NEWS YOU WON'T FIND ON CNN

The Assassins of Truth

By Charles Sullivan

10/12/06 "Information Clearing House" -- -- It is evident to me that the

United States government believes that any individual or group of people that
works to prevent it from implementing its agenda are terrorists. Furthermore, I
contend that the government’s plan is not the people’s agenda; but some of us
will be required to sacrifice our lives in order to help them execute their will,
and all of us will be required to sacrifice our freedoms.

I also contend that the government overwhelmingly represents the interests of

wealth and power; that its strength is derived from corporate bribes, rather
than from grass roots populist support; that it exists to execute a Plutocratic
agenda of world domination, while neglecting the needs of the overwhelming
majority of the people.

I charge that the government is engaged in immoral and criminal conduct on a

global scale. That it does not conform to the norms of civil society; that it is
sociopathic, and flagrantly violates domestic and international law. The form
of government that we have does not serve the citizenry—it preys upon them.
It is not a government of the people, for the people. It is government of the
corporations, for the corporations, by the corporations—a corporate
Plutocracy.

The sole purpose of Plutocratic government is to spread the gospel of free

market economics and privatized wealth, and to extend the hegemony of
capitalism to every corner of the earth. Its god is the almighty dollar.
Championed by right wing extremists, it is equally endorsed by cowering neo-
liberals in Congress. Its funding is derived from corporate sources and
extorted tax contributions from the citizenry.

I contend that the government routinely breaches the Constitution and the Bill
of Rights that it was sworn to uphold; and that it circumvents domestic law
through the frequent use of presidential signing statements that effectively
render civil law null and void. The recent passage of the Military
Commissions Acts that resulted in the suspension of habeas corpus, passed
into law with the aide of fourteen Democrats, is beyond onerous—it is
morally vacuous and criminal.
The executive branch of the government, in particular, has run amok; it
disdains the daily struggles of ordinary citizens, and is engaged in class
warfare against its own, and the world’s working people. It conducts terrorist
attacks on its own citizens, and against civilians abroad.

It is widely known abroad that the U.S. government is practicing

extraordinary rendition in order to torture, maim, and kill its suspected
enemies; it imprisons innocent people all over the world indefinitely, without
due process and without charging them with any crime.

We bear witness to the crimes of a rogue government that invades sovereign

nations, bombs their cities into piles of rubble, murders with impunity,
imposes harsh economic sanctions, denies women and children life saving
medical treatment, and steals their oil and mineral wealth. Hypocritically, it
calls those who resist occupation, terrorists.

I further contend that the government is engaged in a campaign of unlawfully

monitoring the communications of its citizens, including the infiltration of
Quaker religious orders that preach doctrines of peace over those of war, and
is increasingly stifling free speech and the right of peaceful assembly. Our
hard won civil liberties are giving way to an emerging police state. The prying
eyes of paranoid government are everywhere.

Thus we are left with an illicit government that routinely commits crimes
against humanity under the pretense of executing a war on terror. To its
eternal shame, it has unleashed the National Security Agency, the Federal
Bureau of Investigation, the Central Intelligence Agency, and the Pentagon
upon its own citizens without just cause. These agencies are monitoring our
computers, tapping our phones, and tracking our movements not to protect
America from terrorists, but to protect the Plutocracy from those who would
expose it.

What does it say about a government when those who uphold the Constitution
and the rule of law are targeted as enemies of the state or as terrorists? Is this
what Thomas Jefferson and the framers of the constitution intended?

The assassins of truth have the audacity to feign faith in god while daily
committing unholy acts of terror against peace loving people at home and
abroad. With the deftness of a public relations firm, they are using religion as
a weapon against a guileless flock that blithely follows its every command,
even as it leads them to the slaughter of an Armageddon of its own creation.

By these acts and worse, the U.S. government defines Democracy. It has been
empowered to do so by Republicans and Democrats alike.
I hereby assert that the hidden purpose of the U.S. government is not to serve
the needs of the people or to make the world free and democratic, as it so
boldly claims; it is to accrue ever more wealth to the obscenely rich, the
global elite. Its intent is to do to the U.S. what it has done to Iraq; to revoke
the Constitution and the rule of law; to bankrupt the federal treasury and to
privatize everything that is publicly owned. Ultimately its objective is to
pursue the religion of unregulated free market capitalism, and to establish
global corporate rule.

It seems to me that any government that does not serve the people and treats
those who uphold the Constitution as terrorists is not a Democracy; and we
should refrain from calling it by that name. Governmental power that is not
derived from, and subservient to the people, is illegitimate—a form of
authoritarian dictatorship as vile as Communism.

When an institution that was purportedly created to serve the needs of the
people is no longer accountable to the people, and operates in secrecy, we can
be sure that sinister powers are in motion. Those responsible are not only
obscuring truth and revising history; they are knowingly and willfully
assassinating truth, and mocking the very idea of Democracy.

Government that is controlled by capital, rather than a moral imperative to

serve the public good, is a danger to the world. Such government is not only
misguided and inherently unjust; it is hostile to Democracy and opposed to
peace.

A government of the people would have a very different agenda than a

Plutocratic regime. It would provide no cost health care to its citizens, free
higher education to anyone who wants it; and it would not squander the
federal treasury on unprovoked war that will not end in our lifetimes. Such a
government would not overthrow democratically elected governments abroad.
Nor would it throw its support behind terrorist states like Israel, and it would
not finance brutal dictatorships like Saddam Hussein and Augusto Pinochet,
as has been the history of the American government.

Democracies do not betray its citizens by outsourcing jobs to sweat shops in

other parts of the world in order to maximize corporate profits and to drive
down wages. They do not wage war on sovereign nations based upon lies and
innuendo; they do not occupy other countries, and they do not plan additional
wars and occupations at the behest of corporate lobbyists against nations that
pose no threat to them.

Democracies do not sentence their youth to fight and die under false pretenses
in order to open sovereign nations to corporate plunder and capitalism.

Plutocracy, I contend, is the outgrowth of the capitalist system that values

 private profits above all else. Under this sickly paradigm people are
dehumanized; reduced to mere commodities on a par with a lump of coal or a
pool of oil. It is a system that knows the price of everything but the value of
nothing; and it is driven by insatiable greed.

Democracies derive their power from the people, all people being equal, and
the distribution of wealth being equal. Plutocracies derive their power from
the private ownership of immense wealth and property that represents a small
percentage of the aggregate population. In the capitalist system, only those
with wealth and property have legal standing and representation in
government. All others are second class citizens with second class rights and
subservient to the Plutocracy. It is about time that we learn the difference.

Charles Sullivan is a photographer, free lance writer and social activist

residing in the hinterland of West Virginia. He welcomes your comments at
csullivan@phreego.com.

Click on "comments" below to read or post comments

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Home

BUMN Privatization Has Not Impacted

Public Welfare Yet
Submitted by marwati on Tue, 05/04/2010 - 04:25.
in

• Seminar / workshop

The privatization of state-owned enterprises (BUMN) is expected to drive the implementation

and realization of economic democracy in Indonesia as an effort to increase people's welfare. In
addition, privatization can also enhance the company value. Nevertheless, the impact of
privatization on the public welfare is not yet optimal. It is due to the motive of privatization that
emphasizes the need to meet the State Budget deficit rather than corporate interests.

The statement was delivered by former Minister of State Enterprises, Dr. Sugiharto, MBA, in a
Seminar and Book Review BUMN Privatization Policy: Appreciation of the Late Prof. Dr,
Mas'ud Machfoed, MBA, Ak., held at Masters Science and Doctorate Building of Faculty of
Economics and Business, Universitas Gadjah Mada (UGM), Saturday (1/5).

The privatization which is not yet optimal in improving people's welfare, according to Sugiharto,
is indicated by the increased level of unemployment after the privatization. In connection with
this problem, he proposed increasing the partnership program conducted by the enterprises to
provide labor and work opportunities through partnerships and community development funds or
BUMN corporate social responsibility.

This doctoral graduate of UGM Graduate School said that there was an increased contribution of
enterprises to the state before and after privatization, namely increased tax collection, dividends,
and investments. Nevertheless, the privatization in Indonesia is still less varied and adopts one
method only, which is through the sale of shares to state companies. In fact, the privatization
around the world, other than through stock sales, can also be conducted through the joint
operation (KSO), joint ventures and management contracts. "It is particularly important to
reorganize those enterprises to make them more efficient and effective. They are grouped in five
categories, namely stand alone, merger or consolidation, holding, divestment, and liquidation,"
he added. He agreed that privatization remains to be put as a strategy in BUMN transformation.
Privatization is actually a corporate action to further improve efficiency, cut down bureaucracy,
improve performance and innovation, and ability to compete.

Meanwhile, the lecturer of Faculty of Economics, University of Indonesia, Dr. Dewi Hanggraeni,
SE, MBA, said the privatization in the industry whose policies are still dominated by the
government tends not to have a positive impact on the company performance. In her opinion,
prior to the privatization, the government should ensure that the enterprise has good corporate
governance, so, after privatization it will generate optimum revenues for the government with the
high price of shares in the primary market.

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for archive/historical purposes only. It will not be updated.
Information on the Risk and Regulation Advisory Council can be found on the
Department for Business Enterprise and Regulatory Reform website

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Government Response: Economic Regulators

Letter from Patricia Hewitt to Better Regulation Task Force accompanying
Government response.

I am pleased to enclose the Government's response to the Economic Regulators report, published
by the Better Regulation Task Force in July last year. I would like to take this opportunity to
apologise once again for the delay in issuing this response.

The report raises a series of important and challenging issues that the Government and the
independent regulators, within their respective roles, will need to take forward. While it is
appropriate that the Government itself takes forward some of the key issues, and officials across
Whitehall will ensure this happens, much of the report is concerned with the regulatory
governance and working practices of the independent regulators. While it is therefore the
responsibility of the regulators to develop specific, timetabled action plans, I would look to them
to do so in response to the welcome contribution the Task Force has made to the debate on sector
regulation

One clear way of progressing this agenda for change would be through more extensive use of
joint working arrangements. The Government looks to the regulators to make effective use of
best practice sharing and benchmarking as part of this process. The Report, and this response to
it, makes clear the merit in the regulators developing working practices which could usefully be
developed as a code of regulatory best practice. In tackling this, I am sure that the regulators will
seek dialogue with key stakeholders, including the BRTF, as a part of its work on the important
issue of regulatory governance. Officials will of course provide the regulators with any
assistance they might find helpful in taking this forward.

Better Regulation Task Force Report on Economic Regulators:

The Government Response
1. The Government welcomes this report. It is a valuable contribution to the debate about the
economic regulation of utilities. The sectors covered by the report are a key part of the nation's
economic infrastructure. The regulators play an essential role in protecting consumers and
promoting efficiency and competition in those sectors.

2. As the Task Force points out, this is the first report addressed to bodies at arm's length from
Government as well as the Government itself [1]. Although the Task Force initially focused on
OFTEL, OFGEM and the CAA the report was also addressed to the wider group of regulators
including OFWAT, ORR and Postcomm. In drawing up its response, the Government has
discussed the issues raised by the report with the regulators. In relation to implementation -
where this involves regulators rather than Government it is clearly for them, given their
independent status, to determine how this can be best done to suit the circumstances of the
market they are regulating.

3. As the Task Force acknowledges, a significant amount of work went into the Government's
Utilities Review which preceded the Utilities Act 2000. Some parts of that legislation are still in
the process of implementation. The Review also impacted on other sectors, for example the
setting up of Postcomm took account of the Review's conclusions. There are also other areas of
economic regulation that are subject to further change, for example:

· in relation to water the Government has published a draft Water Bill and is set to consult further
on proposals to introduce greater competition;

· the Government has also announced that it will create a new regulatory regime for
communications, including a new single regulator - OFCOM.

4. In considering the issues raised by the BRTF, Government and regulators will need to take
account of a wide set of stakeholders - including, in particular, consumers and new entrants to a
market - and not only those companies most affected by regulation. What may appear to be over-
regulation to a dominant incumbent company may be seen as vital protection for a new entrant
trying to break into the market, or a consumer faced with limited opportunities to switch. It is
important to strike the right balance.

5. The BRTF report along with the WS Atkins efficiency review for the Treasury provide a
helpful stimulus in the area of regulatory best practice. Government believes that each regulator
should continue to develop regulatory good practice. The regulators already have 'joint working'
arrangements for discussing issues of common interest - the heads of the regulatory bodies meet
frequently and there are also working level meetings to discuss specific issues. The Government
believes that it would be beneficial for the quality of regulation if regulators further develop this
process to maximise the gains of sharing good practice. One possible outcome of this work might
be for the regulators to build on the annual statement on joint working and to develop a code of
regulatory good practice. The Government expects the regulators will follow through issues in
this response and be prepared to show progress to the Task Force when they revisit their Report.
6. The Task Force's report made five specific recommendations to improve the regulatory
framework. In addition the Task Force identified five areas which would justify further work.
The remainder of this response document considers each of these in turn.

Specific Recommendations
Recommendation 1: Regulators' annual business plans should
include a clear explanation of how they will prioritise their different
objectives. They should also explain how the decisions they take
relate to their objectives.
The Government agrees with this recommendation. It falls to the
regulators to take this forward, building on work already in hand.

7. The objectives of economic regulation are set out through the statutory duties and functions
contained in the relevant utility acts. In many, but not all cases, the legislation will already lay
down a hierarchy for those objectives. For example OFGEM has a primary duty to protect the
interests of consumers wherever appropriate by promoting effective competition. It also has a
range of secondary economic, social and environmental duties that it needs to consider on a case
by case basis in order to determine ow best to meet the primary objective.

8. Within the established statutory framework, it is for regulators to determine how to prioritise
and balance these objectives. Government agrees with the BRTF on the benefits of making
priorities and the basis of individual decisions as clear as possible. Greater transparency helps
business by reducing uncertainty.

9. While it is ultimately for individual regulators to decide what material to publish, it will
clearly be useful to stakeholders to have these objectives and priorities clearly set out. The
Government invites the regulators to respond (to Government and the BRTF) on how they intend
to respond to this recommendation, and when.

Recommendation 2: Economic Regulators should be required to produce

assessments of costs and benefits for proposals with a significant
impact on business activity.
The Government agrees with this recommendation. The regulators
are planning to bring forward their proposals for improved impact
assessment by the end of the financial year.

10. Regulators are independent and operate at arm's length from Government. They are required
to intervene in markets to protect consumers, stimulate competition or control utilities with
monopoly power. Their interventions can therefore influence significantly the way in which
companies behave and their proposals may have a significant impact on the regulated companies
and on other stakeholders. Such proposals can arise in the normal execution of the regulators'
responsibilities or as a result of new Government requirements.

11. The Government has already introduced, as a matter of good practice, a non-statutory
requirement on all Government Departments - and a range of other organisations including
Health and Safety Executive, Food Standards Agency and Environment Agency - to produce a
Regulatory Impact Assessment (RIA) for any proposal which will have an effect on business,
charities or the voluntary sector. The RIA assesses the impact of the proposal in terms of costs,
benefits and risks. It explores the various ways of achieving the intended outcome and the costs
involved in administering or implementing the proposal.

12. The RIA is now an integral part of the policy making process within Government and is very
helpful in setting out in a straightforward, consistent way, a clear statement of what is intended
and why, and what the consequences will be. It is particularly helpful during the consultation
process when those affected by the proposal can immediately see the impact the proposal is
expected to have on them and comment accordingly. These views can then be taken into account
before final decisions are made. This can prove particularly valuable in identifying more cost
effective ways of achieving the same outcome.

13. Government Departments, through a process which involves initial estimates, consultation
with stakeholders and ongoing refinement, produce a final RIA which the relevant Government
Minister signs off. This demonstrates that the full range of options has been considered, the
overall impact weighed and he or she is satisfied that the benefits (which may be financial,
environmental, social or otherwise) justify the costs.

14. Experience in producing RIAs within Government has shown that for individual regulatory
proposals it is not always easy to estimate costs and benefits. However, it is usually possible to
make a broad assessment, even where effects may be spread over a long period or where a
measure is aimed at promoting competition with dynamic effects.

15. The Government recognises that the regulators already seek to analyse and consult widely on
their proposals and this deserves credit. However, the Government endorses the proposal that a
common and clear explanation of the expected costs and benefits - and letting those affected
comment on those costs and suggest how they could be minimised - is the best way forward for
measures which are likely to have a significant impact. Such an approach increases the
transparency of the decision making process and gives stakeholders a better opportunity to
comment and to see their views being taken actively into account.

16. It is also important that, in taking forward measures with a significant impact, regulators are
able to justify their decisions and demonstrate that they have taken full account of the views
received. The Government, and equally stakeholders, would recognise the value of operating in
such an open and transparent way.

17. The issue of assessing costs and benefits has already been considered as part of the WS
Atkins study for HM Treasury. Following this, the four regulators subject to that study- OFTEL,
OFGEM, OFWAT and ORR - agreed to the principle of setting out a clear assessment of the
impact of major proposals[2].

18. Cabinet Office Regulatory Impact Unit (RIU) officials ran a workshop on 3 October 2001
with these four regulators to explain how the RIA process already works as good practice within
Government and to show how it can be applied in a wide range of circumstances. The
Government have given a commitment to provide a similar workshop to the other regulators
(Postcomm and CAA). RIU are also willing to contribute advice on the good practice they have
developed in this area to assist the regulators in fulfilling their commitment to the
recommendations in the Atkins report and in responding to this Recommendation.

19. The Government believes the following guiding principles that underlie the RIA process are
also applicable to regulated sectors:

· Identify from the outset the impacts the proposed measures may have on stakeholders (and this
can mean consumers and new entrants as well as regulated companies).

· Explain the desired outcome and consider the various options for achieving this and the risks
involved.

· Good practice is to make an assessment of the likely impact.

· Seek views through consultation.

· Explain why the benefits of the proposed measure would justify any negative impact.

· Quantify the expected benefits and disbenefits where this can reasonably be expected to be
done.

20. Using these guiding principles, and with advice and support from the Government, the
regulators will be able to develop the most appropriate form of impact assessment for their
circumstances taking account of their responsibilities for addressing market power and their
other statutory objectives. They are planning to bring forward their proposals by the end of the
financial year. On this timetable, they could be rolled out by Autumn 2002. The Government is
willing to offer its support in this process, and also sees a particular role for best practice sharing
and benchmarking in this area.

Recommendation 3: The boards of regulatory bodies should include both

executive and non-executive members. They should be appointed for
their expertise rather than to represent stakeholder groups.
The Government agrees with the broad thrust of this
recommendation. We will consider the case for legislative change in
the water industry.

21. The Government has already made major steps to improve continuity and consistency
through the creation of boards. For example, through the Utilities Act 2000, the Gas and
Electricity Markets Authority (the governing board of OFGEM) was formally established for
regulation of the energy sectors. Indeed Ofgem introduced a management board structure in
advance of legislation - and they believe that their new board structure has increased the
legitimacy and authority of their decision making process.
22. The Government has already announced that the new communications regulator, OFCOM,
will have a board structure. This is cited as a positive example by the BRTF, as are the CAA and
Postcomm structures.

23. OFWAT has recently announced the strengthening of its decision making process by
announcing its intentions to recruit non-executive directors to the OFWAT Board. Previously it
consulted with a number of outside advisors through its Regulatory Policy Committee. The
Government can see that a move to more formal board structure could bring benefits. Change
would, however, require primary legislation. The Government will consider this further -
conclusions will appear in the response to the Water Bill consultation - and the Government will
keep the BRTF informed on how this addresses their concerns.

24. Government agrees that where a board structure is created there needs to be a mix of
executive and non-executive members. We also agree that board members should be appointed
for their expertise and not be appointed to represent stakeholder interests. This is the case with
those boards that already exist.

Recommendation 4: Regulators should include proposals in their work

plans which encourage an innovative approach to consultation, allow
a real dialogue between different stakeholders and demonstrate
how proposals have been amended following consultation.
The Government supports this recommendation.

25. Government supports the general thrust of the Task Force's conclusions. The consultation
process is most productive when all stakeholders have a genuine opportunity to inform and
influence outcomes. At the same time the report shows the difficulties of structuring the
consultation process so as to meet the needs of all stakeholders without generating 'consultation
fatigue'.

26. Regulators already consult widely, publishing a large amount of information. They try to do
so in a user friendly way - publishing information on the internet and using electronic mailing
lists to notify interested parties, having clear executive summaries of consultation papers, making
use of mailshots and leaflets to reach certain groups. This is in addition to the large number of
face to face meetings that already go on with stakeholders and their representatives. Regulators
are also committed to transparency, and make available non-confidential responses to
consultations.

27. The Government recognises progress that regulators have made to improve their consultation
process, but believes more could be done. The Government has set out standards on consultation
in Cabinet Office Guidance and commends this to the regulators as a baseline. Regulators should
continue to build on the work already done and develop best practice in this area as part of their
joint working arrangements on regulatory governance.

Recommendation 5: Regulators should set out a programme in their annual work plans to review
market sectors for the lifting of price controls and to remove outdated license conditions.
Companies should be able to challenge failure to complete these programmes.
The Government agrees with the first part of this recommendation, but not the second part.

28. Effective competition is the best safeguard of consumers' interests. Regulators have a
common objective of promoting effective competition as a means of furthering consumer
interests wherever possible. However, this will not always be possible - there are some sectors or
parts of sectors where effective competition is some way off or where regulation of some kind
may always be necessary (eg monopoly networks).

29. Where competition is effective, regulators should be able to rely mainly on the Competition
Act. Continuing with detailed sectoral regulation may be unnecessary and counter-productive.

30. In those sectors where competition is developing, regulators have already made progress in
reviewing markets and reducing regulation.

31. The Government agrees that the BRTF have rightly highlighted the importance of public
scrutiny in this area. Markets should be subject to continuing regular review to consider the
extent of competition that has developed and the ongoing suitability of regulation. Such reviews,
and the methodologies underpinning them, should be published to allow effective public
scrutiny. How frequently reviews are needed would depend on the market in question, but any
review would benefit from effective public consultation with the results published in the next
annual work plan. Joint working among the regulators would be particularly valuable in this area
to ensure consistency and best practice sharing across the regulated sectors.

· Oftel's current practice is to review markets every 2 years subject to variation in individual
markets. Oftel will be required under the EU framework directive to review all designated
markets on a 'regular' basis. While the Directive is still to be finalised the indication is that all
initial reviews need to be completed within 15 months of Spring 2002. Oftel is currently in the
process of developing its plan for 2002/3 which will set out how frequently it looks at individual
markets and the depth of each review. The review timetable following 2002/3 will need to be
determined in the light of the finalisation of the Framework Directive.

· Ofgem has undertaken regular reviews of the effectiveness of competition in the gas and
electricity supply markets for several years, and published the key indicators it uses to assess the
development of competition. Ofgem proposed in November 2001, as a consequence of its latest
annual review of domestic supply competition, to remove all the remaining supply price controls
on domestic gas and electricity from April 2002. Ofgem has also published the approach it will
take to assessing the effectiveness of competition in metering, and indicated its intention to lift
remaining price controls on metering once effective competition is established in these services.

32. The second part of the Recommendation suggests that regulated companies dissatisfied with
a regulator's decision not to deregulate should be able to challenge it to a third party. The Task
Force recommends that the onus is placed on regulators to justify the need for continued
intervention in markets. The Task Force leaves open which body should hear any such
challenges but suggests it may be appropriate for the Office of Fair Trading.
33. This would imply a major change to the current regulatory system and could shift the balance
between the consumer and producer interests. While the possibility of a challenge could
potentially increase the accountability of regulators it could also undermine their ability to
regulate companies effectively. If any market review were open to challenge then regulators may
spend undue amounts of time and resources defending decisions. There is a risk that the
regulatory process would become too legalistic and the deliberate dynamism and flexibility of
the current systems could be damaged thus impairing the effectiveness of the regulators.

34. In addition, we would be wary of creating a regime that encouraged price controls and
regulations to be lifted in order to meet a deadline rather than when it was actually appropriate.
We believe that regulators are best placed to judge the extent of competition in a particular sector
at any given time. Further, formal challenges may be lengthy and the findings may become out
of date, in what are frequently dynamic markets, by the time they are published or acted upon.

35. For these reasons, the Government does not believe it would be appropriate to put in place a
challenge mechanism of the kind suggested by the BRTF.

Areas for Further Work

(A1) The role of Government in regulation
36. The Task Force suggests there may be a problem due to the
Government failing to adequately articulate its policy on social and
environmental objectives and suggests that the Government needs
to give a clear policy direction.

37. It is important to have a clear dividing line between Government and regulators. Government
should set the overall legal framework and then allow the regulators independence to operate at
arm's length from Government within that framework. Regulators should be allowed to focus on
their core role - economic regulation - without interference from Government.

38. However, economic regulation cannot be pursued in a vacuum. Decisions on economic

regulation can have social and environmental effects. Regulators need to understand the social
and environmental impact of their activities and consider these potential impacts in making
choices about which regulatory route to take. Regulatory objectives in relation to social and
environmental matters have been a long standing feature of utility regulation.

39. The Utilities Review considered this issue in some depth. The Government made clear that it
should not be for economic regulators to try to decide what may be socially or environmentally
desirable. Instead, it is more properly the role of Government to set out the policy goals in the
social and environmental sphere.

40. The Government announced that it would give regulators statutory guidance on social and
environmental policy so that it would be clear what the policy goals were in those areas. Once
published regulators would be under a statutory duty to take account of this guidance. The
Utilities Act 2000 implemented this policy in the energy sectors - DTI consulted on guidance last
year[3] and final guidance is being prepared. The Government also issued social and
environmental guidance to Postcomm under the Postal Services Act 2000.

41. Similar provisions will be put place in other sectors. Relevant provisions were already
included in the draft Water Bill published in November 2000. For aviation, the Government has
already announced in the 1998 Integrated Transport White Paper that as a key principle aviation
should meet external costs and this will be developed.

42. The Government has also made clear that where social or environmental decisions have
significant financial implications, Government would set this out through legislation, rather than
through guidance to the Regulator. The Government reaffirms its commitment to this policy.
Recent examples of this are the Vulnerable Groups Regulations for water, and the requirement to
provide free postal services for the blind and partially sighted.

43. The Government believes that developments from the Utilities Review and Utilities Act
significantly help to clarify the respective roles of Government and regulators. These new policy
developments are still in the process of implementation. Government will keep this area under
review as it gains experience of how it has worked in practice and will report back to the BRTF
in the light of experience within the next year.

(A2) The effect of price regulation on investmen

44. The Task Force points out that RPI-x price regulation has worked
at encouraging cost savings. They recommend that it is time to
consider afresh whether RPI-x regulation incentivises investment.

45. Each regulator is responsible for setting price caps to deal with the particular characteristics
of the sector for which it is responsible. But Government also has an interest - given the
importance of these sectors to the economy - in ensuring that the regulatory system provides an
appropriate framework for investment. For example, the PIU Energy Policy Review is currently
considering, in relation to security of supply, the long term investment signals produced by the
regulatory regime for gas and electricity.

46. Price controls can be consistent with significant levels of investment. For example, over £38
billion has been invested in the Water industry since 1989: approximately double the average
level of expenditure in the 1980s before privatisation. Fixed price caps (using the RPI-x formula)
are reviewed periodically and regulators have adapted the system over time to incentivise
investment and service improvement.

47. Regulators have already made progress in adapting the original RPI-x formula. But this needs
to be an ongoing process. Government and regulators - in accordance with their respective roles -
will work together to develop and articulate best practice, to deliver greater regulatory certainty,
and to ensure that the regulatory system provides appropriate incentives for investment.
(A3) The relationship between competition law and sectoral regulation

48. The Task Force has highlighted two key questions where further work might provide new
insights. These are 1) how to decide when a market is sufficiently competitive so that it no longer
needs specific regulation 2) whether the sectoral regulator or general competition authority will
regulate the competitive parts of the markets most efficiently and effectively.

49. In relation to the first question: Government believes that regulators are best placed to make
a judgement on the state of competition in a utility market and when sector specific regulation
should end. Judgements on the extent of competition are inevitably likely to be very market-
specific. This is a major part of the job that regulators are charged with.

50. Regulators have already given serious consideration to the question of how to assess
competition in markets. Both Oftel and Ofgem already publish in advance their proposed
methodology for assessing the extent of competition in markets. Oftel will be reassessing its
existing guidelines in the next six months in the light of its experience in applying them over the
past year and to reconcile them with requirements arising from new EU directives. The
Government would encourage closer joint working among the regulators on these issues as there
are benefits to be gained from benchmarking and public scrutiny of methodologies. The
Government would also recommend that the regulators keep the BRTF informed on progress.

51. The second question was whether the regulation of contestable parts of utility sectors should
be transferred to the OFT. Where effective competition has fully developed in a particular
market and detailed sectoral regulation is therefore no longer applied to competing firms there
would be a case for transferring responsibility to the Office of Fair Trading, which would
regulate it under general competition law. But so long as there is a sectoral regulator in order to
regulate the residual monopoly elements of these industries, that sectoral regulator is likely to
have a better knowledge of any contestable markets supported by or closely interacting with the
monopoly activities of the Office of Fair Trading. Concurrent powers, where these apply, allow
the Office of Fair Trading and the respective sectoral regulators to agree, case by case, which is
best placed to address any particular issue. The Government does not see any need at present to
change the arrangements, but will keep broader developments under review.

(A4) Challenging the regulators' decisions

52. The BRTF looked at the different ways in which stakeholders can challenge the regulators'
decisions. The Task Force expressed particular concern about the system by which a regulated
company can challenge a regulator's proposed price control. They considered that the system
might be improved by allowing companies to make a limited appeal on a single issue.

53. Certain regulatory decisions, principally price controls, are effectively a 'package' based on a
set of assessments on companies' future costs and revenues. It is therefore likely that a challenge
to a proposed price control will have to challenge the package as a whole. This is a consequence
of the nature of the decision and not an arbitrary procedural requirement.
54. To offer a right of appeal which enabled a regulated company to pick and choose individual
elements of a package decision for challenge is not attractive. The companies will only appeal on
those elements they consider too 'harsh'. Where a decision is considered too 'soft' it will be
unchallenged. Allowing a quick and simple appeal on a limited basis is likely to encourage a one
way street of price increases to the detriment of customers.

55. We believe that the current in depth analysis that is required, when challenges are made,
contributes to the validity and finality of the Competition Commission's findings.

56. While we have serious reservations about creating a new method of 'quick and easy' appeals
on individual elements of a price control we do recognise that the current system is not beyond
improvement. Although we cannot make a specific commitment, we recognise the value of
keeping this issue under review and will consider the case for improvement and seek to identify
the resources necessary to take this forward.

57. The Task Force also specifically refers to the rather different system that currently applies to
airport regulation by the CAA and has recommended reform. We agree that the procedure
whereby the Competition Commission makes recommendations to the CAA, who then make the
final decision, is anomalous. The Government has already announced its intention for the CAA
to become the single regulator for airports and for its decisions to be referred only to the
Competition Commission only if the parties cannot agree. We therefore agree with the Task
Force and will take forward any legislative changes that are required as soon as Parliamentary
time and other considerations allow.

58. As the Task Force notes, apart from licence modifications and Competition Act cases, in
general the rest of the decisions made by a regulator can only be challenged by seeking Judicial
Review (the Telecoms sector is different in that it provides an appeal on the facts of the case).

59. The Competition Act 1998 introduced a new system of appeals to a specialist tribunal. One
possibility might be to extend this type of appeals mechanism to some of the more major
decisions that a regulator makes - such as a decision that a company is in breach of a licence
condition. This could increase consistency between the competition and regulatory regimes and
may improve regulatory certainty. The Government will consider this issue further before
making any specific commitment.

60. However, any consideration of appeals mechanisms would need to tread a delicate balance.
Stronger rights of appeals for regulated companies can improve transparency and regulatory
certainty, but they can also be used for mischief - allowing for deliberate obfuscation or delay.
Equally, any changes to the existing system would need to consider how consumer interests
could be best articulated and protected.

61. The Government intends to keep the issue of appeals mechanisms under review.
(A5) The use of self-regulation

62. The Task Force would like to see more use of self-regulation to encourage good behaviour of
market participants.

63. The Government strongly agrees with the Task Force that there are policy objectives which
can be achieved with little or no state intervention. Indeed, Government and regulators agree that
wherever possible the first alternative to formal regulation should be complete deregulation
rather than self- or co-regulation.

64. Regulators have already found some scope for using self- or co- regulation, and they agree
that there may be scope for more. It appears to us that such forms of regulation are likely to be
most appropriate in relation to cultural, social, or consumer protection issues. Self-regulation is
less likely to be appropriate in some of directly economic areas of regulation such as tackling the
abuse of a market power to damage potential competitors. Clearly if self or co regulation is to
work, the response from stakeholders - in particular the industry subject to regulation - must be
constructive and positive. Where the impetus for such initiatives comes from regulators alone it
will be difficult to make progress.

65. The Government believes that regulators are best placed to judge when and where self
regulation can be relied on. The legal framework is flexible enough to allow regulators to rely on
self regulation where it is appropriate.

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[1] This response distinguishes throughout between Government and regulators. Although the
regulators can be considered to be part of the overall machinery of government within the UK,
the regulators are appointed by ministers and operate independently at arm's length from
ministers, and this underscores the distinction between ministerial Government and independent
regulators.

[2] HM Treasury press statement of 2 July 2001 "Andrew Smith welcomes utility regulators'
response to efficiency review".

[3] Draft Social and Environmental Guidance to the Gas and Electricity Markets Authority, May
2001

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