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7 July 2011

Assessing the Value for Money of Regulation of Infrastructure Networks Anne Taylor & Alex Scharaschkin. 7 July 2011. Assessing the Value for Money of Regulation of Infrastructure Networks. The UK National Audit Office Regulation of UK infrastructure industries Value for money

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7 July 2011

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  1. Assessing the Value for Money of Regulation of Infrastructure NetworksAnne Taylor & Alex Scharaschkin 7 July 2011

  2. Assessing the Value for Money of Regulation of Infrastructure Networks • The UK National Audit Office • Regulation of UK infrastructure industries • Value for money • Principles of performance measurement • Challenges for regulators • Impacts

  3. The UK National Audit Office • Our role • To provide independent information, assurance and advice to Parliamenton the use of public resources • To help promote better financial management and value for money

  4. Regulation of UK infrastructure industries • Sector economic regulators are independent of Government • Varying levels of competition between sectors: • Rail • Postal services • Gas & electricity transmission • Water • Gas & electricity supply • Telecoms

  5. Value for money Good value for money is the optimal use of resources to achieve the intended outcomes

  6. Value for money External factors Resources (€) Inputs Outputs Outcomes Economy Efficiency Effectiveness Cost effectiveness / value for money

  7. Principles of performance measurement A performance measurement system should be: • Focused on the organisation’s aims and objectives • Appropriate to, and useful for, the stakeholders who are likely to use it • Balanced, giving a picture of what the organisation is doing, covering all significant areas of work • Robust, in order to withstand organisational changes or individuals leaving • Integrated into the organisation, being part of the business planning and management processes • Cost Effective, balancing the benefits of the information against the costs

  8. Challenges for regulators Regulators face particular challenges in trying to measure their performance, for example: • determining indicators of outcomes reflecting the statutory duties set for them by Parliament • appropriately recognising the fact that outcomes are usually influenced by other factors as well as the regulator's actions • determining thresholds for ‘good’ performance, given this problem of attribution

  9. Sphere of influence

  10. Performance of the regulator vs performance of the market Requirements for effective regulation of cost efficiency

  11. Impacts • Public Accounts Committee (PAC) • Ofcom • Office of Rail Regulation • Ofgem

  12. www.nao.org.ukanne.taylor@nao.gsi.gov.ukalex.scharaschkin@nao.gsi.gov.ukwww.nao.org.ukanne.taylor@nao.gsi.gov.ukalex.scharaschkin@nao.gsi.gov.uk

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