The effectiveness of corporate governance is once again in the headlines. It is key to all the areas where reform is on the agenda. From the media, financial institutions, care homes, schools and hospitals, the debate is running on where between ‘soft touch’ and mandatory legal requirement the regulatory line should be drawn.
This question was at the heart of a UKAS and BSI sponsored event held at the House of Lords. It was attended by officials from a wide cross section of Whitehall departments. The keynote speaker was Oliver Letwin MP, Minister for Government Policy at the Cabinet Office. His address focussed on how interest in standards and accreditation is growing within government and across all departments and agencies.
The key concern for government and businesses is how to minimise unacceptable behaviour by the few without penalising the reasonably behaved majority. The Minister commented “The solution to policy problems does not always lie in complex legislation.” As an illustration of the unwieldiness of formal legislation, the legislative process can take up to seven years from the original concern to the final law being passed. By which time the original problem has often been long superseded and the outcome is a new law that addresses an outdated issue.
Letwin continued. “There is a tendency to imagine that regulation is the only or best solution.” Even where alternatives such as regulatory agencies are used, they don’t necessarily have enough power or reach. “In either case” Letwin stated “the result can mean costs are loaded onto people who were not related to the original wrong in the first place, and the wrong-doers still do wrong but at greater cost to those who are and are likely to remain basically blameless.”
Accreditation is also being examined in relation to the growth in public sector diversification and the government’s aim to reduce regulation through the ‘One in One out’ mechanism. Letwin outlined “there are two agendas at present – liberating British business from regulation, through the Red Tape Challenge, and improving how regulation is enforced”. The aim is to achieve these goals, while maintaining positive outcomes for businesses and consumers alike. “There will always be wrong doers and sharp shooters and there does need to be a way of controlling and limiting them” admitted Letwin. “However, solutions need to address problems faster than traditional regulation and to work at a lower level”.
A strong selling point for accreditation and standards is their facility to respond quickly to innovation and to develop solutions at speed that are implemented within the business process. This was illustrated by UKAS and BSI’s response to the need for accredited standards within the Green Deal initiative where standards were agreed and accredited certification bodies identified and processed within a particularly tight timetable. As such, Letwin surmised “accreditation teamed with standards can be a hugely flexible tool which has probably been under used to date.”
It is down to the relevant departments to take up the government’s challenge on increasing use of alternative strategies other than statutory regulation. Letwin underlined the point saying “We can’t command it, we can only beg it”. However, the Cabinet Office is clearly committed to this approach, as its work with UKAS and BSI to date demonstrates. “The hope is we will move away from the statutory model which is lumbering and takes too long to become effective and from crypto-regulation which lacks the bite.” As such, government needs UKAS and BSI’s more flexible and fast moving model of control which works in real time and in the real world. Based on this, Letwin predicts that these solutions will accrue increasing amounts of interest and support from across Westminster, Whitehall, and beyond.