The government is interfering with the work of independent regulators and ministers are pushing to appoint “political allies” to top jobs, a group of peers has claimed.
In a report on the independence of regulators in the UK, the House of Lords’ industry and regulators committee sounded the alarm over the independence of watchdogs today and warned that “urgent reform” was needed to boost accountability.
“Our report raises concerns about the functioning of the three-way relationship between the regulators, the government, and parliament, particularly the role and performance of regulators, their independence, and their accountability,” chair of the group Lord Hollick said.
“We are especially concerned at cases where the Government has failed to resolve political or distributional questions facing regulators, and instead interfered in their day-to-day workings.”
The group added that there was “a perception that some regulatory leaders have been appointed on account of their political loyalty rather than their experience and capability”.
Regulators have come under increasing scrutiny from government in recent years as ministers look to slash red tape post-Brexit and boost growth across industries.
In a major shake-up of financial regulation last year, the two City watchdogs the Prudential Regulation Authority and Financial Conduct Authority, were told to include competitiveness and growth within their objectives.
The FCA and PRA also clashed with the government over proposed call-in powers, which would have handed ministers the ability to step in and overrule certain regulatory decisions.
In its report today, the group of Lords pointed to comments from a senior official in the office for public appointments which highlighted “efforts [by government] to promote political allies by leaking ministerial preferences”.
Boris Johnson’s government came under fire from some activists for reportedly pushing for the former editor of the Daily Mail, Paul Dacre, to head up the regulator Ofcom. Dacre ultimately withdrew from the race.
The Lords said that regulatory systems across industries were now in need of urgent reform to “streamline regulators’ duties and objectives and provide prioritisation in the event of conflicts”.
Among the to-do list was a call for parliament to “play a more prominent role in scrutinising appointments to regulators” and “state clearly what it has delegated to regulators to decide independently”.
The government should also “provide a public explanation if it chooses to make an appointment that has not been endorsed by the relevant select committee”, they added.
An ‘Office for Regulatory Performance’ should also be set up to investigate and report on regulators’ performance and support Parliament in holding regulators to account, they added.
“If the integrity and legitimacy of the UK’s regulatory system is to be preserved, the findings and recommendations in our report must be addressed by the Government, regulators and Parliament,” Lord Hollick said.