Who will be next ball out in the Great Regulators' Lottery?

Minding the Minders

A moment's silence for Peter Davis, the deposed Lottery regulator. And a mite of sympathy. Yes he was untelegenic, someone who managed simultaneously to be wooden and slippery, who until the very moment his number was up seemed unaware of what the fuss was about. Yet he was also a victim whose fate owes much to decisions taken a decade and a half ago by a dangerous constitutional radical - Margaret Thatcher.

For it was Thatcher who, without reflection, created the new breed of regulators, largely unaccountable to either Whitehall or Parliament, untrained, amateur, working with minimal job descriptions and without performance appraisal. That some of them acquired near folk-hero status - James McKinnon for taking on British Gas, Bryan Carsberg as the phone-user's friend at Oftel - cannot detract from the administrative fact that huge amounts of discretionary power affecting millions of households were loaded on the shoulders of a diverse crew of quangocrats. They are not civil servants answerable to ministers nor politicians in their own right yet they have often, inconsistently, behaved like both.

There has lately been a breakdown in trust between the British people and their government - and the insouciant creation by the Tories of these undemocratic hybrids must bear some responsibility. Mrs Thatcher is often credited with borrowing ideas from the old guru, Frederick von Hayek. But on this front, she failed completely to register one of the Austrian economist's great anxieties about the modern state - that increasing amounts of its work gets devolved to a class of official who played by rules of their own devising.

The Office of the Lottery Regulator is a bureaucratic copy of Oftel, the Office of Telecoms Regulation. Needing a figleaf for the public interest after the privatisation of British Telecoms, Mrs Thatcher rebuffed her ideologically-pure economic advisers and announced that Oftel was to have extra but vaguely specified powers to promote competition. Space was inadvertently created for Bryan Carsberg spectacularly to play to the consumers' gallery - even though by law he had as much obligation to BT's shareholders as to BT's customers. After Oftel, but without rigorous review, similar offices were created for the privatised gas, electricity and water industries (though not, inconsistently, for airports). In the nineties, the same formula was used for rail franchising and regulation and, since 1994, the National Lottery.

There were other choices - like the American way of regulation, through open hearings (in which lawyers, needless to say, are heavily involved). But the Tories preferred the "good chaps" approach. If ministers could stand up and say with their hands on their hearts that John Swift (at Ofrail) was a Queen's Counsel and a gent, hence completely above the railways fray, it absolved them from blame.

But who then asks how well Mr Swift (his contract is up for renewal in December) is performing or even what criteria he should be working with? Is public visibility part of his duties? How often, for example, do we see him on the Nine O'Clock News berating Railtrack? Just to make his life more complicated, the job of berating Richard Branson for failing to ensure Virgin trains run on time belongs to Ofraf (Office of Passenger Rail Franchising, headed buy the even more obscure John O'Brien).

Not that Mr O'Brien will answer the phone when commuters complain that the 07.45 from New Street is an hour late. No. That, it turns out, is somebody else's job.

The point is not whether or not individual regulators do a good job; the difficulty is thea puzzling lack of definition over the job they are supposed to do. Clare Spottiswoode, overcame an initial bit of embarrassment at her effortless transition from a managing a small computer software company (was this relevant experience?) to make a fist of breaking up British Gas into regional suppliers. But both she and the Electricity Regulator (the economist Professor Stephen Littlechild, appointed partly because he had written the pricing formulae he was supposed to be implementing) have found themselves increasingly anachronistic. The industry has changed under their feet as gas suppliers have become electricity providers and vice versa - and meanwhile everyone who owns a conduit into households fancy themselves as the carriers of communications.

To call the utility regulators amateurish and their appointment procedures a game of chance would be cruel, but not too far from the truth. At water, Ian Byatt - now aged over 65 but apparently still to continue until the year 2000 - was previously a civil servant in the Treasury, a department not well known for its specialist knowledge ofsewerage and water pipes. Might he be the next ball to fall from the drum in the Great Regulators' Lottery?

Unsurprisingly Labour came to power last year promising to take a look at the regulatory empire created by the Tories. Yet we still have not seen the green paper that was supposed to follow the review of energy and water regulation set in train last summer by Trade Secretary Margaret Beckett. As for the Department of Environment, Transport and the Regions, it promises a white paper later this year which might recommend a strategic rail authority. But where is the central data base that allows the relative performances of these men and women to be compared and contrasted?What we see here is another example of the fragmented nature of British government.

Jobs are vacant. Chris Smith needs to appoint a successor to Peter Davis; the job at Oftel is pending now that Don Cruickshank is off to help combat the dreaded Millennium bug. But it won't be enough for Labour to chop and change among personalities. More important is giving this game some hard and fast rules.

A few years ago it became fashionable to talk about the "regulatory state". In it governments would step back, hold the ring, let business get on with it.In reality, the Tories took fright at such a minimalist approach; they botched their own job.

Now it's Labour's turn. To realise its plans, regulators will need to be a lot more energetic - and more interventionist than ever. Surely that has to mean dispensing with the pretence that the regulators are free- floating independents. They need to be subjected - in ways Peter Davis evidently was not - to clear and accountable political control.