The government is seeking to overhaul the UK’s framework for regulation as it plans for a new approach following the UK’s exit from the European Union. That seeks to give regulators more authority to set detailed rules, following objectives set in statute. UK law currently contains detailed regulations in a variety of areas that derive from EU law. The UK government is seeking to devolve some of these areas to regulators for them to maintain going forward. But with the prospect of regulators having greater devolved authority, attention is turning to whether the current system is effective in holding them to account.
Currently, at the heart of that system is the Better Regulation Framework from the Department for Business, Energy & Industrial Strategy (BEIS), on which the UK government is consulting. ICAEW says in its response to the BEIS consultation that the Better Regulation Framework needs to be improved.
ICAEW says the government’s existing principles, which should guide regulation – the Principles of Good Regulation published by the Better Regulation Task Force (in 2003) – are sound. These principles require proportionality, accountability, consistency, transparency and targeting.
Charles Worth, ICAEW Head of Business Law explained: “We feel that reform is needed, but it needs to be done carefully if it is to meet the objectives of reducing unnecessary regulatory burdens and promoting growth. More is required than simply giving regulators a greater role and tweaking the current framework”.
Current difficulties lie in how the principles are interpreted and implemented, particularly in how proportionality (Principle 1) is applied. Regulators do not always adhere to the principles in practice. The government wants regulation to support growth and innovation, but to meet these ambitions an effective framework is needed to ensure regulators’ accountability (Principle 2) to these principles.
ICAEW points out that the current Framework for Better Regulation focuses almost exclusively on proportionality with an emphasis on the analysis of costs. “This is not sufficient to promote compliance with the principles as a whole,” ICAEW says. “While the current BEIS Regulators’ Code incorporates the principles and has its own emphases (on consultation and transparency) which are generally helpful, we do not believe it has generally been effective in ensuring that regulators adhere to the principles.”
ICAEW concludes that the Better Regulation Framework should be replaced by a new framework for good regulation. “This would incorporate the Principles of Good Regulation and the Regulator’s Code, as appropriate, to result in a single framework applicable to regulators and, to the extent appropriate, the legislative process,” it says. “It would also need to address any issues arising out of this consultation not already addressed.”
The ICAEW response to the consultation calls for the principles within any new framework to remain relatively short and easy to follow. It is also calling for the establishment of a new independent body for good regulation which would be accountable to Parliament and help ensure regulators are accountable for applying the new framework.
John Boulton, ICAEW Director of Policy, pointed out: “There is already a case – as set out by ICAEW in its response – for existing processes to be improved. However, if Parliament decides to delegate more power to regulators to make regulations and enforce them, the need for a new independent body for good regulation will be heightened.”
A new independent body to promote good regulation in the public interest would help Parliament hold regulators to account, help regulators preserve their independence where relevant, and help ensure that government bills meet the Principles of Good Regulation.
The ICAEW representation states that this is a significant reform, and the body needs to be adequately empowered and resourced to perform what would be an important function. It might also help promote a learning cycle to inform reviews of whether particular regulations remain relevant and fit-for-purpose.
Read the full consultation response - ICAEW representation 94/21: reforming the framework for better regulation
Stay up to date
You can receive email update from ICAEW insights either daily, weekly or monthly, subscribe to whichever works for you.Sign up
News in brief
Read ICAEW's daily summary of accountancy news from across the mainstream media and broader financing sector.See more