Regulation Inside Government: Public Interest Justifications and Regulatory Failures

Regulation is normally thought of as government regulation of the private sector, particularly business. However, there is a developing literature on regulation inside government, exploring the ways in which government regulates itself through a range of bodies which set standards for public sector organizations, monitor them and seek to bring about compliance with those standards. Reading across economic theories of business regulation to regulation inside government, this article suggests that the current wave of reform inside the UK public sector implicitly reflects a public interest view of regulation. However, the analogous public interest justification for the regulation of business has been heavily criticized and regulatory failures have been suggested including regulation in the interest of regulated bodies, regulation in the interest of regulators and the high costs of operating regulatory systems.