regulatory Policy and Governance: Challenges in Implementation Professor Julia Black London School of Economics and Political Science Presentation to OECD Regulatory Policy conference Stockholm, 3

2 Overview Key elements of the Recommendation New points of departure for the better regulation agenda Challenges faced by regulators Challenges faced by whole of government overseers Points of tension and complementarity How good are better regulation overseers in observing their own better regulation agendas? 2

3 OECD Recommendation Familiar elements of the better regulation agenda But a new framing of the nature and challenges of regulatory governance Systemic view of the regulatory system rather than siloed, one at a time view of individual regulatory agencies Recognition that regulatory systems cross national boundaries Consequently a need for two forms of coherence and coordination Vertically in multi-level governance regimes within regulatory domains, within and beyond nation states Horizontally across regulatory domains, within and beyond nation states 3

4 Looking at the Recommendation from which end of the telescope? From the regulator to the centre From the centre out to the regulators 4

5 V Challenges faced by regulators include Conflicting or inadequately specified regulatory objectives Need to administer multiple pieces of legislation which give them varying powers and instruments with respect to different parts of their mandate Inadequate powers Limitations on resources, including need to compete with private sector for skilled personnel Inappropriate data and challenges in developing sophisticated data management systems Lack of technologies for evaluating regulation Difficulties in managing change from tick box to performance based / outcome focused regulation & risk based regulation 5

6 Challenges facing regulators cont. Need to regulate dynamic markets with relatively static regulation that can be outdated Challenges of internal governance and operation, notably communication, coordination, processes and people Poor leadership or Boards that may not have a grip on the industry being regulated or understand the task of regulation Conflicting demands from those to whom they are accountable Persistent political rhetoric about negative effects of regulation which is not balanced by messages about its positive effects Challenges of balancing risks, resources and reputation in delivering risk based regulation 6

7 View from the regulators To what extent do the Recommendations help regulators to address these challenges? To what extent do they place an onus on whole of government better regulation units to address these challenges? 7

8 View from the regulators cont. Legal mandates and powers Requirements relating to the need to specify regulatory objectives and review the stock of legislation Requirements for governments to maintain strategic capacity to ensure regulatory policy remains relevant, effective and flexible Capacity building requirements on BR units to provide training in ex ante evaluation and at sub-national level Requirements to review and promote coherence between regimes can address issues of overlaps and underlaps between agencies 8

9 View from the regulators cont. But on the whole, could regulators have reason to think that the Recommendation focuses on policies and procedures that BR units tell regulators to adopt, rather than on how BR units can help regulators overcome the challenges facing them? 9

10 View from the other end of the telescope: from the centre out to the agencies Challenges facing whole of government BR units in the centre include : Scale and topography of the regulatory landscape Uncertain definition of which bodies are regulators Varying status of and formal legal powers over agencies Frequent changes in constitution and powers of regulatory bodies Multiple and overlapping jurisdictions of regulators, making attribution of responsibility difficult 10

11 View from the centre cont. In addition, BR units face the challenges of governing at a distance Varying degrees of responsiveness by regulators to the BR agenda Varying capacities of regulators in terms of resources, technical expertise and competence Asymmetry of information and expertise vis a vis the regulators Opacity of regulatory processes between the visible points at either end of the regulatory process: policy formation and formal enforcement actions Analogies with the challenges agencies face in regulating their regulated population are strong 11

12 Tensions within the Regulatory State 12

13 Potential ways forward Developing a system-wide view Regulators to engage in greater communication cross-domain about common problems BR units to recognise that individual regulators are part of a system and Each to facilitate vertical and horizontal coherence & communication 13

14 Ways forward cont. Need for BR units to understand the nature of regulatory task and challenges facing regulators Greater secondments from central government out to regulators BR units to recognise that risk based regulation in agencies means taking risks, and that failures will inevitably occur 14

15 Ways forward cont. BR units can play a role in facilitating capacity building within and across regulators Dissemination of best practice examples across government Facilitation of data sharing across agencies Capacity building in techniques of ex post evaluation Institutionalising evaluation by setting out criteria of success when proposing regulation and stating clearly how success is to be evaluated 15

16 Ways forward cont. Government and BR units to become better at better regulation Eg NAO criticism of UK government: reorganises government bodies frequently and badly BR to improve techniques of RIA and ex post evaluation BR units to monitor and review agencies on a performance basis and adopt a risk based approach to their monitoring 16

17 Concluding observations Tensions between the centre and the periphery are inevitable Managing those tensions is central to overcoming the challenges of achieving whole of government approaches to BR Key elements include Developing a system wide view and approach by both BR units and regulators BR units and regulators to facilitate capacity building within and across regulatory bodies BR units to improve their knowledge of the tasks and challenges facing regulators BR units to become better at better regulation Development of greater trust between the central BR units and regulatory bodies 17