https://quarterly.blog.gov.uk/2016/06/03/regulators-fit-for-the-future/

Regulators fit for the future

How regulators can use new technologies to help minimise the burden on business, get the best value for taxpayers and drive innovation.
Using technology to improve public services

The way the UK regulates has changed dramatically in recent years. The Civil Service has been exploring what the next wave of change for modern regulators might look like. In this article, Martin Donnelly, Permanent Secretary at the Department for Business, Innovation & Skills, discusses how regulators can use new technologies to help minimise the burden on business, get the best value for taxpayers and drive innovation.

Across the public sector, we are being challenged to work smarter, take advantage of new technologies and adapt. That goes for regulators as much as any other public body. Indeed, when regulators adopt new approaches themselves, they also build their capability to support innovation in the sectors they oversee.

The Cabinet Office (CO) and Department for Business Innovation & Skills (BIS) have been working together to anticipate key technology opportunities for our regulators. This project has uncovered a number of promising innovations, many of which are already being led by regulators.

The reason for this focus is clear. The modern regulator can use technology to provide a better service for – and reduce burdens on – business, get the best value for the taxpayer and drive innovation more broadly.

Of course, the responsibilities of regulators vary significantly – from issuing environmental permits to ensuring financial firms provide appropriate advice to consumers. However, through their project, BIS and Cabinet Office have identified opportunities that are relevant to many of them.

Data science

Many regulators collect, hold and interrogate large amounts of data – whether it is information about a particular business’ activities, statistics across a sector, or a record of assessments made by the regulator. Data science is about exploring new techniques and technologies to work with this data to better achieve our objectives.

For regulators, this might mean collecting and processing multiple large data sources in order to better understand the likelihood that different businesses (or other regulated bodies) don’t comply with the expectations set out in regulation. If we know this, it can help regulators to target their work more effectively, or spot trends or anomalies. This will enable regulators to shift their focus to identifying and tackling serious problems in their sectors from less routine activities.

Ofsted is working with the Department for Education to explore using big data to predict and prevent decline in school performance.
The Competition and Markets Authority is developing its capability in digital forensics, in order to help target cartels and monitor and assess markets.

Algorithmic decision-making

Computers can be programmed in order to automatically carry out a range of activities. This includes, for example, validating the completeness of data received by a regulator or applying rules to categorise information and present analysis.

Potential in this area is certain to evolve with time. But, already, where regulators are making clear, rule-based checks or judgments at scale, they may be able to automate some or all of this process. This can reduce the time or effort needed for the handling of routine activities.

As part of the Environment Agencys digital transformation work, the agency is developing new approaches to environmental permitting, which will automate parts of the process based on online information submission.

Data sharing

Where it is possible for multiple regulators to match-up records they hold covering the same organisations, this unleashes many opportunities. For example, it opens up the option for businesses dealing with multiple regulators to ‘tell us once’, reducing the time spent sending similar information to multiple organisations.

Matching records also allows regulators to combine intelligence on the organisations they oversee. This means it can be possible to merge or better sequence inspection efforts, reducing the burden on business. And it has the potential to help regulators work together to develop a more sophisticated understanding of which organisations pose the greatest risk of not complying with regulation, and target efforts on those.

The Health and Safety Executive is leading work with many departments on ‘Regulatory Intelligence’, and is scoping out the development of a ‘Regulatory Intelligence Hub’, which will match and link disparate data from many sources to provide a combined view of duty-holder performance. Its own FIND-IT tool already uses this technology to target inspection activities further and reduce burdens on compliant businesses.

Internet of things

This technology is about a network of physical objects that are connected and able to collect and exchange data. It is relevant to regulators whose work involves checking the location or status of physical things.

In the future, regulators will be able to use sensors (which can be very simple, or can be embedded within more sophisticated devices, such as drones) to gather information as an alternative to inspection.

The Food Standards Agency is co-funding a programme of work on the Internet of Things and food safety, including a series of short pilot projects on issues such as transportation of food, temperature control and data standards.

And beyond

There are many more opportunities. As you would expect, regulators are moving services online and there is more to do in that area.

Innovative work can be seen wherever you look. The Maritime and Coastguard Agency is working with industry to develop marine autonomous vehicles (which can carry out important scientific and commercial information gathering); and the Department for Environment, Food & Rural Affairs is developing further use of satellite imagery of farms, so even more farm inspections can happen remotely.

We have been impressed by the creative approach to solutions and the constant commitment to improvement we have witnessed from regulators.

We need also, of course, to look for inspiration beyond regulation and the UK. For example, Her Majesty’s Revenue & Customs’ (HMRC) Connect programme, which scours vast databases to help spot tax non-compliance; or the US Environmental Protection Agency’s use of solar-powered buoys, transmitting water- quality information.

Of course, no technology is a fix-all solution, and we always need to put proper thought and care into how we use data. But these ideas have the potential to augment the impact of our skilled staff in regulators.

In the future

More information on this work will be published by departments and regulators over the next few months, as they set out their individual approaches to innovation and regulation. This will include details around regulator operating models, and more broadly how regulators support innovation to flourish in the sectors they oversee. And we plan to set out the commitment we invite those we regulate to hold us to.

We have taken an important first step in setting out what the future could look like and the benefits that new technology could bring. I urge all regulators to continue to explore opportunities, to innovate, share and improve together – that is the best way to ensure we remain fit for the future.