Laying down the law: the research behind regulatory reforms

15 March 2010

Professor Richard Macrory (UCL Laws) describes how his Review of regulatory sanctions became a new Act, inspiring culture change within the UK Government, and legislators abroad.

“Academic lawyers are rarely given the opportunity to see their ideas turn into actual legislation, and it is both an exhilarating and somewhat unsettling experience. The Regulatory Enforcement and Sanctions Act 2008 has been described as a revolution in the way we think about the design of regulatory sanctions in this country, and the coming months see a critical period in its practical implementation.

Houses of Parliament

As an environmental lawyer I had long been interested in the process of enforcement, and recent board membership of the Environment Agency provided fresh insights on the challenges facing a core regulator in enforcing environmental law. I was struck by the extent to which we were largely reliant on the criminal law when things went wrong, and conducted research at UCL on the wider range of types of sanctions that were available to many equivalent environmental regulators in other countries.

In 2005 I was appointed by the Cabinet Office to lead a Review on regulatory sanctions as part of the Government’s general regulatory reform programme. The Review went way beyond the field of environmental law, covering some 61 national regulators as well as local authorities, and almost every area of business regulation one could think of – from environmental, health and safety, trading standards, food standards, planning and building controls to charities and night-club bouncers.

Initially a daunting prospect for a fairly specialised lawyer, but one that turned out to have distinct advantages. I was forced to examine underlying principles and processes rather than getting drowned in the technical details of the individual laws, and the Review quickly revealed problems that were common across the board.

In almost every area of regulation there was a small percentage of individuals or operators who were quite blatantly not complying with the law, and often making large sums of money by undercutting legitimate businesses. But then there were companies who broke regulations through oversight, carelessness or an unexpected accident but with serious consequences and where a simple warning was not a sufficient response.

Professor Richard Macrory

The problem in most areas of regulation was that for largely historical reasons the only real sanction the regulator possessed was the criminal law. Sentencing discretion should be able to distinguish the truly intentional from the careless, but in reality we were making the criminal law do far too much work, and there was a danger we were devaluing its impact where it was most needed.

My Review identified important improvements that could be made to the criminal law system, but the headline recommendations were to give regulators a greater range of sanctions beyond the criminal law – notably civil sanctions taking the form of significant financial penalties but without going through the criminal courts. The criminal law would be reserved for the truly criminal but without undermining the overall effectiveness of a sanctions system.

The Government accepted all the recommendations in the Review. The Regulatory Enforcement and Sanctions Act was passed to provide framework powers that could then be drawn down by Ministerial Order to individual regulators as and when needed. This month Parliament debated the first such Order which grants these powers to the main environmental regulators. A trial is planned amongst local authorities in the field of trading standards, and other regulators may soon follow suit.

The first such sanction will probably not be imposed until the end of the year, and we are some way from judging how effective the new system will be. But former colleagues in the Environment Agency talk of a positive culture change already taking place internally, and, even more gratifyingly, other countries are now looking to the Review for application in their jurisdictions.

Perhaps more importantly in what will be an election year, the process should survive any possible change in Government. The recent Conservative Green Paper on Regulatory Reform concludes by stating: ‘We will evaluate the progress which has already been made towards implementing the Macrory Principles of regulatory justice, which aim to improve both the flexibility, consistency and appropriateness of regulatory sanctions, to discover whether it is possible and desirable to speed up the process in the future.’ ”

Richard Macrory is Professor of Environmental Law at UCL, and is Director of the UCL Centre for Law and the Environment.


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