1. CCRP workshop, July 20117 July 2011 Assessing the Value for Money of Regulation of Infrastructure Networks Anne Taylor & Alex Scharaschkin

2. CCRP workshop, July 2011 Assessing the Value for Money of Regulation of Infrastructure Networks The UK National Audit Office Regulation of UK infrastructure industries Value for money Principles of performance measurement Challenges for regulators Impacts

3. CCRP workshop, July 2011 The UK National Audit Office Our role To provide independent information, assurance and advice to Parliament on the use of public resources To help promote better financial management and value for money

4. CCRP workshop, July 2011 Regulation of UK infrastructure industries Sector economic regulators are independent of Government Varying levels of competition between sectors: Rail Postal services Gas & electricity transmission Water Gas & electricity supply Telecoms

5. CCRP workshop, July 2011 Value for money Good value for money is the optimal use of resources to achieve the intended outcomes

6. CCRP workshop, July 2011 Value for money Resources (€) InputsOutputs Outcomes EfficiencyEconomyEffectiveness Cost effectiveness / value for money External factors

7. CCRP workshop, July 2011 Principles of performance measurement A performance measurement system should be: F ocused on the organisation’s aims and objectives A ppropriate to, and useful for, the stakeholders who are likely to use it B alanced, giving a picture of what the organisation is doing, covering all significant areas of work R obust, in order to withstand organisational changes or individuals leaving I ntegrated into the organisation, being part of the business planning and management processes C ost Effective, balancing the benefits of the information against the costs

8. CCRP workshop, July 2011 Challenges for regulators Regulators face particular challenges in trying to measure their performance, for example: determining indicators of outcomes reflecting the statutory duties set for them by Parliament appropriately recognising the fact that outcomes are usually influenced by other factors as well as the regulator's actions determining thresholds for ‘good’ performance, given this problem of attribution

9. CCRP workshop, July 2011 Sphere of influence

10. CCRP workshop, July 2011 Performance of the regulator vs performance of the market Requirements for effective regulation of cost efficiency

11. CCRP workshop, July 2011 Impacts Public Accounts Committee (PAC) Ofcom Office of Rail Regulation Ofgem

12. CCRP workshop, July 2011 www.nao.org.uk anne.taylor@nao.gsi.gov.uk alex.scharaschkin@nao.gsi.gov.uk