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The UK Deregulation agenda – Importance of risk management
in design and delivery of regulation
Gordon MaddanProgramme Manager - Business
Outcomes – what regulation is for
•Make it easier to start up and run a business
• Improve the health of communities, and protect workers and the environment
•Support businesses to grow and create new jobs
• Promote fair competition
• Expand markets and trade by improving border controls
Can regulation support growth?
Research suggests three ways that a better approach to
regulation can aid growth-
1. Reducing costs for business• E.g. costs of data returns
2. Improving confidence and control• E.g. Primary Authority
3. Realising wider economic benefits • E.g. The impact of horsemeat
Prosperity and Protection
• ‘Good’ regulation can support growth, as much as ‘poor’ regulation hinders it
• How regulation is delivered (enforcement) matters• Key aspects of delivery include
–Right level regulation-local/regional/national–Listening to the views of business –Businesses to be the ‘customers’ of regulation
Good regulation is:...choosing the right methods to move from
risk to outcomes
Risks OutcomesInterventions
Risk Based Regulation
‘Unless risk assessment is carried through into resource allocations and regulatory practice, it is wasted effort.
Risk assessment needs to be comprehensive, and inform all aspects of the regulatory lifecycle from the selection and development of appropriate regulatory and policy instruments through to regulators’ work including data collection, inspection and prosecution’
Hampton Report, 2005
EU and Ministerial
engagement
Key:BRE leadBRDO leadRPC leadDepartments lead
The Regulatory Policy Cycle: respective roles of BRE,
BRDO and RPC
1. Regulatory Policy
6. Evaluation
2. Problem Identification
3. Developing Options
5. Delivery
Making Whitehall machine
work
Owning the IA process
Providing a forum for business
engagement
Engagement with
Behavioural Insights Team
Encouraging dept
ownership
Alternatives to enforcement
Simplifying regulatory delivery &
PA
Feedback from business & regulators
Landscape/sectoral review
approach
PIRs
BRDO, BRE and RPC
Advice on early testing of options
Business input to Better
Regulation Policy
4. Recommendations
to Ministers
Assessment of IAs, policy
options
Policy advice on delivery
considerations
Engagement with regulators
& business
Risks OutcomesInterventions
• More efficient and effective• Target resources• Reduce burdens on business• More transparent to business
Why use risk based approaches?
Higher Risk
Medium
Lower risk
Risk profiling of businesses
Risk = Hazard x LikelihoodHazard – anything with the potential to cause harmLikelihood – likelihood of a hazard causing harmHarm – scale of adverse impact on individuals, the environment or other businesses
Defining Risk
Risk assessment
Identify the level of hazard
– High– Upper medium– Lower medium– Low
Risk assessment
Identify the likelihood of compliance
– Very high– High– Medium– Low– Very Low
Risk assessment of individual businesses
Identifying the likelihood of compliance– Business track record – Current level of compliance– Knowledge and commitment to compliance– Systems to manage risks
Categories:Very high - High - Medium – Low – Very Low
Risk categories
Very high High Medium Low Very low
High Lower Medium
Upper Medium
Upper Medium
High High
Upper medium Lower
MediumLower
MediumUpper
MediumUpper
MediumHigh
Lower medium Low Lower
MediumLower
MediumUpper
MediumUpper
Medium
Low Low Low Lower Medium
Lower Medium
Upper Medium
Likelihood of compliance
Lev
el o
f h
azar
d
Risk Based Targeting Advice and Inspection
Polic
ies an
d prio
rity s
etting
Educ
ation
Specialist Intervention
GenericAssessment
TSFS
Higher Risk
Medium
Lower Risk
Earned Recognition Reduces Risk
Poor Compliance
Record Increases Risk
Common Risk Framework
Common Assessment
of Likelihood of Compliance
Sector Specific Hazard
X
Leve
l of i
nter
venti
on
How Risk assessment is used in the UK
• Food Hygiene Premises rating system
• Exemption of small low risk premises from liability to Health and Safety Inspections
• Trading Standards intervention model
• EU Rapex product safety assessment
used in the UK
BRDO Priorities 2015• Regulators’ Code – statutory code of practice for
regulators setting out what is expected of them• Growth Duty – statutory duty for regulators to have
regard to growth as they undertake their duties• Data Sharing – identifying ways for regulators to share
data to support business compliance / reduce burdens• Primary Authority – providing reliable advice to support
businesses to comply – extend and simplify• Competency for regulators – improving knowledge, skills,
and attitude at the front line• Improved business dialogue mechanisms – Expert
panels, Better Business for all, Business Reference Panel
Regulators’ Code Sets out what businesses should expect from regulators:
•Regulators should support those they regulate to comply and grow
•Regulators should engage with those they regulate and hear their views
•Regulators should base their regulatory activities on risk •Regulators should share information about compliance and risk
•Regulators should ensure clear information, guidance and advice is available
•Regulators should ensure that their approach to their regulatory activities is transparent
Growth dutyTo emphasise that growth is an important factor to be taken
into account in all regulatory decisions
Amending the legal framework to enable regulators to make improvements to the business experience of regulation and foster a regulatory environment conducive to compliant growth.
• Current Status• Government Response to Consultation published • Deregulation Bill• Going through Parliament • Guidance published
Primary AuthorityTo drive consistency and reconnect businesses with the regulatory system
•Primary Authority allows businesses to form a statutory partnership with one local authority, which then provides robust and reliable advice which other councils have to take into account. Regulatory Enforcement and Sanctions Act 2007
• The scheme enables businesses to benefit from clearer, assured advice and more consistent enforcement.
•Government has extended Primary Authority to (smaller) businesses where they share an approach to compliance. This includes franchises and trade associations. Enterprise and Regulatory Reform Act 2013
• The scheme creates a joined up regulatory system that saves businesses time and money, improves public protection and consumer confidence.
Primary Authority • 433 local authorities
Primary AuthorityCoordinated partnerships
• 33,500 ACS members
Key features of Primary Authority
• Legally entitled to rely on assured advice
• Enforced by block on enforcement action without consent of PA
• Determinations on correctness of advice / enforcement can be sought from BRDO
• BRDO role to agree suitability of partnerships
• Cost effective for both Businesses and Local Authorities – PA’s can recover costs
Participants in Primary Authority
• 6733 Businesses
• 7111 Partnerships
• 5588 Coordinated partnerships
• 85% Small or medium sized enterprises
• 155 Local Authorities
Competency Structure for regulators
Technical Knowledge Sections
Age Restricted Products
Gambling Act 2005
Intellectual Property
Noise
Agriculture Health and
Safety Licensing Act
2003
Petroleum
Animal Health
and Welfare
Generic Skills Sections Pollution
Fair Trading
Core Regulatory Skills
Leadership
Port Health
Fire Safety
Housing
Metrology Primary
Authority
Food
Product Safety
Expert panels To bring together Government policy leads, regulatory experts from business and Local Authority enforcers to resolve issues of sectoral concern as they arise
• Food Standards and Labelling • Food Hygiene• Metrology• Age Restricted Products and Housing• Fire Safety• Supermarkets Primary Authority • Housing• Leisure • Fair Trading
Areas covered by ‘Better Business for All’ regulatory partnershipsAim to bring together business representatives and all regulators local and national operating in an areas to improve coordination and build business support and confidence
The UK Deregulation agenda – Importance of risk management
in design and delivery of regulation
Gordon MaddanProgramme Manager - Business