The document discusses alternatives to regulation that can be considered by the UK government. It outlines the UK regulatory framework and the role of independent regulatory bodies in scrutinizing new policies and requiring justification for regulations over non-regulatory options. Alternatives to regulation mentioned include industry self-regulation, voluntary codes of practice, awareness campaigns, and simplifying existing regulations. Challenges in considering alternatives include incentivizing government departments to explore a wide range of options early in the policy process and better evaluating the effectiveness of alternative approaches.

1. Alternatives to Regulation
OECD Training Workshop on Regulatory Impact Assessment
November 2014

2. Alternatives to Regulation
•UK Framework
•Role of independent Scrutiny
•Alternatives to Regulation
•Challenges Ahead
•Potential Solutions

3. UK Regulatory Framework
•Effective, well-designed regulation plays a vital role in protecting business, consumers and wider society.
•However, unnecessary regulation can also harm society as they result in a waste of time and resources. In many cases, alternatives to regulation are more effective.
•UK Government sees regulation as a last resort. The UK Better Regulation Framework Manual (BRFM) permits the use of regulation only when:
–we cannot achieve their objectives using alternatives to regulation; and
–When an impact assessment of the costs and benefits of various policy options shows that regulation is preferable to other non-regulatory options.
•The Government publishes these impact assessments online so that stakeholders can see how new polices will affect them. It also gives them a chance t identify unwanted outcomes from the new regulation.

4. Independent Scrutiny
•The Regulatory Policy Committee (RPC) provides independent scrutiny of all impact assessments underpinning new regulations brought forward by UK Government Departments.
•In particular, the RPC scrutinises the economic rationale behind regulatory proposals to ensure that there is a genuine basis for Government intervention. As part of this scrutiny role, the RPC can challenge Government Departments about their decision to introduce regulations in response to a policy problem.
•This includes requiring Departments to justify why non-regulatory options have not been considered as part of the options appraisal or impact assessment process. If we are not satisfied, we can declare the Department’s impact assessment as “not fit for purpose”.
•This effectively means that, when the proposal reaches the Reducing Regulation Committee (a cabinet sub-committee of Government ministers) for clearance, it will probably get rejected on the basis that a strong enough case has not been made.

5. Identify the Problem
•Identify ‘market failure’ or socially undesirable outcome that calls for regulatory intervention
–Economic theory is useful at this stage
–BUT market failure alone does not justify intervention
•Use evidence to understand scale of problem
•Consider if problem is real or a perception issue
•Ultimately, decision to intervene is political

6. Identify the Problem

7. Specify Objectives
•Identify what the policy intends to achieve
•Objectives should be
–Specific
–Measurable
–Achievable
–Relevant
–Time-bound

8. Step 3: Identify Policy Options
•Identify ALL the viable options
–No intervention (do nothing or do minimum)
–Prescriptive regulation
–Alternatives to regulation
•Only present genuine options to stakeholders

9. Alternatives to Regulation
•“Government will regulate to achieve its policy objectives only:
–having demonstrated that satisfactory outcomes cannot be achieved by alternatives, self-regulatory, or non-regulatory approaches; and
–if the regulation and the enforcement framework are to be implemented in a fashion which is demonstrably proportionate; accountable; consistent; transparent and targeted.”
•Is it necessary for Government to act?
–The Government’s presumption is that conventional ‘command-and-control’ regulation is a last resort.

10. A Regulatory Continuum
Govt. Led Actions
State Regulation
Non-state Regulation
Information and Education (Disclosure Regulation)
No Intervention
Self- regulation (Voluntary self- regulation)
Co- regulation (Enforced self- regulation)
Command and Control Regulation (Classic Regulation)
Economic Instruments (Economic Regulation)
Mandatory code of practice
Mandatory government guidance
CSR Policy
Voluntary code of practice/guidance without government backing
Voluntary code of practice/guidance with government backing
Legal penalties
Market Incentives
Market Led Actions

11. Alternatives to Regulation
•Instead of creating new regulations, Departments are encouraged to consider alternative solutions. These include:
1.Utilising existing regulation e.g. proposed employment agencies regulations.
2.More effective enforcement of existing regulation e.g. Privacy and Electronic Communications Regulations (PECR).
3.Simplifying or clarifying existing regulation e.g. rationalisation of UK Housing Standards.
4.Awareness raising campaigns e.g. food labelling in the food retailing industry.
5.Producing industry codes of practice e.g. Professional codes for lawyers.
6.Industry self regulation e.g. UK Press Complaints Commission.
7.Do nothing at all.

12. Challenges ahead
•To ensure early consideration of alternatives:
–Key internal stakeholders should be involved at the early stages of policymaking. Early engagement should encourage discussion of a wider range of options for achieving policy objectives.
–Many of the examples of alternative approaches point to the need for early and ongoing engagement with external stakeholders (business, industry, civil society organizations and the public) as part of the formal consultation process.
–Providing more incentives for Departments to consider alternatives to regulation. Incentives include alternatives to regulation being out of scope of the ‘One-in, Two-out’ rule.

13. Potential Solutions
•To overcome perceived barriers to using alternatives:
–A stronger understanding of the factors that increase the success of alternatives is needed. Government needs to articulate more clearly what alternatives to regulation are, how they should be developed and implemented, and when they work best.
–More evaluation of alternatives to regulation would help us to better understand the impact and effectiveness of different policy approaches.
–More evaluation of interventions not explicitly labelled ‘alternatives to regulation’ could provide greater insight. Government has intervened where the use of regulation was never considered. These interventions provide insights into the development of alternatives.

14. Online Resources
•The UK Better Regulation Framework Manual (BRFM): https://www.gov.uk/government/uploads/system/ uploads/attachment_data/file/211981/bis-13- 1038-better-regulation-framework-manual- guidance-for-officials.pdf
•Regulatory Policy Committee (RPC):www.independent.gov.uk/RegulatoryPolicyCommittee

15. Contact details
•Mohammad Zayyad/Cara Maguire
•1 Victoria Street, London SW1H 0ET
•Tel: 020 7215 3685
•E-mail: regulatoryenquiries@rpc.gsi.gov.uk