Treasury: should regulators have a duty to promote innovation?

The government is consulting on whether regulators should have a statutory duty to promote innovation.

This is one aspect of a HM Treasury consultation running until 15 January 2019 on Encouraging innovation in regulated utilities. The paper said: “The government is interested in whether giving regulators a statutory innovation objective is an effective way to fundamentally hard-wire pro- innovation thinking within the energy and water sectors.”

Elsewhere the consultation looks among other things at what have been regulators’ most successful initiatives, what the barriers to innovation are, and what new tools regulators need to drive innovation further. It wants proposals for both sector-specific and cross-sector business models.

In a foreword, Exchequer secretary to the Treasury Robert Jenrick said: “The UK has led the way in developing a model of economic regulation which has since been replicated around the world…However, when the utilities were privatised and the regulators were established in the 1980s, the economic and technological context was vastly different. The digital revolution had yet to fully begin and challenges such as decarbonisation had yet to become a major priority for government. When regulators were first set up, lowering costs was the overriding priority, and innovation was not always hard- wired into their objectives.

“When faced with the current pace of technological change, it is important to ask whether there is more government and regulators can do to build on existing best practice and further encourage innovation and investment in our core utilities. Responses to this consultation will help to shape how our regulated utilities respond and adapt to future change and ensure they deliver a better, more innovative service for the consumer and the economy.”