Spending Review 2021: Regulatory services submission

COVID-19 has highlighted the importance of local regulatory services, but it has also illustrated issues with their resilience and capacity. The Local Government Association (LGA), Chartered Institute of Environmental Health and Chartered Trading Standards Institute are calling on the Government to use the 2021 Spending Review to take steps to increase the sustainability of these services.

Backlogs

COVID-related work has created significant backlogs for most regulatory teams around the country. In the short term, with ongoing limitations on capacity, councils should have greater flexibility to adapt risk-based approaches for normal activity, rather than the more prescriptive national requirements that remain in place in some services. In the longer term, the Government must consider the options below.

New demands on the services – contributing to government priorities

With new responsibilities continuing to be added to regulatory teams, we would like to see:

• Additional resources that enable councils to increase capacity and therefore fulfil the new duties placed on them in addition to pre-existing ones.
• A mechanism for reaching agreement across government departments about which competing priorities should be prioritised (as occurred during COVID-19), given the lack of capacity to absorb new duties without disrupting the delivery of existing duties.
• Without this agreement, the flexibility and freedom for councils to determine all programmes of activity according to local need and intelligence.

Addressing the challenges: ensuring the sustainability of future services

Alongside an increase in general funding for councils set out in the LGA’s main spending review submission, there are a number of specific steps that the Government should take.

1. Boost the future pipeline of qualified officers through a dedicated apprenticeship fund

A cross-government regulatory services task and finish group convened to look at the challenges in these services recommended a dedicated apprenticeship fund enabling councils to begin to increase regulatory capacity. We support that recommendation.

Research shows that although councils want to recruit regulatory compliance and environmental health apprentices, budget limitations have constrained their ability to do so, with services struggling to cover the cost of salaries for apprentices. We urge HM Treasury to agree the cross-government proposal to fund salaries for two regulatory apprentices per council – a relatively small sum that would support the creation of skilled employment opportunities up and down the country, supporting the levelling up agenda, and help to kickstart a new generation of qualified officers.

2. Invest in regional support networks

There is scope to boost the capacity of regulatory services through a small level of investment in regional networks that help to increase the resilience of council teams delivering services.

3. Enable councils to recover more of the costs of running regulatory services

Enabling councils to recover a greater proportion of the costs of running regulatory services from the businesses that benefit from them has the potential to significantly increase investment in services. 

We recognise that now is not the right time to introduce these changes, as businesses have only just returned to operate in a more normal way post-COVID-19. However, there is a need to plan for the future, so that we are able to take action at the point when it is appropriate to do so. The Government should begin work now to:

• Explore where nationally set fees are set too low to recover costs. Our preference is for this to be rectified through allowing councils to set licensing fees and accurately reflect local costs, but at the very least an uplift is required to nationally set fees.
• Progress the recommendations of the Regulatory Future review on implementing proportionate charges on the businesses that benefit from regulation, including a licensing framework for food businesses and fees for regulatory interventions.

Ahead of the 2020 spending round, the Local Government Association, Chartered Institute of Environmental Health and Chartered Trading Standards Institute published a submission highlighting the challenges within these important public protection services and the need for additional support via the spending round. At that point, six months in, the COVID-19 pandemic had already highlighted the demands placed on these relatively small teams tasked with leading the compliance and enforcement response to COVID-19 in addition to a wide array of business-as-usual activity.

The submission highlighted the vital work the services were doing to enforce COVID-19 regulations, the significant contribution they make to a number of government priorities and the important new duties they would soon have to support British businesses in the post-transition economy. We called for alternative approaches to be taken to future enforcement duties, for a cross government approach to the new burdens being placed on already stretched services, and for additional investment in them, to be generated from increased general government funding for councils as well as from new funding mechanisms such as fees for intervention in non-compliant businesses.

Since then, the Government has acknowledged concerns about current and future capacity. At the end of 2020, the then Ministry for Housing, Communities and Local Government (MHCLG) convened a regulatory services task and finish group to look specifically at the demands being placed on environmental health, trading standards and licensing services. Comprising officials from across Whitehall, councils, the LGA and professional bodies, the group considered:

• the impact of the pandemic on workloads, and the backlogs of normal work arising from this
• the need for a comprehensive forward look of the many new demands being placed on services, and for a consistent process for departments to highlight these so they can be considered collectively
• current and future resourcing, capacity and qualification routes
• cost recovery across the services
• how to ensure coordination across the many different departments with an interest in the services, alongside appropriate input from councils and professionals.

We are pleased the Government recognised the need to explore the issues in these services and the risks they pose for the future, and we commend the work of the task and finish group. It is also encouraging that work is ongoing to progress some of the recommendations of the group, particularly in relation to the future pipeline of regulatory officers.  

However, while we recognise the challenges that prevent other recommendations from being implemented at the current time, we maintain our position that there is a need for urgent action on a number of fronts if we are to ensure sustainable long-term capacity in these crucial services. The lead times for training up a new generation of practitioners to the right level will take several years and capacity is needed to support trainees as well as meeting the demands placed on the services.

The remainder of this report updates our submission from last year to set out our view of why there is a specific case for measures to ensure the sustainability of environmental health, trading standards and licensing services and what needs to be done.

Through business-as-usual activity these services have a positive impact across a broad range of issues.

In 2019/20 trading standards services:

Environmental health works across a broad range of areas to protect the public and support businesses to operate in a safe way. These areas include:

• Housing and community – EHPs work to keep tenants safe in their rented homes, investigating complaints by tenants and doing proactive inspections of Houses in Multiple Occupation and within licensing areas.
• Environmental protection – in 2019/20, 117 local authorities received 132,000 complaints about noise. These authorities took 5,000 formal actions and 96 prosecutions. Each full-time equivalent officer investigated on average 300 noise complaints per year and up to 670 complaints per year in some regions of England.
• Food safety and integrity – in 2019/20, local authorities in England, Wales and Northern Ireland were responsible for inspecting over 562,000 food premises and took a total of 156,000 formal actions to improve food hygiene and 26,000 formal actions to improve food standards.
• Health and safety at work – in 2019/20, local authorities in Great Britain made over 60,000 visits to businesses to investigate health and safety issues and offer advice to businesses, serving nearly 2,000 notices on businesses presenting risks to their employees and members of the public and taking 55 prosecutions.
• Public protection and wellbeing – EHPs have played a major role in protecting the public, supporting Government, businesses and communities during the pandemic. Practitioners were widely redeployed due to their knowledge and skills in infection control and public health. Overall, around 8 out of 10 EHPs working for local authorities were redeployed last year in response to the pandemic. The most common activities included: enforcing business restrictions (98 per cent), advising businesses on trading safely (97 per cent), developing COVID-19 related policies and procedures (95 per cent), managing local outbreaks (78 per cent), emergency planning (69 per cent) and contact tracing (59 per cent).

COVID-19 has illustrated how the versatile skills and agility of services dealing with this range of issues can be quickly deployed in response to a crisis. Since Autumn 2020, when our original paper was submitted, council regulatory services teams have switched between:

• working closely with local partners to implement a rapidly changing legal framework
• enforcing business closures and taking action against the minority of businesses unwilling to comply with the law
• supporting responsible businesses to understand the law and guidance and to open safely once permitted to do so
• rapidly developing new approaches to using COVID-19 marshals and other officers to enhance public safely and build confidence
• implementing local contact tracing processes to help stop the spread of the virus, and supporting a wide range of wider council activities linked to the COVID-19 response.

At the same time as responding to the pandemic, since January, councils have also incorporated business support processes vital to enabling UK exporters to export predominantly seafood products to the European Union following the end of the transition period. To date, almost 5,000 export health certificates have been issued by councils (without which businesses would have been unable to trade), alongside the concurrent priority of pandemic response.

This highlights that in both normal times and in an emergency, regulatory services have a critical role to play in protecting the public and supporting businesses – and that we will lose valuable protections if the services are left to wither and dwindle without action to address their decline. But it is also worth explicitly making the link between investment in the services and a number of current government priorities that they support.

The stark need to tackle pre-existing health inequalities has been highlighted by COVID-19, which has exposed in shocking clarity the poorer health outcomes experienced by some people within our society. The pandemic offers a useful reminder that environmental health is an integral part of public health and should be considered a key part of the public health capacity and workforce. COVID has illustrated at scale the role of the service in infection control and prevention measures, but it has also drawn attention to the centrality of housing to health and wellbeing, an issue environmental health has an important role to play in. Trading standards, too, already play a key local role in tackling specific health issues such as the accessibility of illegal tobacco, and the Government is looking to local services to implement a range of measures aimed at tackling obesity. In licensing, there is increasing recognition of the role that public health can play and calls for a formal public health objective.

The services are also increasingly being asked to implement a range of measures aimed at protecting the environment, in addition to their historic role in pollution and nuisance control.  These measures are focused on preventing the sale of goods that harm the environment, as well as on the energy efficiency of our properties; additionally, the Government is looking to councils to play a key role in delivering its animal welfare plan.

Finally, it is also worth highlighting recent research on public attitudes to regulation, which indicate support for the maintenance and enforcement of regulatory frameworks.  Research by the National Centre for Social Research concluded that the public are not seeking a less strongly regulated economy following our exit from the European Union, while qualitative research by Unchecked UK found significant support for strong and effective regulation among so called ‘red wall’ voters.

Polling in Wales has indicated strong majority (70 per cent) support for the more or the same regulation of big businesses and for support among both leave and remain voters for maintaining levels of regulation in key areas; this mirrors patterns of support found in polling among younger leave voters. Among respondents to a survey for Unchecked asking for attitudes on areas of regulation such as consumer protection, food safety, and the environment, 66 per cent of younger Leave voters wanted to increase or keep regulation in all 11 categories. Across all categories, on average 50 per cent of respondents want more regulation, and 28 per cent want no change to regulation.

Backlogs

The regulatory services task and finish group explored the impact of the need to prioritise COVID-19 response work over normal business activity, and the extent to which backlogs had built up in areas of work that councils had to pause during the pandemic. The findings again highlight the range of important public protection activity that regulatory services are involved in, and where the risks fall when councils do not have the capacity to maintain activity across the full range of demands on their time.

The cross government task and finish group approved a localised, risk based approach to identifying which issues and visit/businesses should be prioritised to help address these backlogs and return to a normal pattern of activity.

In the short term, with ongoing limitations on capacity, we would support councils having this greater flexibility to adapt risk-based approaches for normal activity, rather than the more prescriptive national requirements that remain in place in some services. In the longer term, the Government must consider the options below.

New demands on the services – contributing to government priorities

Throughout the pandemic, we have continued to engage with several government departments seeking to use local regulatory capacity to enforce a diverse set of new laws linked to various different government priorities.

Our submission last year highlighted the following new council enforcement duties (either newly in place or due to be shortly), including:

• bans on microbeads in cosmetics
• bans the sale of certain materials for wood burning stoves
• bans on plastic straws, drink stirrers and cotton buds
• tenant fees
• the sale of knives and acids
• the sale of energy drinks
• requirement for electrical safety certificates for privately rented homes
• the introduction of calorie labelling in restaurant chains.

Since then, we have seen further proposals for council enforcement linked to:

• the introduction of deposit return schemes for bottles and mandatory takeback of disposable cups
• a prohibition on the use of Botox among the under-18s
• the ban on promotions of certain types of unhealthy food
• energy efficiency in non-domestic properties
• a range of animal licensing and welfare activity through new legislation covering issues as diverse as live animal exports, primate licensing and banning the advertising of low welfare elephant experiences outside the UK.

We have repeatedly highlighted the challenge for councils in absorbing an ongoing flow of new regulatory responsibilities without the ability to recruit more staff to support this: a limited pool of officers is being asked to absorb more and more responsibilities at the behest of multiple government departments without any coordination nationally. All of these policies have important underlying objectives – but as COVID-19 has shown, undertaking new activities requires capacity to be diverted from other areas of work.

The regulatory services task and finish group has developed a new process – the ongoing maintenance of a forward look for regulatory services – intended to keep track of new demands on councils. This will help to provide the collective view of the services the LGA has been calling for several years, creating transparency about the overall ask of the service. But transparency in itself does not solve the issue at hand, and we will need supporting measures to resolve the fundamental issue of more demands being placed on overstretched services that are already struggling to fulfil their existing duties. These measures should include either:

• Additional resources that enable councils to increase capacity and therefore fulfil the new duties placed on them in addition to pre-existing ones.
• A mechanism for reaching agreement across government departments about which competing priorities should be prioritised (as occurred during COVID-19), given the lack of capacity to absorb new duties without disrupting the delivery of existing duties.
• Without this agreement, the flexibility and freedom for councils to determine all programmes of activity according to local need and intelligence.

Capacity

Our submission last year highlighted that reductions in local government funding have had a significant and detrimental impact on regulatory budgets and staffing and warned about the limited number of newly qualified staff entering the services. Work linked to the task and finish group and COVID-19 response over the last year has provided further insight into the following issues:

• An ageing workforce that is shrinking due to both retirement and retention issues, with the loss of officers to other sectors and agencies common, a picture that has been exacerbated by the relentless demands of COVID-19 over the past 18 months.
• Challenges in recruitment, with a limited pool of professional capacity available and an increasing gap between filled and advertised posts.
• Difficulty in bringing in new officers through available routes such as apprenticeships, with a lack of funding for training posts meaning these roles taking up a post in core staffing teams; alongside this, councils reported challenges in ensuring available management and operational time for mentoring new officers. However, there is recognition of the impetus that new and younger officers can bring.
• Concern about the loss of specialist expertise in a number of areas, with many officers now taking on generalist roles as councils are unable to carry specialist posts within their headcounts.

Workforce and new entrants



Environmental health

In April 2021, CIEH published a local authority environmental health workforce survey. The survey found estimated that there are around 3,300 FTE qualified environmental health practitioners (EHPs) working in English local authorities, as well as around 400 EH graduates yet to fully qualify, and 4,000 officers not EHPs delivering environmental health services: in total, around 7,600-7,870 FTE EH professionals working to deliver environmental health, an average of 23.7 FTEs per local authority. However, CIEH estimates that there has been a loss of 1,000 FTEs in food, health and safety, environmental protection over the past decade.



Recruitment issues were a clear theme; four out of five councils reported using agency staff to deliver services, with 87 per cent doing so due to shortages in resources or delays in recruitment. 56 per cent of authorities reported vacancies that were left unfilled for six months or more, with CIEH estimating approximately 375 FTE posts left unfilled in 2019/20, highlighting the lack of available EHPs.



Budgets remained unchanged on the previous year in 51 per cent of authorities, with 24 per cent reporting decreases and 17 per cent reporting increases, although it should be noted that this is against a backdrop of substantial service reductions beforehand, with research suggesting that numbers of council Environmental Health Officers in England and Wales fell by a third (33 per cent) from 2009/10 to 2016/17. A third of respondents reported that the delivery of some statutory services was at risk due to resourcing issues.



Trading standards

According to the CTSI 2018/2019 Workforce Survey, there was a loss of 99.4 full time qualified (meaning individuals holding a professional trading standards qualification such as DCATS, DTS, CTSP or equivalent) trading standards posts (across the 78 services that responded to the 2017 and 2018 surveys). This is the equivalent of 10 trading standards services of cuts, and comes on top of the 50 posts lost according to the 2017 CTSI Workforce Survey.



The average number of qualified trading standards officers per authority is 9.4 full time equivalent (FTE), but 53 of those responding to the 2018/19 survey had a total of less than six qualified officers. Many trading standards services have less than 5 full time equivalent staff and only one fully qualified trading standards officer. In the 2018/2019 survey, only 44 per cent of those heads of service who responded felt that they have the expertise to cover the statutory duties placed upon their services. This is a large change from 2017, when 70 per cent said they could cover these duties, while 30 per cent said they could not.



In interviews, the report comments that a smaller service summed this situation up as being, “...on a knife edge…’’, and “having the team members now to fulfil the role, but going forward they are ageing as a team… [there is] little confidence in being able to recruit new staff”.



Training and qualification

The CIEH survey found that in 2019/20, 159 councils reported supporting 110 EH trainees; a rate of 0.7 FTE per authority on average. More than half did not have a single apprentice or trainee, with lack of budget and mentoring capacity highlighted as the primary reason.



According the CTSI Workforce Survey 2018-2019, more than a third of trading standards officers have over 20 year’s post-qualification experience, with 12 per cent of the workforce having less than five years’ experience. This confirms that an ageing trading standards workforce is a threat to future professional capacity, a concern expressed by many of the heads of service interviewed.



Whilst there remains a great deal of experience within the trading standards profession, at the time of the survey there were only 50 trainee trading standards officers currently in post, and 21 planned for 2019/20. This may reflect the lack of funding for training, with the average training budget per service being less than 2 per cent. Seventy per cent of heads of service were, however, interested in appointing an apprentice.

We have set out above why we need to take action to address reduced capacity in these services. Alongside an increase in general funding for councils set out in the LGA’s main spending review submission, there are a number of specific steps that the Government should take.

Boost the future pipeline of qualified officers through a dedicated apprenticeship fund

The task and finish group supported the recommendation for a dedicated apprenticeship fund enabling councils to begin to increase regulatory capacity. Research shows that although councils want to recruit regulatory compliance and environmental health apprentices, budget limitations have constrained their ability to do so, with services struggling to cover the cost of salaries for apprentices. We urge HM Treasury to agree the cross-government proposal to fund salaries for two regulatory apprentices per council – a relatively small sum that would support the creation of skilled employment opportunities up and down the country, supporting the levelling up agenda, and help to kickstart a new generation of qualified officers

Invest in regional support networks

There is scope to boost the capacity of regulatory services through a small level of investment in regional networks that help to increase the resilience of council teams delivering services. Networks can help to share specialist resource, tools and knowledge across regions, recognising that it is not feasible for all councils to maintain specialist expertise across the full range of disciplines the services cover.

National Trading Standards already commissions a range of regional and national TS work, via the existing local authority networks. As part of its spending review bid, it requested growth of around £5 million for specific investment in the existing TS regions where all local authority Trading Standards Services have agreed to collaborate and work in partnership via a regional model. This would provide a resource of approximately 7 or 8 people in each region and in Wales to provide additional expertise and coordination support that local authorities in those regions could call upon. Areas for investment include: support for coordination of apprentices and trainees; additional expertise to help local authorities with digital enforcement; support for local authorities in areas to undertake scams awareness raising activities; additional support for regional intelligence and tasking to ensure the limited resources are allocated the highest priority areas and other specialist experts that local authorities can utilise when the need arises – a recent example has been for an expert of energy efficiency regulation. This could be commissioned via existing NTS grants with regional groups and local authorities across England and Wales so would not require any new infrastructure.

Enable councils to recover more of the costs of running regulatory services

Enabling councils to recover a greater proportion of the costs of running regulatory services from the businesses that benefit from them has the potential to significantly increase investment in services. This would not be a new approach: it is an established principle that licensing frameworks should be cost neutral, with licence fees funding the costs of the service, and the polluter pays principle is accepted in many areas of regulation, including environmental and gambling regulation. However, many nationally set licence fees do not currently reflect the costs that councils incur in running licensing frameworks, and work has stalled on developing new fees for intervention and cost recovery mechanisms as recommended in the Cabinet Office’s Regulatory Futures review.

It is worth emphasising that even when set to reflect local cost recover, these fees represent a tiny proportion of businesses overall set up and operating costs: while increased fees would collectively provide a significant resource boost to councils, it cannot credibly be argued that fee increases at these levels would impact the viability of individual businesses. However, we nevertheless accept that now is not the right time to increase fee levels or introduce new fees given the focus on post-COVID business recovery – businesses hit hard by the pandemic, particularly in the hospitality sector, need to be given time to recover and thrive, to be nurtured back to stability: a role that environmental health, licensing and trading standards have a big part to play in through their business support activities.

But this position will change in the coming years. By the time of the next spending review, viable businesses will have returned to a more secure footing but there will be an increasing imperative to stabilise public finances following the impact of COVID. Current shortfalls cannot go on indefinitely; by that point, will it really be justifiable for taxpayers to be subsidising businesses through fees set nationally twenty years ago which undersell the costs incurred by councils in supporting them? Or that businesses which account for the greatest proportion of local regulatory capacity – namely food businesses and non-compliant businesses – do not make any contribution towards the cost of this?

There is a need to plan ahead for the future, so that we are able to take action at the point when it is appropriate to do so. The Government should begin work now to:

• Explore where nationally set fees are set too low to recover costs. Our preference is for this to be rectified through allowing councils to set licensing fees and accurately reflect local costs, but at the very least a national uplift is required.
• Progress the recommendations of the Regulatory Future review on implementing proportionate charges on the businesses that benefit from regulation, including a licensing framework for food businesses and fees for regulatory interventions.

Delaying this work will not only harm taxpayers but will risk further weakening local public protection services.

Explore how regulatory reform could reduce costs - for businesses and regulators

Another piece of longer-term work would be to explore how modernising and co-designing the UK’s outdated licensing frameworks could help create a post-transition better regulation dividend and create efficiencies for both businesses and council regulators.

The LGA’s Rewiring Licensing document has previously set out the case for updating the UK’s outdated licensing frameworks, which are piecemeal, overlapping and – in many cases – extremely out of date. Streamlining these frameworks could reduce the pressures on both the councils operating and the businesses complying with these frameworks. In line with the principle of cost recovery outlined above, this could also reduce the fees associated with these frameworks.

Better regulation can be delivered but it takes time and significant work to devise and implement. As the recent Taskforce on Innovation, Growth and Regulatory Reform stated, this will take ‘sustained drive and focus from the Government’– it is not a quick win. But as with fees and cost recovery mechanisms, that emphasises why it is important to start now the process of identifying where improvements could be made and the work that is required to do this. The Government’s commitment to long term reform of the pavement licensing system following temporary relaxations introduced during COVID-19 is an example of where changes can be made, through co-design with councils and businesses; but there is a need to look at these issues collectively.

The Government’s regulatory services task and finish group provided a welcome focus on the challenges in a core set of local regulatory/ public protection services; pressures that were highlighted by COVID-19 but present well beforehand. We commend government for initiating this work and urge it to now use the spending review to implement the actions necessary to take forward the good work and recommendations outlined by the group.