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Regulatory Agencies under Challenge

Regulatory agencies have been at the heart of public sector reform over recent decades. Whether it is in the area of economic regulation of utilities, in the oversight of social and environmental activities, or in the regulation of government by itself, the idea to oversee activities via free-standing bodies has witnessed international currency. Regulatory agencies were said to provide for a range of advantages, such as higher degrees of expertise, a detachment from political pressures and electoral cycles and increased distance from those activities that were to be regulated.


CARR Discussion Paper 81 - Regulatory agencies under challenge

One key argument in favour of regulatory agencies has been that they provide for ‘credible com-mitment’, i.e. the view regulatory agencies provide for long-term decision-making that reduces the likelihood of policy reversal over time. The idea of credible commitment via the regulatory agency device was always dependent on wider political system characteristics. However, work presented in this workshop highlighted the limited capacity of formal devices to provide for ‘credible commitment’. This was particularly the case in those political and economic systems that undergo considerable political and/or economic transition. Formal provisions did not predict the degree of autonomy from political or private interest influence over regulatory activities. In fact, jurisdictions were seen to increasingly reduce the scope for ‘independent’ regulation in some sectors, but not in others. This gives rise for further enquiries into why some sectors seem to witness a higher degree of political intervention than others. Furthermore, this led also to debates about measures to assess the distance of regulatory agencies from political as well as economic actors. Finally, it also raised questions as to how to understand ‘independence’ as a regulator and what the legitimate spheres of interest and political influence were.

A second theme in the literature has been the behaviour of regulatory agencies. Atention has increasingly focused on questions of regulatory overlap (such as ‘concurrency’) and the need for regulatory co-ordination, whether in terms of vertical (centre-local) or horizontal (cross-sectoral) relationships. Discussion here focused on how relationships among different regulatory bodies emerged and evolved over time, how different regulatory bodies were formally required to work with each other and what kind of formal and informal resources were required to facilitate such co-operation and co-ordination. Finally, there were also questions as to why co-operation and co-ordinational was observable in some areas, but less so in others. This was largely associated with activities that were either supporting the core missions of regulatory actors or not.

A third theme related to questions of expertise. As noted, regulatory agencies were supposed to provide for superior staff resources and expertise. On the one hand, regulators could, potentially, provide for rewards that ‘normal’ government departments were unable to grant. On the other hand, the specialised nature of regulatory bodies also facilitated growing specialisation rather than the ‘go anywhere’ culture of ministerial departments. What, however, does ‘expertise’ mean - especially as simplistic dichotomies between ‘political loyalty’ and ‘subject expertise’ are not providing for much mileage? One key interest therefore has been on the background of regulators to assess what kinds of expertise and experience they bring to their job. A second is the observation that there has been a specialisation in terms of regulatory governance, namely the view that regulators require not just subject expertise in terms of being competent with regards to the activities they are overseeing, but that they also need knowledge about how regulatory organisations should be organised and governed, and about the utilisation of particular regulatory interventions. In addition, expertise resides not just within regulatory organisations. How regulatory agencies therefore seek to involve external expertise, such advisory committees and other devices, is a further area of growing attention.

The ‘agency’ model therefore has been found to be under challenge. The initial optimism that the creation of a separate body would lead to directly observable beneficial changes has proven to be more problematic than (some may have ) expected. Whereas in some sectors and countries, the agency model may therefore be said to be on the vane, the attraction of resorting to agencies as a device for regulating certain activities is unlikely to go away - and neither is the interest in regulatory agencies as a site for research. 

Workshop Programme

Martin Lodge, June 2015. This text represents the individual views of the author and should not be attributed to any other individual or collective view.


CARR Discussion Paper 81 individual articles:

Independent agencies: no fixed boundaries What brings the Government back in? Frank Vibert

Comments on the notion of boundaries and independent regulation Sebastian Eyre

Closing time? Regulatory agencies and consumer engagement in economic regulation Eva Heims and Martin Lodge

Regulators – order of the court or disorder of the town council? Lindsay Stirton

Independence and the boundaries between regulators and regulatees Christel Koop