OECD Reviews of Regulatory Reform: United Kingdom 2002

Challenges at the Cutting Edge

image of OECD Reviews of Regulatory Reform: United Kingdom 2002

The OECD's review of regulatory reform in the UK. The review finds that the United Kingdom presents a stimulating contrast of tradition and modernity, which is reflected in a mature and innovative regulatory system. The broad sweep of its reforms is impressive. Continuous reforms of the regulatory management system, the competition policy and law as well as in the regulatory regimes of key economic sectors are a strong basis for ensuring high quality regulation contributing further to drive economic performance. The UK was early in liberalising its public utilities and in developing new regulatory approaches to the complex problems of managing the network industries. It was also among the first countries to introduce a system of regulatory impact assessment, which, along with competition policy and law, has been continuously updated since. It has a reputation for having a regulatory environment that is among the most supportive of market openness and global competition in the world. The UK now faces challenges typical of a mature regulatory regime at the cutting edge of developments. Complexity and diversity - of regulatory objectives, of the institutional architecture and of procedures - are major issues to be continuously monitored. Building on these efforts and continuing to address regulatory challenges and areas of weaknesses will permit the UK to maintain itself as a leader in regulatory governance.

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Electricity and Gas Sectors and Regulation of the Professions

The UK was and remains one of the pioneers in the reform in the electricity and gas sectors – it started earlier than most countries, has gone further than most in introducing competition, structural separation and winding back price regulation. At the broadest level, the outcome of reform was to shift away from government owned monopolies to a competitive structure. This involves a large number of private sector operators in the potentially competitive parts of the industry, independent regulation of private monopolies where competition is not feasible, and the government setting the legal framework. The present UK regulatory framework and the sectoral regulator (Ofgem) are among best practice in the OECD. The benefits from increased efficiency, that have been shared among consumers (in terms of lower prices and improved, more innovative services), shareholders and the government, have been substantial.

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