Reducing administration - but at what cost? The Hampton Review and beyond

Citation

Krieger, A. (2006), "Reducing administration - but at what cost? The Hampton Review and beyond", Strategic Direction, Vol. 22 No. 11. https://doi.org/10.1108/sd.2006.05622kab.002

Reducing administration - but at what cost? The Hampton Review and beyond

Reducing administration - but at what cost? The Hampton Review and beyond

Twelve months ago the much-heralded Hampton Review was published looking at the complexities of the regulatory regime and proposing a risk-based approach to enforcement. Few who have been on the receiving end of the barbs of government inspection and enforcement would argue with one of the key tenets of the review – the need to reduce the administrative burden on business caused by the interwoven complexities of the regulatory regime.

The burden on business

In looking at the work of enforcement authorities the Review considered the work of 63 national regulators, 203 trading standards offices and 408 environmental health offices in the UK. In view of the vast numbers of these regulators it is small wonder that the review identified that the system as a whole is over-complicated and lacking in uniformity. Businesses may identify with the report’s revelations; that overlaps in regulators’ activities mean that there are too many forms, too many duplicate information requests and multiple inspections imposed upon businesses. However, one may question whether we really needed a report to tell us what those at the coal-face have found screamingly obvious for some time.

Reduction in red tape

Nevertheless, is the Hampton Review some belated good news for small and large business alike, struggling to emerge from the encumbrance of red tape with which they have been burdened? Certainly the report suggests that if its recommendations were to be adopted, inspections would be reduced by a third and form filling reduced by a fourth. To achieve this it proposes entrenching the principle of risk-assessment still further throughout the regulatory system, by requiring that regulators themselves apply the “risk assessment” approach to inspection and enforcement. The concern expressed by the report is that regular routine inspections of the responsible and compliant are carried out at the expense of under-investigation of those who are more at risk. The balance, it is suggested, should shift so that inspection rates would fall where risks are identifies as being low and be enhanced for those which the poorest records of compliance.

All that glistens …

However, amidst this apparent good news is a somewhat more concerning thread of change. It seems reasonable for the report to suggest that common reporting frameworks have the potential to reduce unnecessary duplication by inspector, but it will be a challenge to achieve integrated inspections between regulators, whilst avoiding the dilution of expertise.

There is much talk too within the report about the consolidation of smaller regulators, which should be merged to form larger “thematic bodies”. Of the 63 national regulators covered by the review, smaller regulators form a substantial proportion, and 31 have fewer than 100 staff. The report criticizes small regulators as being less able to work together, less aware of the cumulative burdens on businesses, less efficient and more costly to administer. As a result it recommends that over the next two to four years, 31 of the 63 national regulators should be consolidated into the following seven bodies:

1. 1.

   An expanded Environment Agency.

2. 2.

   An expanded Health and Safety Executive.

3. 3.

   An expanded Food Standards Agency.

4. 4.

   A new rural and countryside inspectorate.

5. 5.

   A new animal health inspectorate.

6. 6.

   A new agricultural inspectorate.

7. 7.

   A new consumer and trading standards agency.

Fears acknowledged

Those who already find the existing regulators with whom they deal cumbersome and juggernaut-like in their lack of maneuverability will be alarmed to discover recommendations suggesting that they should be made bigger-still. To its credit the Hampton Review acknowledges such fears, with the optimistic note that where bodies are merged, they “should certainly not be larger, and ideally be smaller than the combination of their predecessor bodies, and that same constraint should apply to their budgets”.

Having amalgamated and reduced the number of regulations the report also recommends the creation of a regulatory oversight body, the Better Regulation Executive (BRE). This new central body is intended to be the “enforcer” in the system, responsible for introducing the proposed reforms and thereafter holding regulators to account against the principles set out for inspection and enforcement. This should be helpful, provided it ensures that it adds value, and does not become just another layer of bureaucracy.

An iron fist?

Finally, the report also recommended that tougher and more consistent penalties should be applied. It says that there are many instances where the fines imposed are not sufficient to recoup the gain offenders made by operating illegally. In order to address this, it recommends that maximum fines in magistrates’ courts should be increased and that magistrates should have more power to set fines that are an effective deterrent. So, tougher penalties being prosecuted by larger super-regulations? The administrative burden may be set to reduce, but it remains to be seen at what price.

Twelve months on …

As a response to the Hampton Review recommendations, the Maconry Report was commissioned into Regulatory Justice and sanctions following conviction. The report published in May 2006 agreed that the financial penalties currently handed down by Courts are not a significant deterrent for cases of regulatory non-compliance.

However, although Hampton envisaged the introduction of tougher, quicker penalties for more serious offences, the Maconry Report goes wider and is far more lateral thinking. In addition to existing regimes of criminal proceedings and statutory notices, the report also recommends administrative fines as an option, and most controversially of all places considerable emphasis on restorative justice instead of criminal proceedings or as part of a sentence following conviction.

Among the proposed penalties for non-compliance are:

• •

  Publicity orders. Reputation is an important asset to many businesses. A publicity order provision would enable a court, in addition to any other sentence imposed, to order that a notice (with wording agreed between the business and the regulator) be placed in an appropriate publication such as a trade publication, local or national newspaper or another media outlet such as radio or television, or in a company’s annual report within a specified period.

• •

  Corporate rehabilitation orders. This would involve provisions to enable a court to require a company to undertake specific actions or activities during a specified period (such as one or two years). The activities specified in the order could include training of personnel in regulatory related matters, the adoption and implementation of action plans to address regulatory non-compliance or taking steps to remedy the harm caused by regulatory non-compliance. Failure to comply with the order would lead to the company being brought back to court and sentenced in an alternative way.

• •

  Community projects. The court would have the power to order an offender to complete a relevant community improvement project within a specified period and for a specified value related to the underlying harm or benefits that had been caused or obtained by the offender. This could be used in addition to another sanction such as a fine.

• •

  Mandatory audits. This type of provision could be used in the case of businesses where there is a deficiency in the business management and where systemic organizational change would help better achieve future compliance. The suggestion is that brining in external expertise could get the business the help it needs in identifying ways in which it could improve its operations and meet its regulatory requirements.

Anne KriegerPartner at Gordons LLP, Leeds, UK.