Improving Regulatory Performance: Lessons from the United Kingdom

Comments for the Record

Senate Budget Committee

Improving Regulatory Performance:

Lessons from the United Kingdom

608 Dirksen Senate Office Building

November 16, 2:30 PM

By Michael G. Bindner

Center for Fiscal Equity

Chairman Conrad and Ranking Member Sessions, thank you for the opportunity to submit comments for the record on this issue.   These comments to some extent repeat recommendations included in our testimony on the budget process from October, but bear repeating in this case.

In looking at regulation in the United States, it is not hard to find resistance to the very concept of regulation.  One would think with this amount of resistance, the party sourcing most of it would simply end it all when in power – yet it has not.  This demands exploration.

There are two main objections to regulation n the U.S.A.  The first is that it squelches innovation, especially innovation by small and emerging businesses.  This may or may not be true. Whether it is or not depends on how all encompassing the regulatory authority behind the particular regulation is and how concentrated the industry is it exists in.  Small businesses find it impossible to compete in the automotive market dominated by the Big Three U.S. automakers and the established international producers, many of whom actually produce more of their product within the U.S. than the domestic manufacturers. 

This objection has some truth in it – and it explains why regulation remains – because the established producers use regulation to protect their market share against competition.  Indeed, research on regulation shows that regulatory agencies become stable when captured by the major firms they regulate, with scientific experts moving back and forth between government and industry and a definite bias towards established players.  As these established players are often major donors to both parties, it is unlikely that this form of regulation is going anywhere fast.

Government and industry are more tightly intertwined in the United Kingdom than they are in the United States, so it is likely improvements come from better training of experts rather than any dismantling of partnerships between government and industry.

The second major objection is the “unelected bureaucrat” issue.  This objection is a bit of a canard, because in the popular imagination, a bureaucrat is the clerk at the DMV who had a short temper due to the long lines she had to face that day.  These aren’t the kind of bureaucrats who make regulatory policy, however.  While there certainly are entrenched civil servants who work on regulatory efforts, they are done under the guidance of both Congress and political appointees in the President’s party – who are often from the advocacy sector and come armed with an agenda that may or may not be shared by the President.  Often, these appointees are under-trained for the jobs they hold – which is why initiatives to train civil servants in the Senior Executive Service are often not adequate to improve agency leadership – as the wrong people are being trained.

A bigger bang for the buck would come from training and pre-certifying political appointees, giving them the same training SES members get on budgeting, personnel and policy, with ethics pre-screening as well.  Letting each major political party develop a cadre of such Senior Political Servants, with the help of the U.S. Government, would allow new administrations to hit the ground running.  SPS members should sail through the appointment and confirmation process – assuming they are required to go through the process at all.

Often, the complications to confirmation occur as a way to influence regulatory policy.  They are seen as necessary because Congress often feels shut out from the regulations they mandate.  On June 30, 1983, the Supreme Court ruled the legislative veto unconstitutional in an immigration case, In re Chada. Since that time a Joint Resolution of Disapproval legislative veto has been enacted as a general case. Several other legislative vetoes have also been acted into law. However, many of these cannot survive the standards imposed by the Chada decision. Therefore, Congressional control of agency regulation remains an open question.

To regain control of regulations, authorization committees review the body of regulations under their purview during consideration of the President’s budget. The President or Independent Agencies submit any changes to their major regulations (enacted since their last authorization) as an appendix to their authorization proposals. If the authorizing committees approve of the changes they do nothing. However, if they are unsatisfied with the changes, or wish to make changes of their own they can at this juncture.

These changes are made one of two ways. The first way is to write the change into law, which restricts subsequent action. If circumstances change the agency then seeks legislative relief or waits until the next authorization cycle. This option limits the ability of agencies to deal with emergencies, making it undesirable.  The second way is to change agency regulation by law, allowing for further change as circumstance changes. This almost superficial difference preserves flexibility in the regulatory process, making it desirable.

Enactment of this proposal firmly places regulatory initiative with the Congress. This approach gives the people say in the regulatory process through Congress, strengthening representative government. In doing so it helps the less well organized (who know how to reach their Congressman, but not the administrative agency). The regulatory review provisions have two more advantages over the status quo. First, they bring the regulatory review process into sharper view, allowing for more involved citizen input. Second, they avoid the constitutional pitfalls of the legislative veto.

These issues don’t exist with the United Kingdom.  There is no separation between Her Majesty’s Government and the majority in Parliament.  They are one and the same, so accountability is not an issue.  Ministers are also groomed more effectively in the British process than in the American.  While viewing the BBC situation comedy “Yes, Minister” shows that there are still issues that the civil service must deal with in terms of the competence of political management, they are not as extreme as in the U.S. system where political appointees often return to private life, industry or advocacy just as they are finally house-broken.

Thank you for the opportunity to address the committee.  We are, of course, available for direct testimony or to answer questions by members and staff.