Categories: Finances

Grenfell Tower fire tragedy has broader lesson about regulation

Edwin Heathcote rightly calls for action following the Grenfell Tower fire (“Best memorial for Grenfell is ensuring it never repeats”, Opinion, February 10).

But rewriting building regulations will not work without addressing culture, which affects how people think, and incentives, which govern behaviour.

Yes, there should be regular reviews to weed out laws and regulations that are out of date, over-prescriptive, unduly onerous and so on. But successive governments’ deregulatory agendas have failed to recognise that almost all laws and regulations have, or at least had, a valuable purpose. Slogans like “two out for every one in” make clear that the aim has been just reducing regulation not improving it.

No wonder that architects and construction companies did not take fire safety seriously when the rhetoric from government implied that no rule had any real value, that all were just burdens on business. Politicians need to talk up the benefits of regulation, hard though that is in the current political climate.

The incentives on regulators are wrong where companies choose who should assess them. There the regulators have to be just tough enough for their certificates not to be worthless but not so tough as to lose trade.

There are different models for obtaining market benefits while retaining independence. Before its closure, the Audit Commission was responsible for local authority audit. It was a public body answerable to central government. It contracted most local authority audits to private sector firms via a competitive process. Since the auditors had the commission as their client they remained independent of the local authorities whose books they were checking.

The lessons of Grenfell need to be applied wherever the regulated are currently able to choose their regulator, for example in company audit and credit rating of securities. The present arrangements are not quite allowing organisations to mark their own homework, but come far too close for comfort.

Michael Romberg
London W1, UK

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