The Hampton Review

1. The Hampton Review March 2007

2. Background • Business made a series of high level complaints about poor co-ordination and multiple inspections • Chancellor commissioned the review at Budget 2004 • It was the first time that Gov had looked systematically at the administration cost of regulation including: • inspections • form filling • coordination between different inspectorates • Remit to streamline administration costs, without reducing outcomes • Interim report at PBR 2004; final report at Budget 2005 • Complemented by Less is more, David Arculus which triggered admin burdens measurement exercise.

3. The facts: the regulatory sector • 63 national regulators of varying size, from 1 inspector to almost 2,500. • 468 local authorities, both counties and districts, with 4,500 trading standards staff and 15,300 environmental health staff • 1¼m inspections by national bodies, 2½m by local authorities each year • Total spend of national regulators: £3.1bn • Total spend in local authorities: £0.9bn

4. What businesses think • Lack of joining up • 74% of businesses said that the inspections they received were not co-ordinated • 60% of businesses had overlapping information requests from different regulators • 70% had received conflicting advice (Hampton survey) • Inspectorate landscape is too confusing • 50% of small businesses looking for advice cannot find it (SBRT) • A serious worry for small businesses • top cause of worry for small business owners, ahead of increasing customer demands and lack of time for friends and family (Grant Thornton)

5. Examples • The HSE told a business to move storage of a particular chemical away from the main factory building to prevent accidents, and the Environment Agency then told them to move it back, to prevent contamination of waterways in the event of an accident • John Lewis has been told to change the way it prices perfume three times in two years, although the regulations have not changed • One major GSK pharmaceutical plant has received only one random visit from HSE in the last 5 years, plus two in response to accidents. The Food Standards Agency, however, inspects the canteen every six months without fail, even though no problems have ever been reported.

6. What the review has found • Administration costs are a considerable burden, but hard to quantify • The major components of the administrative burden are: • Form filling there are too many forms, they are too long, they are too hard to navigate and there is too much duplication • Inspection which are too often uncoordinated and untargeted. Inspection activity has gone up, but regulatory outcomes have not improved • The burden falls most heavily on small business (69% of administrative burdens fall on companies with fewer than 50 employees – ICAEW)

7. Recommendations Hampton recommends a balanced package: • Common principles for all regulators to follow • Consolidation of regulators to: • provide joined-up services. Most businesses should only have deal with 1 or 2 regulators • 31 regulators into 7 thematic bodies by 2009 • Improve management and accountability of regulators and their ability to prioritise • Less form-filling: • Business reference group to vet all forms before introduction • (In time) common ICT platforms to allow data sharing • Make enforcement more effective: • Quicker penalties through administrative fines • Higher fines for persistent offenders • Standards for appeal procedures

8. Common principles: enforcement • Regulators, and the regulatory system as a whole, should use comprehensive risk assessment toconcentrate resources on the areas that need them most; • Regulators should be accountable for the efficiency andeffectiveness of their activities, whileremaining independent in the decisions they take; • No inspection should take place without a reason; • Businesses should not have to give unnecessary information, nor give the same piece ofinformation twice; • The few businesses that persistently break regulations should be identified quickly, and faceproportionate and meaningful sanctions; • Regulators should provide authoritative, accessible advice easily and cheaply; and • Regulators should recognise that a key element of their activity will be to allow, or evenencourage, economic progress and only to intervene when there is a clear case for protection.

9. Common principles: policy • All regulations should be written so that they are easily understood, easily implemented, andeasily enforced, and all interested parties should be consulted when they are being drafted; • When new policies are being developed, explicit consideration should be given to how they canbe enforced using existing systems and data to minimise the administrative burden imposed; and • Regulators should be of the right size and scope, and no new regulator should be created wherean existing one can do the work.

10. Key outcomes • Principles of enforcement enshrined in law • Better accountability for regulators • Reduction in form filling through fewer, simpler forms • End of ‘routine’ inspections • Penalties reform for tougher, quicker penalties for persistent offenders • Businesses better able to understand requirements • Structural reform of national regulators • Greater co-ordination of local authorities’ work