The Budget and super regulators

Background

In the 2004 Budget, the Chancellor asked Philip Hampton to lead a review into regulatory inspection and enforcement with a view to reducing the administrative cost while maintaining effective regulation. The final report, entitled "Reducing administrative burdens: effective inspection and enforcement", was published to coincide with the 2005 Budget.

The Hampton Review

The Hampton Review examines the inspection and enforcement work of 63 national regulators, as well as the 203 trading standards offices and 408 environmental health offices in English, Scottish and Welsh local authorities. Although it does not concern regulators that are the sole responsibility of the devolved institutions in Scotland, Wales and Northern Ireland, many of the regulators within the scope of the review operate over the whole of the UK or Great Britain.

The overall conclusion of the review is that although there is much good practice in UK regulation, the system is complicated and good practice is not uniform. It says that an overlap of regulators has lead to too many forms, information requests and multiple inspections imposed on businesses. The report makes 35 recommendations to address these issues.

Among the main recommendations is that a comprehensive risk assessment should be introduced throughout the regulatory system, so that inspection rates are reduced for less risky companies with the best records of compliance, but increased where necessary for riskier companies. It estimates that the risk assessment approach could lead to one million fewer inspections and reduce the number of forms regulators send out by 25 per cent. The report acknowledges the progress made by the Environment Agency and the HSE, which have published strategy documents based on risk assessment and are already beginning to implement the policy.

Another proposal put forward by the review is that several of the smaller national regulators should be merged to form large 'thematic bodies'. These smaller regulators currently make up a large proportion of the total. For instance, of the 63 regulators covered by the review, 31 have fewer than 100 staff. The report criticises 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:

• an expanded Environment Agency;
• an expanded Health and Safety Executive;
• an expanded Food Standards Agency;
• a new rural and countryside inspectorate (the new integrated agency);
• a new animal health inspectorate;
• a new agricultural inspectorate; and
• a new consumer and trading standards agency;

A further recommendation of the report is 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.

Government response

Gordon Brown responded to the report in his Budget speech, saying that: "The Government welcomes the final report of the Hampton Review and accepts its recommendations in full and will bring forward early legislation to implement them". He laid out the Government's plans to establish a new Better Regulation Executive (BRE) in the Cabinet Office to take on the work carried out by the existing Regulatory Impact Unit and to oversee the implementation of regulatory reforms.

The full Hampton report is available by clicking here. This will open PDF in a new window.