‘It is not possible to assess whether Ofcom delivers value for money’ says Public Accounts Committee

This article was published in February 2011 and reflects the regulatory position at that time. For current guidance on this topic, contact Bratby Law or see our latest insights.

The House of Commons Committee of Public Accounts scrutinises the accounts of publicly funded bodies to assess whether those bodies deliver value for money (which it defines as being ‘the optimal use of resources to deliver intended outcomes’). It today published a report ‘Ofcom: the effectiveness of converged regulation’, which reaches the fairly damning conclusion that it is impossible to assess whether Ofcom is delivering value for money, on the basis that Ofcom does not specify intended outcomes, explain how its activities will achieve those outcomes or set out how it will deliver success. In my previous post on regulatory best practice I discussed the current BIS consultation on best practice for economic regulation that identified a lack of clarity on regulatory objectives as an area to be improved. In light of this report, the watcher wonders whether Ofcom sometimes confuses quantity of paper with setting clear outcomes? In Ofcom’s defence, the Committee did acknowledge that outcomes for consumers in communications markets had been broadly positive, although it identified as issues:

• fines for silent calls;
• persistent barriers to consumer switching; and
• limited competition in fixed infrastructure,

By reference to complaints to Consumer Direct helpline, the Committee also identified as problematic complaints around agreements relating to:

• mobile phone service;
• telephone landlines; and
• internet service.

The Committee also identified that Ofcom had successfully reduced its costs and managed its expenditure, although the Committee noted that Ofcom’s practice of managing to a budget, rather than requesting the budget required to achieve its objectives was not likely to optimise outcomes or deliver value for money. The Committee identified that future budget cuts of 28% over the next four years carried with them a high level of risk to produce detrimental consumer outcomes.