External efficiency review of utility regulators

HM Treasury commissioned Oxera and WS Atkins for this study. This efficiency review examined the four utility regulators in Great Britain—the Office of Gas and Electricity Markets (Ofgem), the Office of the Rail Regulator (ORR), the Office of Telecommunications (Oftel) and the Office of Water Services (Ofwat). The review focused on inputs (procedures, processes and resources) rather than outputs (regulatory effectiveness), with three specific objectives:

to examine the way in which the regulators define, plan, and prioritise proposed areas of work from which programmes and projects are developed;
to evaluate the management of programmes and projects from inception to closure;
to assess their overall cost efficiency and that of support functions, such as corporate overheads, human resources, finance, information technology/ information services, library facilities, procurement/use of consultancies and press-office functions.

The study involved process benchmarking, in terms of the management, planning and monitoring of the regulators’ work, and metric benchmarking, in terms of the costs of common support function. In addition to obtaining data for analysis from information requests of the regulators, Oxera obtained views from the regulators’ various stakeholders (eg, regulated companies, consumer representative bodies, environmental lobby groups, and the City) and to rate the regulators against a set of 29 criteria. To provide external benchmarks, information was collected and comparisons undertaken of the costs, staffing, and management of support functions in comparator organisations, including other UK and overseas regulators.

Following this review, recommendations were given aimed at improving the performance of the regulators where it was identified as being lacking.

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Policy, risk and science: securing and using scientific advice

The objective of this study was to identify good practice in securing and using expert scientific advice for policy-making. Co-sponsored by eight government bodies, the study offered recommendations for improving the quality of scientific advice received by government and used in policy development.

Although scientific methods are well established and scientific theories successfully inform policy decisions, this study was concerned with weak evidence, novel and incompletely known risks, hypotheses and gaps in data.

On the basis of a literature review, case studies and informal interviews with a wide range of interested parties, a set of recommendations was formulated in the form of:

principles—these are fundamental and comprehensive;
a model process—the clearest way to secure scientific advice that is fully compatible with the principles;
supplementary notes—these include detailed recommendations for some aspects of the process.

The report, published by Health & Safety Executive, called for significant changes in the operation of existing mechanisms, which should result in more robust advice. This should lead to more informed policy decisions and a system of policy development with a higher level of public confidence and the support of the scientific community.

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The wider impacts of rail and road investment

Appraisal of the environmental impacts of rail schemes for a client in the rail industry

Drawing together the work of academics, government and others into a single reference guide, this appraisal of the environmental impacts of rail schemes contributes to the debate on the appropriate level of public support for rail services. It contains an introduction to future transport problems, a guide to assessing public support for new transport services, and estimates of the financial and environmental costs of road and rail passenger transport. It also includes analysis of the marginal costs of travel by road and rail in the long run—the appropriate measure of the cost of meeting future demand.

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