LEADING ARTICLE : Unsung heroes who filter out the sleaze

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The Independent Online
Regulators - they sound like the heroes of a high plains Western, all leather coats and smoking six guns. The reality is, of course, rather more prosaic. These people rejoice in such unwieldy titles as Director General, Office of Telecommunications. They inhabit drab standard-issue offices and - no offence - they tend to be somewhat less than charismatic. And yet, if ``opposition'' means the scrutiny and checking of established power, they are some of the most important opposition figures in Britain. They are more aggressive and outspoken than many Labour or Liberal Democrat front-benchers. And, of course, they have much more power.

So, perhaps not surprisingly, the public has come to invest trust in the regulatory offices created since privatisations of gas, water, rail and more recently, the lottery. In general, and certainly during the past week, the signs are that that trust has not been misplaced. On digital television, Don Cruickshank, head of Oftel, looks like he will make the best of the hand dealt him by the sloppy policy-makers of the Department of Trade and Industry. John Swift, the rail regulator, fiercely denounced Railtrack's under-investment. His record is far from perfect but there has to be a warm welcome for his readiness to dig for information and pass it on - as of this week, Railtrack is on notice.

These are performances government and its officials say they are happy with. But they say it through gritted teeth. "Independence" is never really popular in the corridors of Whitehall. The rest of us have begun, in a quiet way, to take the regulators' freedom for granted. Yet, if we stand back for a moment, and consider their brief history, this power is a remarkable thing. Regulation and bureaucracy were what Mrs Thatcher pledged herself to cutting. It was not that long ago Lord Young of Graffham was setting up a Deregulation Unit to produce White Papers with long lists of rules to be rescinded. In fact, when it came to it, people were found to be rather keen on health and safety at work. Even staunch Conservative voters were unenthusiastic about repealing the rules on development control and land use. (In a contest between ideological deregulators and Nimbys, the latter always win hands down.)

Today's regulators represent a further step - the return of powerful and popular bureaucrats. Why did the Conservatives tolerate this? Simply because, having privatised some of the most politically sensitive services, without properly breaking up the resulting monopolies, they were scared stiff of what companies and voters would say if they felt cheated or abused.

So far, an interesting lesson in the political limitations of radical Toryism. But the shape of the regulatory offices looks odder still when we consider how personal and discretionary they are. This is against the ideology of the past 17 years in a serious way. For instance, Friedrich Hayek was one of Lady Thatcher's gurus. He was a root and branch antagonist of giving officials a lot of personal discretion - that really was, he argued, the road to serfdom. Yet here we have Ms Spottiswoode in gas, Professor Littlechild in electricity, Mr Byatt in water and Mr Cruickshank in telecoms making individual and sometimes idiosyncratic judgements about price levels, competition and industrial structure - all very important political questions.

For democrats, the regulatory offices leave much to be desired. Notionally accountable to Parliament, the regulators have only to produce an annual report and turn up, if they care to, in response to select committee requests. They are effectively immune from Parliamentary scrutiny. Their judgements are, it is true, subject to inspection by the courts in judicial review and by the Monopolies and Mergers Commission. But all the courts can do is determine that their personal judgements were exercised after due care and deliberation. As for the MMC, it too is an odd animal - a quango made up of political appointees which is supposed to be fair and independent. As for the regulators' relations with ministers and Whitehall, well, they ought to be prickly and suspicious. Sir James Mackinnon at gas set a good example here - a regulator's honesty correlates with the degree of discontent among civil servants.

For all those ambiguities of structure, the regulatory offices work quite well. Even more important, the regulators command public confidence. When on Thursday Mr Cruickshank did the media round explaining how he plans to monitor Rupert Murdoch's control of the entry point for digital signals into the home, he sounded rather like the people's champion. Goliath may be big but David's footwork looks nifty; he may even have a pebble or two in his pouch. As for Mr Swift at the Office of Rail Regulation, he has turned out to be a source of vital information - for example, about investment levels - which even Labour in its cautious pre-election mode will surely find it hard not to exploit. Assessing these complex privatised companies requires, above all, huge amounts of technical information. We have never needed such activist regulation more.

So they are imperfect, sit unhappily in democratic life and are at odds with the prevailing ideology of Conservative Britain. Even the regulators' independence cannot be taken for granted. With government gongs and subtle hints about team playing, let alone the ever present risk of "capture" by the industry under regulation, the system is fraught with inducements to bend. Yet, more by luck than design, the regulatory offices have become high offices of state. They have, overall, confounded the critics. So, what are we saying - that this is a happy political story, something successful, even cheering? Well, yes, slightly to our own surprise, we are. It is, after all, the season for optimism.