Summary
'UK Economic Regulators’ (HL
189-I) examines the statutory remits of the UK economic regulators, their
working methods and working relationships, the value for money they provide and
the extent to which the regulators have successfully promoted competition and
de-regulated where possible, as well as considering whether they should be
given an additional statutory duty to facilitate the competitiveness of UK
firms.
As a result of the privatisation of many nationalised
industries in the 1980s, independent sector-specific regulatory offices were
established to regulate these industries to promote genuine competition and
ensure companies did not exploit monopoly powers.
Examples of these
regulatory offices include: Oftel (telecommunications), Ofgem (electricity and
gas supply), Ofwat (water services), and Postcomm (postal services). Other
regulatory offices with slightly different regulatory remits include: the Civil
Aviation Authority, the Financial Services Authority, the Pensions Regulator,
the Competition Commission, and the Office of Fair Trading.
In examining
the work of the UK economic regulators, the House of Lords Select Committee on
Regulators concludes that the legislation is working well but that a greater
standardisation of remits should be introduced over time to ensure all
regulators are statutorily required to follow best practice. In most sectors
regulators have played an important role in helping to promote competition,
with the exception of the water industry.
The Report explores possible
reasons for the lack of competition in this sector and urges Ofwat to take
account of the general comments made by the Competition Appeal Tribunal on its
access regime. It highlights the need for greater parliamentary oversight over
regulatory bodies and recommends that a Joint Committee of both Houses be set
up or, failing this, that a sessional Select Committee be established in the
House of Lords.
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How does it affect
me?
If you work for a regulatory office or work in an industry overseen
by a statutory regulatory office, this affects you.
Lord McIntosh of
Haringey, Chairman of the Committee, said:
“Many of the UK’s economic
regulators have done an excellent job in ensuring their markets are competitive
and provide good value for the customer. Unfortunately in the water industry
this has not been the case. Ofwat must do more to encourage competition amongst
water suppliers. They have to start by looking again at how they interpret the
legislation around access charges. We see no reason why the water industry
cannot become just as competitive as energy or telecoms is now. Overall there
needs to be more Parliamentary oversight of the role of regulators to ensure
they don’t pursue over regulation or become self serving. That is why we are
recommending a new Joint Committee is established to regulate the regulators.”
Find out more about
the
House
of Lords Select Committee on Regulators.
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