Some Interesting/Worrying Regulatory News

Ofgem and “The Rich”

David Higham was not the only one to choke on his conflakes this morning when he read the FT’s headline that “Ofgem considers higher bills for the rich”. Ofgem is apparently asking “whether or not we can allocate costs more progressively”.

Ofgem wants to address the problem that will be caused by lower (variable) energy costs leading to fixed costs becoming a higher proportion of energy bills, which is arguably unfair for low use (and generally poorer) customers. But the associated complexity and bureaucracy would appear daunting, to put it mildly, and contrary to the current government’s deregulatory stance.

There is also an interesting constitutional problem. The postal regulator was (many years ago) facing concern that increased competition in the postal market might imperil the universal postal service:- letters etc. to be delivered anywhere in the UK for fixed prices. It wondered whether it could require new entrants to cross subsidise Royal Mail but an eminent barrister gave forceful advice along the lines that such ‘taxation’ could be imposed only by Parliament. Much the same would, I imagine, apply to any proposal that results from Ofgem’s review.

Regulation and Growth

In contrast to the above, the government has today published its new approach to ensure regulators and regulation support growth. Individual industries and lobby groups will no doubt pore over the detail but the good thing is that it is, on the whole, a substantial document with concrete proposals, even if the headline aim “to cut administrative costs for business by 25% by the end of the Parliament” is a bit iffy.

Regulation in the USA

Here is an extract from a recent interesting Institute of Regulation LinkedIn Post:

President Trump is moving fast. His executive orders are impacting regulation as much as other areas. The March podcast from the Institute of Regulation spoke to Prof. Cary Coglianese, law director at the University of Pennsylvania and world regulatory expert, about the likely impact of the new administration on US regulation. He had various concerns. First was that things that might benefit from some regulation – such as AI and climate change – would remain unregulated, with risks of harm unidentified. Second was that the administration’s early deregulatory approach, with 10 regulations to be culled for every new one introduced, was unfocused and unlikely to be effective. Third was that federal hiring freezes and staffing cuts would significantly reduce the effectiveness of regulatory agencies in areas where protections are needed.

Cary agreed that US regulation can be leaner. But it needs to be smarter too, with the benefits and costs of regulation understood and balanced. This could be done through better retrospective reviews of regulations, though this was not a quick fix. But above all, he urged us all to focus less on rulebooks and more on people – both those who benefit from regulation and those who bear its costs – and design regulatory systems around them.

You can listen to the 30-minute podcast on Spotify and the Institute’s website here: https://lnkd.in/eyY3ZCy3 .

Martin Stanley