Army of regulators costs taxpayers Pounds 1bn

School inspectors are part of a growing army of auditors, invigilators and regulators which cost taxpayers Pounds 1 billion a year yet - according to a new study - are themselves neither audited nor inspected.

The regulators do not ask themselves the same questions about their efficiency and effectiveness that they direct at their clients. It is often a case of "do as I say, not as I do".

An audit of the auditors carried out by a London School of Economics team shows that while numbers of civil servants and council staff have been cut, the ranks of the inspectors and regulators have been rapidly growing.

The study leader, Professor Christopher Hood, joked that at current rates of expansion within a few decades every teacher would have his or her own personal regulator. The study was released by the Economic and Social Research Council as part of its programme of study into the functioning of Whitehall.

Recent growth has been striking. Government now employs some 20,000 "regulators" in around 200 separate regulatory and inspection agencies. Spending on them during the past two decades has doubled in real terms, a rate of growth three times as fast as government spending in general.

Some are called auditors (employed by the National Audit Office and the Audit Commission); some are regulators (employed for example by the Office for Gas Regulation); others are inspectors employed by the Office for Standards in Education and the Health and Safety Executive; yet others are called ombudsmen and complaints adjudicators. They inhabit bodies such as the Housing Corporation, the Funding Agency for Schools and the Further Education Funding Council. In addition there is a sub-empire of administrative tribunals - about 70 in number - which also act as regulators.

Professor Hood says this looks like a perverse example of "Parkinson's law". The more privatisation, the more local management, the more arm's length government agencies, the more regulators have been created. Instead of rolling back bureaucracy, a new public service "industry" has been created, the study says.

"As the Civil Service spun off operations, regulatory regimes were created which appear to involve substantial second guessing and bean-counting," the study adds. The inspectors and regulators often overlap and are said to pursue conflicting goals. The "compliance costs" of meeting the demands of the inspectors are rarely estimated and are probably huge.

The LSE study highlights the fact that nobody within the system has much of a clue whether the new breed of regulators is effective. For example, it costs more than Pounds 20,000 for OFSTED to inspect a secondary school and this figure is probably too low as education authorities often mount "mock" inspections before the real thing.

"Who knows if that is good value for money? With a few exceptions there is little consideration of the costs and benefits of regulation," the study says.

The regulators often hit councils hard. An inner London borough, for example, is now forced to spend nearly Pounds 2 million a year filling in the forms and answering the questions posed by its various regulatory bodies.

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