THE NEED FOR A REGULATORY CHARTER

Pages355-363
DOIhttps://doi.org/10.1108/eb024782
Date01 February 1993
Published date01 February 1993
AuthorCENTO VELJANOVSKI
Subject MatterAccounting & finance
THE NEED
FOR A
REGULATORY
CHARTER
Received: 19th May, 1993
CENTO
VELJANOVSKI
CENTO
VELJANOVSKI
IS
A
DIRECTOR
OF
LEXECON
LTD.
LONDON,
WHICH UNDERTAKES REGULATORY
AND
ECONOMIC ANALYSIS
HE
HAS WRITTEN
WIDELY
ON
PRIVATISATION, REGULATION
AND
COMPETITION LAW INCLUDING 'SELLING
THE
STATE
-
PRIVATISATION
IN
BRITAIN, (1988)
EUROPEAN POLICY FORUM.
ABSTRACT
There has
been
growing concern about the
accountability
and
procedural safeguards
surrounding
the
economic regulation
in
privatised utility industries (telecommuni-
cations, gas, airports, water and
electricity).
In the paper, the source
of
the problems
is
identified as the over-reliance on the
discre-
tion of regulators, the absence of consistent
and strong procedural protection which
would ensure that decisions are explained,
and weak and highly ambiguous channels
of accountability.
The
arm's length rela-
tionship
between
government
and
industry
following privatisation
has
made regula-
tion more adversarial and personalised.
In
order to deal with this new situation, more
formal
procedures
are required which limit
regulators' powers
and
discretion, increase
procedural safeguards, and formalise and
strengthen
the
system
of
checks
and
balances which operate
on
regulators.
A
positive set of proposals which satisfy these
requirements
is
set
out by the author.
The regulation
of the
privatised
utilities
has
come under increasing
strain
and
criticism.
The
recent
reference
of
British
Gas to the
Monopolies
and
Mergers Commis-
sion
and the
criticism
of the
elec-
tricity regulator
by the
Energy Select
Committee, together with
the
almost
daily public scraps between regula-
tor
and
industry chiefs
has
drawn
public attention
to
those concerns.
This paper draws
on the
author's
report into 'The Future
of
Industry
Regulation
in the UK
A
Report
of
an Independent Inquiry' (1993)
which undertakes
a
major review
of
the procedures underpinning
UK
utility regulation
in the
telecommu-
nications,
gas,
water, airports
and
electricity supply sectors.
The major conclusion
of
this
review
is the
urgent need
to
reform
the procedures employed
and
dis-
cretion exercised
by the new
breed
of regulators.
The
source
of the
355

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