If any institution should be capable of appreciating the burdens and the benefits of regulation, it is local government.
At the same time as council leaders seek to convince ministers that excessive or inappropriate Whitehall regulation and inspection is a barrier to efficiency and innovation, their own widespread armoury of regulatory services preach the need for compliance. Both these aspects of public sector regulation face a rethink about how regulatory requirements can best be fulfilled.
The expansion of the regulatory sector does at least mean there is now a greatly improved understanding within regulatory bodies of what works. Regulators are much keener to talk about the need to work in partnership with service providers, raising standards through the application of shared expertise.
In its 2004-07 strategic plan, the Audit Commission goes out of its way to signal its intention to move in this direction with the introduction of what it terms strategic regulation - a 'more focused and risk-based approach to audit, assessment and improvement', which will include better targeting of regulatory resources and more partnership working. The commission's strategic plan contains frank admissions about the limitations of previous regulatory regimes, acknowledging that 'audit and inspection have not always been focused where most impact might be achieved and there has not been sufficient emphasis on targeted improvement'.
This more streamlined view of the commission's purpose catches the tide of an important policy imperative coming from the government. Adopting a more rationalised approach to regulation is one of the themes of its efficiency review, launched in the 2003 Budget under Sir Peter Gershon, which will feed into this summer's public spending review. Ministers want to free up resources for front-line services through better procurement at both national and local level, improved use of new technology and changed working practices.
Some Whitehall departments have already begun to prepare for a shift in the balance between back office and front line. Health secretary John Reid announced in May that he plans to halve the number of NHS quangos by 2008. The organisations to be culled have not yet been identified and not all the potential targets - around 40 in total - have regulatory responsibilities. But a number do, and this demonstrates that the restructuring of public sector regulation is far from complete.
Reducing the number of arm's-length bodies - such as those in the NHS - to eliminate duplication and allow greater clarity of role is a theme of the public sector policy, funding and regulation section of the draft Gershon Review, leaked earlier this year.
It found that policy, funding and regulation functions - when defined broadly to include such things as ministers' offices and parliamentary support - has grown to employ about 155,000 people across more than 1,000 organisations. The estimated£8bn annual cost amounts to 4% of total funds.
Much of this structure, Sir Peter recognises, developed for good reasons. Historically, many local bodies had been weak on value for money and performance management. Best-practice transfer between organisations had been slow and politicians wanted to force the pace, while weak data systems had complicated efforts to collect accurate information. But attempts to tackle these problems led to the growth of what he portrays as an incoherent structure with fragmentation, confused responsibilities and
front-line service providers hampered by bureaucracy and compliance burdens.
In terms of regulation, the draft report was clear that - in a phrase shared with the Audit Commission in its adoption of strategic regulation - there must be a more focused and risk-based approach. Under such an approach robust, intensive intervention would be the fate of the 10-15% of organisations that had trouble meeting minimum standards but, for the majority, inspection and audit should be more proportionate to risk.
If the search in Whitehall departments for savings to divert to front-line services results in a reduction in the number of regulatory bodies, it should prove a valuable step towards a more focused approach - although the idea of a single public sector regulator is likely to remain a distant dream.
In the view of many public sector managers it would, in any case, be less of a dream than a giant, departmentalised, bureaucratic nightmare. Specialised services require the attention of inspectors with appropriate expertise. Requiring them all to answer to a single organisation would not necessarily simplify outcomes.
A realistic early test of the government's commitment to more rational regulation will be whether regulators begin to agree objectives and share information with each other. This calls for a lead regulator approach. The newly created Healthcare Commission - formerly the Commission for Healthcare Audit and Inspection - has, for example, responsibility for co-ordinating reviews carried out by other healthcare bodies.
The Audit Commission's plan recognises that 'the regulatory landscape is complex' and agrees it is 'essential that regulators work together to develop a clear understanding of how they can be most effective'. In the past, the commission concedes, regulators have not always been clear about their roles and relationships. Better
co-ordination matters not only in the way public services are delivered, but in their regulation. So the Audit Commission will seek to work more closely with bodies such as the Healthcare Commission and the Housing Corporation, and will co-ordinate its activities with the Improvement & Development Agency's improvement programmes.
It is accurate to describe the Health & Safety Commission's objectives in a new strategy for workplace health and safety, which it is currently discussing with local government representatives, as focused and risk based. Health and safety is a central element of local government's regulatory role, and one that may be about to change significantly. The commission has concluded that there is 'no lasting logic' to the existing division of enforcement responsibilities between councils and the national Health & Safety Executive. It wants to review the balance between local and central interventions - the commission suggests, for example, that there is a case for national co-ordination of councils' approach to retailers with national networks.
The overall thrust of the commission's strategy is that neither the Health & Safety Executive nor councils can meet all possible health and safety demands. They must move away from putting resources into issues when risks are of a low order or are properly managed. Much of this builds on the permissive, self-assessment nature of the 1974 Health & Safety at Work Act, which was in many ways the forerunner of the focused and risk-based approach to regulation that is now being encouraged elsewhere.
In addition to workplace health and safety, council regulatory services encompass a range of mainstream and often newsworthy subjects, including food safety, cowboy builders, rogue traders and nuisance neighbours. 'These issues increasingly fit into the wider community well-being agenda - regulatory services should not be seen as a stand-alone activity, unconnected with the other aims and activities of a local authority,' says Derek Allen, executive director of the Local Authority Co-ordinators of Regulatory Services.
But in spite of their value to local communities, the regulatory services face problems at local level. There are difficulties in recruiting and retaining staff, such as trading standards and environmental health officers.
Lacors' priorities for the coming year include improving corporate and workforce capacity and securing effective community engagement, as councils prepare to take on significant new regulatory responsibilities in alcohol and public entertainment licensing. But in his introduction to the organisation's 2004-05 business plan, Mr Allen identifies another priority. Lacors will, he says, 'rise to the challenge from central government to drive improvement in these regulatory services, and put a robust and coherent case for them to be delivered by local government for local communities'.
Is council delivery of regulatory services under threat? There are, periodically, those in Whitehallwho become attracted to the idea of such innovations as a national trading standards agency. Local government appears to be winning the argument at the moment, but it feels the need to remain on guard.
One problem is that there is not a single view across all Whitehall departments. And that, of course, is not only an issue facing the local regulatory services. It goes to the heart of whether a more Whitehall-wide style of target setting will emerge to support the promised future of a more focused and risk-based approach to regulation.