(Last Updated On: 4th January 2021)

Standards are Little More than Standards

The Grenfell Tower Tragedy illustrates the confusion surrounding Fire Safety Standards in England. Standards are at the centre of regulation and inspection yet discussion on standards, with notable exceptions, treats them as unproblematic. This article looks at standards not as simplistic rules but as complex tools that may or may not be helpful.  In particular the role of Flexible Standards is noted and the greater responsibility of independent inspectors and professional bodies for regulatory compliance.

Types of Standards

Different types of standards used by regulators have very different impacts – and problems. Baldwin (Baldwin et al., 2012) identifies the following types:

Figure 1: Rules-based and Flexible Standards

Rules-based standards and flexible standards are very different from one another and foster different regulatory responses:

  • Rules-based standards check that specific rules have been met
  • Flexible standards audit whether the regulated organisation has the management systems and relevant rules to comply with broad flexible standards. The regulator judges whether those flexible standards have been met.

Rules-based Standards

These are, as the name suggests, rules that must be followed to the specification set down. They are ‘prescriptive’ – they stipulate what must be done or not done.

Input or Design Standards

These specify the resources, skills and other inputs that should be present in the organisation’s system. They prescribe specific equipment or may have a scientific specification (Moore et al., 2011)

Process Standards

These are a further type of rules-based standard and specify the process that must be used, for example, two-person labelling of genetic materials to avoid mislabelling. They too are prescriptive standards.

Regulators may have many hundreds of rules-based standards to check. Jin, in researching Florida restaurants, found that inspectors had more than one thousand rules to check (Jin and Lee, 2013).

Flexible Standards

In contrast, flexible standards encourage a firm or institution to look for the solutions and rules that are right for them, presenting their own plan for compliance to the regulator for approval. In this way, it is argued, they offer liberty to the regulated, minimizing costs (Bennear and Coglianese, 2012) and offering the flexibility to rapidly accommodate advances in technology. They are also thought to promote a more competitive market by encouraging firms to seek better value and more effective solutions (May, 2003).

Output Standards

These specify a certain level of delivery, for example measured emission levels or product specification, rather than the process used to deliver it. Unlike process standards, output standards leave the producer to decide on the most effective process to use.

Outcome Standards

These standards can be expressed in quantitative or qualitative terms.

The outcome-based approach focuses regulatory attention on the achievement of regulatory objectives rather than carrying out prescribed actions. The ability of regulated entities to choose how to achieve those results provides greater flexibility and opens up possibilities for more cost-effective compliance solutions (May, 2011: p. 2).

To achieve this, an outcome measure should be set and the regulator has to be able to measure this. These standards may be specific about the outcome they desire, as in air pollution, or they can be broad, as in this child nursery standard:

Each child or young person can experience and choose from a balanced range of activities (Scottish Government, 2005).

The regulator and regulated, trade association or civil group, agree the means by which the outcome standard will be met and there may be additional regulatory body guidance.

Principle-based Standards

Instead of a set of rules, the regulator requires the organisation to meet a broad principle, outlining regulatory values and objectives thus allowing the organisation to choose its own means of complying with the principle without having to follow a set of prescriptive rules (Baldwin et al., 2012: p. 302).

Braithwaite and Braithwaite (1995) contrasted the regulation of care homes comparing Australian broad standards, such as that the care home should be ‘homelike’, to the US preference for rules governing specific details of the care environment. The perhaps surprising conclusion was that the broad Australian standards promoted creativity and quality in the care environment – managers and staff were released from having to follow prescriptive rules to the letter. Principle-based standards are not ’tick-box’ – there must be a professional judgement made on whether the principle has been achieved. An example of a principle-based standard is taken from UK financial regulation:

A firm must pay due regard to the interests of its customers and treat them fairly (Financial Conduct Authority, 2015).

A broad principle such as this may have substantial guidance and prescriptive rules but, in some situations, the regulatee has considerable freedom to meet the principle in a way they find most suitable.

Management-based Standards

The final type of flexible standard stipulates that the firm has a quality-management or risk-management system or both. This type of requirement is found across the USA, Australia and Europe. The best-known example is the Hazard and Critical Control Point (HACCP) systems required by most food-safety regulators. The organisation manufacturing, supplying or selling food has to show that it has in place a system that controls the risks and hazards that may arise (International HACCP Alliance, 2015). There is detailed guidance and close monitoring.

The Problems with Flexible Standards

It is not an either/or choice between flexible standards and rules-based standards – they both have advantages and disadvantages. We have mentioned some of the drawbacks of rules-based/prescriptive standards:

  • They don’t keep up with change
  • They are inflexible
  • They produce a violation-seeking form of inspection or audit
  • They stifle innovation.

However, flexible standards are implicated in a number of disasters and failures (Black, 2014, 2010, Braithwaite, 2015, Coglianese, 2015).

One such example is the Pike River Coal Mine Tragedy, New Zealand. In 2010, there was an explosion of methane gas at Pike River Coal Mine and 29 miners lost their lives, 13 of who were sub-contracted workers. The consequent report found many reasons for the tragedy but regulatory strategies were significant (Royal Commission on the Pike River Coal Mine Tragedy, 2012a, b).

The health and safety legislation of New Zealand had adopted outcomes-based standards, expressed at a high level, but this did not include the codes of practice or regulations to support the mine managements’ health and safety system. Additionally, the regulator had only two inspectors to cover mining over the whole of New Zealand and they were not trained in quality or safety-system audit. The management of the mine had implemented neither a sound safety system nor the necessary equipment or practices. Workforce training was haphazard and the contractors had neither their own safety systems nor training in the Pike River Mine health and safety systems (Lamare et al., 2015). There was no culture of safety and management were slow to make improvements, many of which had been suggested by the workers. The report commented:

the necessary support for the legislation, through detailed regulations and codes of practice, did not appear. Instead, the opposite happened: such regulations as existed were repealed when the HSE Act came into force. The special rules and safeguards applicable to mining contained in the old law, based on many years of hard-won experience from past tragedies, were swept away by the new legislation, leaving mining operators and the mining inspectors in limbo (Royal Commission on the Pike River Coal Mine Tragedy, 2012: p. 32).

The Balance between Flexibility and Accountability

Flexible standards confront a fundamental regulatory issue and that is how the regulator can maintain control and consistency without stifling efficiency and innovation. What the Pike River disaster demonstrates is that there is a balance between flexibility and innovation and accountability and that specific rules help both regulators and the regulated in managing quality and health and safety systems (May, 2003).

Dialogue with the organisation is necessary to decide the codes and rules needed to support the flexible standard; some firms may not be capable of this because they lack the skills and the resources. Where trust is limited and the skills necessary are not apparent, a reliance on rules-based standards is preferable, or a mix of the two:

… outcomes focused regulation places significant demands on both regulators and regulatees’ judgement and expertise. However, complex systems of detailed rules can be just as demanding to implement and have the additional disadvantage of becoming easily outdated, as in the case of the regulatory regime for deep water drilling in the US. Th(is) … highlights the care that has to be taken in designing a rules-based system, to ensure there is the right combination of principles or outcomes-focused norms and sufficient ‘scaffolding’ through more detailed guidance provisions to indicate to firms how to comply, and assure themselves and regulators that they have done so (Black, 2014: p. 13).

Trust is an important factor in the success of flexible standards. Organisations and individuals have to be trusted to implement fully the agreed regime but the regulator must also be vigilant in monitoring the implementation.

In some cases, trust is misplaced. This was the case with the Volkswagen emissions scandal in 2015. VW eventually admitted that there was software installed in their diesel engines that reduced emissions when it sensed the car was being tested (Coglianese, 2015). However, when the car was driven normally emissions were up to 35 times greater than the regulatory limit (an output standard), the software was illegal and the deception had been ongoing since 2009.

In the case of the Grenfell Tower has too much trust been placed with fire safety professional bodies and the ‘Approved Inspector’ regime?

References

Baldwin, R., Cave, M. & Lodge, M. 2012. Standards and Principles. In: Baldwin, R., Cave, M. & Lodge, M. (eds.) Understanding Regulation: Theory, Strategy, and Practice. 296-311 2nd ed. ed. Oxford: Oxford University Press.

Bennear, L. S. & Coglianese, C. 2012. Flexible Environmental Regulation. Research paper 12-03. Institute for Law and Economics: University of Pennsylvania Law School.

Black, J. 2010. The Rise, Fall and Fate of Principles Based Regulation. LSE Law, Society and Economy Working Papers 17/2010 ed. London School of Economics and Political Science Law Department.

Black, J. 2014. Learning from Regulatory Disasters. LSE Law, Society and Economy Working Papers 24/2014: London School of Economics and Political Science, Law Department.

Brady, J. & Brady, A. 2016. Chapter 2: Regulation and Standards. Regulation: Audit, Inspection, Standards and Risk – a Handbook for Street-Level Regulators. Second ed. Cappoquin, Ireland: Precepts Books.

Braithwaite, J. 2015. Responsive Excellence. Research Paper Prepared for the Penn Program on Regulation’s Best-in-Class Regulatory Initiative. Philadephia: University of Pennsylvania.

Braithwaite, J. & Braithwaite, V. 1995. The Politics of Legalism: Rules Versus Standards in Nursing Home Regulation. Social and Legal Studies, 4, 307.

Coglianese, C. 2015. What Volkswagen Reveals About the Limits of Performance-Based Regulation. REGBLOG [Online]. Available from: http://www.regblog.org/2015/10/05/coglianese-volkswagen-performance-based-regulation/ [Accessed 12/10/2015].

Financial Conduct Authority. 2015. Fair Treatment of Customers [Online]. FCA. Available: https://www.the-fca.org.uk/fair-treatment-customers [Accessed 2015].

International HACCP Alliance. 2015. International HACCP Alliance [Online]. Available: http://www.haccpalliance.org/sub/index.html [Accessed 10/10/2015].

Jin, G. Z. & Lee, J. 2013. Inspection Technology, Detection and Compliance: Evidence from Florida Restaurant Inspections. National Bureau of Economic Research Working Paper Series, No. 18939.

May, P. J. 2003. Performance-Based Regulation and Regulatory Regimes: The Saga of Leaky Buildings. Law & Policy, 25, 4, 381-401.

May, P. J. 2011. 27. Performance-Based Regulation. In: Levi-Faur, D. (ed.) Handbook on the Politics of Regulation. 373. Cheltenham: Edward Elgar Publishing.

Moore, K., Kleinman, D. L., Hess, D. & Frickel, S. 2011. Science and Neoliberal Globalization: A Political Sociological Approach. Theory and Society, 40, 5, 505-532.

Royal Commission on the Pike River Coal Mine Tragedy 2012a. Volume 1, Wellington, New Zealand,

Royal Commission on the Pike River Coal Mine Tragedy 2012b. Volume 2, Wellington, New Zealand,

Scottish Government 2005. National Care Standards : Early Education and Childcare up to the Age of 16, Rev. ed, Edinburgh, Scottish Government.

Standards are Little More than Standards

The Grenfell Tower Tragedy illustrates the confusion surrounding Fire Safety Standards in England. The idea of standards is at the centre of regulation and inspection yet discussion on standards, with notable exceptions, tends to see them as a set of rules. Here we look at standards not as simplistic rules but as problematic tools that may or may not be helpful.  In particular the role of Flexible Standards is noted and the greater responsibility of independent inspectors and professional bodies for regulatory compliance.