Renewing the Regulatory State?

The recently issued Programme for Government of the Fine Gael/Labour coalition gives some hints as to the extent to which regulation will be maintained and developed as a mode of governance over the next few years. The transformation of governance modes from welfare state to regulatory state models in Europe has been observed over the last twenty years and characterised by tendencies towards separation of policy making from operations, displacement of bureaucratic discretion with greater reliance on rules and the use of arms-length (semi-)independent regulatory agencies to monitor and enforce compliance with regulatory regimes. As a governance mode regulation is attractive, particularly in hard times, as it is offers relatively inexpensive (to government) mechanisms to symbolise policy commitments in areas such as financial markets, consumer protection and the environment. The Programme for Government makes extensive use of regulatory proposals, not only affecting business regulation but also regulation of the public sector and self-regulation.

In respect of regulation of business the central themes of the programme for government include a degree of rationalization, notably seeking to bring together the various organisations concerned with the regulation of financial markets, and a new emphasis on enforcement, represented by a proposal to merge enforcement activities of the Health and Safety Authority and the National Consumer Agency. A reader might wonder why these two enforcement agencies were singled out and other enforcement organisations such as Health Information and Quality Agency, the Food Safety Authority of Ireland (which received separate attention in the document) and the Environmental Protection Agency were not included in plans for a more ambitious enforcement agency. However it is done in organisational terms there is clearly great scope for the diffuse agencies involved in enforcing social regulation (broadly defined) to learn from one another, a central theme of a recent NESC report Re-finding Success in Europe: The Challenge for Irish Institutions and Policy ( and in particular its discussion of the network built around the Office of Environmental Enforcement, pp136-141). A distinct set of proposals for sale of state assets, to be guided by a report by Colm McCarthy to be published imminently, will reduce the capacity for the state for control through ownership thus continuing the shift from welfare state to regulatory state modes.

The renewal of the regulatory state is perhaps more strongly represented in coalition plans for operation and oversight of public sector activities. This emphasis implies an analysis that Ireland’s problems lie as much with public sector as with private sector activity. The stringency of regulation of public sector organisations and representatives is targeted by proposals:

  • to reinforce freedom of information legislation
  • to extend the ambit of the public sector ombudsman
  • to introduce whistleblowers legislation
  • to more tightly regulate political party finances
  • to revise legislation governing the relationship between ministers and their civil servants
  • to establish an Investigations, Oversight and Petitions Committee in the Oireachtas linked to a proposed referendum to permit Oireachstas committees to undertake full inquiries (reversing the Abbeylara decision)
  • to require the publication of Regulatory Impact Analyses prior to the taking of government decisions
  • to introduce greater ‘choice and voice’ for users of public services such as schools and hospitals
  • to put the Inspector of Prisons on a statutory basis

At first glance the proposed abolition of the HSE would shift us back towards a classic welfare state mode of governance with direct ministerial control and, we might presume, a greater degree of bureaucratic discretion. Proposals to progressively introduce primary health care services which are free at point of use also shift Ireland closer to the welfare state model of healthcare. However these measures are balanced by the proposal to free hospitals from direct governmental control and, presumably, establish a contractual basis for both the procurement and regulation of healthcare provision. Accordingly the Department of Health may be substantially restricted to policy rather than operational matters in healthcare.

A third trend identified with the shift towards the regulatory state is a reduced emphasis on self-regulation as the state seeks to take on a greater oversight role. Such a trend is found in the document in the commitment to establish in independent regulator for the legal profession, which will to some extent displace professional self-regulation. This reproduces a commitment already found in the EU/IMF aid package and which follows from the Competition Authority’s 2006 report on the legal profession.

Author: Colin Scott

Colin Scott is Principal, UCD College of Social Sciences and Law and Professor of EU Regulation and Governance at UCD. He is a Co-Editor of Legal Studies (Wiley-Blackwell).

8 thoughts on “Renewing the Regulatory State?”

  1. It is one thing to decide to have a regulatory system. It is another thing entirely to create and maintain a regulatory system that is effective in terms of economic and policy outcomes as well as regulatory outputs.

    There have been serious criticisms made of existing regulatory systems. These criticisms need to be understood and addressed and the lessons disseminate throughout the public service before we embark on creating further regulatory bodies and functions. In particular, silo-isation, where given regulatory bodies are only concerned with effecting their own statutory goals rather than seeing the bigger picture must be addressed.

  2. @Colin Scott,

    Many thanks for this overview. I was going through our new government’s ‘cut’n’paste’ job to see if there was any coherence in the regulatory sphere – and starting to grind my teeth. Still not sure, but I think you’re spotted the key strands.

    There seems to be this public perception that regulation went pear-shaped only in the areas of bank supervision and financial regulation. The problem is that regulatory failure has been widespread and systemic; it’s just that the detrimental results are not as spectacular as they have been in banking and finance. It’s more like a drip-drip increase in the burden on citizens and the economy.

    In addition to the proposed culling and re-organisation of various bodies and regulatory agencies – where one expects new appointments will be made at senior level, the top layers of all government departments and statutory bodies should be required to re-apply for their jobs in open competition. This is the very least required to match the thorough-going purging of the political stables effected by the voters on 25 Feb.

    It is not recommended that this be required after every change of government, but, in this instance, there is good reason for such a once-off exercise.

    On Wed. we expect a new government to be elected and appointed, but in reality all that will have changed is the identity of the members of cabinet and their special advisers and the disposition of the lobby fodder in the Dail. The people’s abiding faith in the democratic process and the devastating exercise of thier ultimate authority to decide who governs – and to punish those who have misgoverned – deserves to be rewarded with more thorough-going change.

  3. Governance 101 – Interim:

    (a) Bernie Madoff was done and dusted and in ‘De Joy’ in less than four months. Discuss in 100 words with reference to any Tribunal of your choice.

    (b) The Office of the Director of Corporate Enforcement (ODCE) is provided with insufficient resources by the political system. In whose interests? Discuss in 100 words.

    (c) Following the ‘aesthetic turn’ in economic and political governance, compare and contrast, in less than 100 words, any two of the following: ‘charvet shirts’; ‘equine tents’; ‘dig-outs’; ‘nama’; ‘family seats’ – in the context of expropriating leadership and upper-echelon theory.

    (d) In one sentence, not exceeding a baker’s dozen words, write your conclusion based on all of the above.

  4. This blog post really struck a chord with me, working in a heavily regulated environment often reveals the issues inherent, my most recent pet hate is the fact that financial services firms have to pay Investment Compensation insurance even if you don’t give the investment advice that it covers and you hold professional indemnity insurance already, this strong arm is backed by the Regulatory regime. Is it ‘regulating’? yes, but achieving anything? protecting consumers to whom we embed the price of this upon? Nope.

    The thing that anybody in industry easily grasps is that we had ‘regulation’ and we still got the crash, the very justification for regulation in the first place is the avoidance of the very systemic risk that we are faced with but paid good money to our regulators to avoid. Now we are told more of the same is the solution.

    So what ‘type’ of regulation? How? It’s one thing to make rules, another entirely to enforce them, and it’s one thing to make promises but another entirely to keep them.

    I’m with Zhou on this one.

  5. @ David O’Donnell

    Slow-motion speed is the Irish default and there has been the excuse trotted out about Anglo that there were so many documents to trawl through and then they also had to find a hacker to deencrypt some e-mail messages.

    How long should it take to establish the background on the hiding of the director loans over 8 years?

    Several people including directors had to be aware of it.

    Was it in breach of the criminal law?

    Yes — lay a charge and continue the investigation on other issues.

    In the US, the Galleon hedge fund insider trading trial opens this week; the prosecution has already lined up as witnesses, former senior executives of IBM, McKinsey and Intel, who have pleaded guilty.

  6. @all

    On Governance: The last thing the dying fish discovered was the polluted water.

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