§ 12.54 p.m.
§ The Minister of State, Cabinet Office (Lord Falconer of Thoroton)
My Lords, I beg to move that this Bill be now read a second time.
The Bill will provide a major tool for this and future governments to reform entire regulatory regimes and to tackle unnecessary, overlapping, over-complex and over-burdensome legislation. It builds on the acknowledged strengths of the deregulation order-making procedure, including the rigorous parliamentary scrutiny of proposed orders, and provides additional safeguards. It facilities reducing the burden of regulation.
The clauses in the Bill can be briefly described as follows. The first group, Clauses 1 to 3, contains the main regulatory reform order-making power. Clause 1 sets out the order-making power and the context within which it will operate. Clause 2 explains what is meant by "burden" and related terms, and Clause 3 sets out the tests that have to be met by proposed orders, and limits the level of penalties that can be imposed.
The second group of clauses is concerned with the mechanics of order making. Clause 4 provides that orders shall be made by affirmative resolution, and sets out the subordinate provisions order-making procedure. Clause 5 details the consultation process required for each proposed order, and Clause 6 details the information that the Minister must provide to Parliament when the proposed order is scrutinised. Clause 7 sets out the disclosure arrangements for representations made during consultation. Clause 8 details the procedures for parliamentary scrutiny of draft orders.
851 The third group, Clauses 9 to 11, makes provision for Ministers to make codes of practice in relation to enforcement matters, and the fourth and final group of clauses, Clauses 12 to 15, deals with supplementary matters.
The principles in the Bill received a great deal of close attention before being put to the House today. The Delegated Powers and Deregulation Committee of this House, and its sister committee in another place, each reported on the consultation exercise undertaken in March 1999 and then on the subsequent government response. They reported once informally and privately on an early draft of the Bill, and twice formally on the Bill's publication in draft as Command Paper 4713 in April 2000. The Lords committee reported on it again last month in its report on its work in the 1999–2000 Session, and in its commendably thorough report earlier this week to your Lordships on the three delegated powers that make up the Bill. It comes before your Lordships benefiting from that thorough and immensely helpful scrutiny.
Our Bill is evolutionary in approach, building on two propositions. I refer first to the deregulation order-making power in Sections 1 to 4 of the Deregulation and Contracting Out Act 1994. That was described at the time by the committee now chaired by the noble Lord, Lord Alexander of Weedon, asunprecedented in time of peace".Experience has taught us the value of the new kind of amendable secondary legislation created by the 1994 Act.
Secondly, the Bill seeks to convert the little-used enforcement provisions in Section 5 of the 1994 Act into a reserve power for Ministers to make a code of enforcement practice. We are committed to securing continuous improvement in service delivery. In enforcement matters, we shall continue with a voluntary approach asking enforcers to sign up to our enforcement concordat. That seeks to promulgate best practice.
The reserve code-making power would be used if we encountered problems with the voluntary approach and saw the need for improvement; for example, in cases where there was a persistent and demonstrable failure of enforcement practice by enforcers.
As your Lordships will have spotted, the Bill is purely enabling, containing nothing more than two order-making powers. One of the powers, the proposed regulatory reform power, is wide in scope, and I know that this House will want to scrutinise the issues raised thoroughly.
Perhaps I may now set it in context. Regulation is important. Getting it right first time is important, as is ensuring that the benefits must justify the costs. But the ability to change legislation subsequently to reflect changes in the world around us is just as important. There is no easy answer. Our approach to regulatory reform has to be broadly based. We have appointed regulatory reform Ministers in each of the main regulatory departments to account for their department's regulatory activities. The Panel for Regulatory Accountability is pursuing vigorously its 852 remit of modernising the regulatory system, simplifying existing regulation and easing regulatory pressures on business and the public sector. We have set up the Small Business Service so that for the first time small businesses have a clear advocate inside government. We benefit from the ever-watchful eyes of the Better Regulation Task Force chaired by the noble Lord, Lord Haskins—I am particularly glad to see the noble Lord in his place today—and we are bringing forward this Bill.
Your Lordships may ask what is wrong with the current deregulatory order-making power. After all, the 1994 Act introduced the procedural innovation of the super-affirmative order-making process. It is well engineered, providing for robust scrutiny of the deregulation process.
There have been some notable successes. The Bills of Exchange Order (1996/2993) saved the banking industry tens of millions of pounds in costs by removing an unnecessary statutory requirement for the processing of cheques; and the check-off order (1998/129) removed the need for three-yearly reauthorisation of deduction of trade union subscriptions from pay, thereby reducing costs for business.
Although the process has worked well, limitations identified in the power mean that, with only 46 orders to date, it has been something of a disappointment in terms of the scale of the deregulation delivered. The peak year of activity was 1996 with 23 orders, tailing off ever since—but not because of lack of will; rather, the supply of simple statutory burdens on business that the 1994 Act was designed to remove is drying up. We can only fish for deregulation orders in the pool of pre—1994 legislation.
We want to do more and we need the right tools for the job. We intend preserving the strengths of the existing deregulation process. First, thorough and effective consultation will remain the gateway to the order-making process; secondly, the two Houses will be true co-equals in the scrutiny process—highly controversial or party-political measures will naturally remain more suited to debate on the Floor of the House; and, thirdly, the rigours of the scrutiny process will also be preserved and enhanced. Each proposed order must undergo an intense scrutiny. After consultation, it has to go before a committee in each House not once, but twice, with Ministers required to provide detailed explanatory material in justification.
But, for all its innovation, the deregulation order-making power has turned out to have considerable weaknesses. There are not many small and discrete burdens in statute that can be easily repealed; rather, the real burdens stem from outdated, overlapping and over-complex regulation. To tackle that, we need a wider—ranging reform power so that we can over-haul and reduce burdens on business. It is not only business that will benefit, but also individuals, the voluntary sector, charities and the wider public sector too.
The ability to remove burdens from the wider public sector should not be seen as a charter for the Government to abrogate their responsibilities. Neither 853 we nor the committees have found a satisfactory way to differentiate between proposals that would remove minor administrative burdens from government and those that would, for instance, remove a Minister's duty to provide essential public services. The Bill therefore provides that Ministers will not be able to remove burdens that fall solely on themselves or their departments. Somebody else would have to benefit too.
We should like to see a shift in gear. Until now the deregulation process has produced generally small, but significant, proposals. We should like to see this high quality scrutiny process used for more substantial items, such as reform of fire safety legislation currently spread over 120 Acts; or reform of weights and measures legislation. Those are the sorts of worthwhile reforms that are well overdue and may not otherwise see the light of day. The Prime Minister announced an initial tranche of 22 proposals that could be taken forward as regulatory reform orders. Today I am pleased to be able to tell the House that I have placed in the Libraries a list of a further 27 measures to illustrate the Bill, bringing the total to date to 49.
The Bill also removes the artificial limitation on reforming post—1994 legislation. But we have provided that the order-making power should apply only to legislation which is more than two years old. The two-year waiting period should address the possible temptation to resort immediately to corrective order-making if we cannot get our legislation right first time.
The Bill redefines "burden" to include any limit on the statutory powers of any person. This is an important change. We envisage that regulatory reform orders should be able to deal with circumstances where people do not have the legal authority to do perfectly sensible things. In line with our National Childcare Strategy, for example, we propose to enable school governing bodies to offer after-hours childcare, which at present they can do only if they provide education at the same time. This is something for which many schools have asked.
We want the Bill to bring about the sensible reform of regulatory regimes, and such rebalancing will often involve the redistribution of burdens. That cannot happen without the ability to make new provisions imposing a burden. But that is why any proposal to increase burdens will be subject to additional safeguards laid down in the Bill. First, the new burden must be proportionate to any benefits, considered in general terms, which are expected to result from its creation. This means that Ministers cannot impose new burdens without being able to show clearly that they are justified by the benefits.
Secondly, the order as a whole must strike a fair balance between the public interest and the interests of those affected by the new burden. So, if a Minister were to seek to rebalance an entire regulatory regime, it is likely that a small number of people might be faced with increased burdens. But, under the Bill, the Minister has a duty to show that a fair balance is being 854 maintained; that the additional burden on a small number of people is justified by the greater public benefit of simplifying the entire regulatory regime.
In addition to those stringent tests that apply only where new burdens are proposed, the Bill requires all draft orders to be tested against two other safeguards. First, as was the case with deregulation orders under the 1994 Act, no order may reduce or remove any necessary protection. This was a key concept under the 1994 Act and has been seen to work well. Your Lordships have not hesitated to criticise proposals under that Act that they did not believe maintained this protection and in each case the government of the day amended their proposals to take account of your Lordships' views.
Secondly, no order may prevent anyone exercising an existing right or freedom which,they might reasonably expect to continue to exercise. That is a familiar concept in terms of case law on the European Convention on Human Rights. For example, a proposal might be seeking to reduce the regulatory burdens on the retail trade, but one effect of that might be to reduce some consumer rights. The order could not legally proceed unless it could be shown that consumers had no reasonable expectation of continuing to enjoy those rights. In each case, the consultation process will explicitly seek views on the safeguards, and the scrutiny process in the committees will then examine the conclusions.
So we are proposing a broad power; it has to be, to enable us to achieve the sensible reforms I mentioned. But, as we have widened the power, so we have also toughened up the safeguards. I should add that those safeguards are real; they are on the face of the Bill and they are legally binding.
The Bill has been framed to respect the devolution settlement. It is fully compatible with the European Convention on Human Rights. I signed the Section 19 Human Rights Act statement as I consider that the proposed powers do not require anything to be done that is contrary to the Human Rights Act 1999.
I am particularly grateful to the two committees—the Delegated Powers and Deregulation Committee and its sister committee in another place. They made a significant contribution to the Bill's development. I recognise, of course, that this Bill will entail a considerable increase in the workload of the scrutiny committees and I am sure that at some stage the House will consider the issue of resourcing.
In their recent report on the delegated powers in the Bill, the Delegated Powers and Deregulation Committee raised the serious matter of an amendment to provide for a sunset provision including limiting the operation of the Act to a maximum period of five years, unless renewed by an affirmative instrument for a further period.
We carefully considered that proposal, but I must tell the House that we see serious difficulties with the "sunsetting" of the Act itself. We fear that it would stem the flow of orders, particularly towards the end of the period. Departments would be loath to commit 855 the considerable resources needed to begin the order-making process where they were unsure that the powers would be available to their Minister.
This is a Bill with very important consequences. I look forward to your Lordships' views not only on matters of detail but also following the report from the Delegated Powers and Deregulation Committee on the important points of principle it raises.
In summary, the Bill will provide a valuable tool for this and future governments to tackle unnecessary, overlapping, over-complex and burdensome legislation. I commend the Bill to the House.
§ Moved, That the Bill be now read a second time.—(Lord Falconer of Thoroton.)
§ 1.10 p.m.
§ Baroness Buscombe
My Lords, in rising to speak to the Bill, perhaps I may first thank the Minister for his introduction and pay tribute to the Select Committees of both Houses which have over a period of two years considered with care the Government's proposal to amend the Deregulation and Contracting Out Act 1994.
First, I want to put down an important marker. We are committed to deregulation and supportive of all measures which effectively—and I use the word —effectively" with care—reduce both the cost and bureaucratic burden of red tape. To that end, we do not oppose the Bill in principle but there are a number of important issues which are of considerable concern arid which we shall want to debate in detail during later stages. Indeed, given that there are fewer than four days to Christmas, the fact that so many noble Lords are present today to speak in the debate indicates the importance that we all attach to the possible implications of the Bill.
We introduced the 1994 Act in the face of vehement opposition by the then Labour opposition which described it among other things as "monstrous" and "a constitutional outrage". That Act is clear in its intent. It enables what one might call "a one-way street" to facilitate deregulation; hence its name. What we have before us now is a proposal for a two-way street which will allow the imposition by orders of new burdens, new costs and new regulations; hence its name, "Regulatory Reform".
It is worth noting that there was considerable discussion at the outset of the consultative process on the Bill with regard to the sensibility of changing the name of the Select Committee in the House of Commons from "Deregulation Committee" to something more akin to "Better Regulation Committee". That is a clear indication of the Government's thinking. It certainly reflects the Government's action, given the enormous increase in regulations in the past three and a half years. Indeed, the British Chambers of Commerce have calculated the extra burdens on business of regulation as £10 billion during this Parliament. Those costly burdens are thanks in large part to this Government signing up to the Social Chapter as well as all those home-grown regulations attaching themselves, for example, to our 856 utilities. As a recent editorial in the Wall Street Journal, entitled "Britain is regulating itself to death", states:The burden of regulation is one of the main criticisms of Labour's record in government",and
It is important to rip out whole rafts of the regulatory regime where such regulation is no longer necessary".We say "Amen" to that!
That brings me to the real intent of the Bill. Are the Government sincere in their stated desire to deregulate or is this more regulation by another supposedly more expedient means? Should we agree to the widening of a power to allow Ministers to decide whether it is right to introduce new legislation by orders, by committee, in essence behind closed doors, by secondary means? It is one thing for secondary legislation to strike down burdens; it is another for secondary legislation to add burdens, especially financial ones.
There is a risk, notwithstanding the obligation to consult, together with the procedures expressed in the Bill, of a new Act being used for broader purposes than those for which it is presently said to be intended. The risk should, we believe, be considered in the context of a concern expressed on a number of occasions by members of both Select Committees and which relates to the role of Ministers. The noble Lord, Lord Haskins, stated in evidence on 30th June 1998:The impediment to better regulation seems to me to be departmental. I am amazed how little control of the day-to-day running of government the Prime Minister and the centre have over departments. Departments are notoriously vertical in their approach towards regulation rather than horizontal. This is a weakness of the British system".The unprecedented increase in the number of regulations since that was said in 1998 confirms that neither the Better Regulation Taskforce, the Government's Small Business Service nor even the right honourable Mo Mowlam's Star Chamber has yet succeeded in changing that culture. I believe that we must all keep that in mind during the passage of the Bill.
Furthermore, another factor which causes us real concern with regard to approving in principle the widening of the powers of the executive, and which relates to the proposed procedures for scrutinising draft orders, is the degree of oversight provided by the committee which rests on a "convention". It is a convention which dictates that if the committee rejected the proposal or requires it to be amended, appropriate steps would be taken to comply with the committee's wishes.
This Government have shown themselves almost proud of their willingness to dispense with conventions, and when pressed by the Select Committee the Minister appeared to hedge his bets. When asked what would be an appropriate matter for this so-called "streamlined" procedure, he could merely answer that he could not define such a matter but would know it when he saw it.
While one may have complete confidence in the judgment of the Minister, the same might not be said of others who follow in his footsteps. In short, any 857 guarantee based upon a convention is not much of a guarantee. Indeed, it would be quite easy to imagine situations where the truncated procedure could be invoked under a guise of its being "appropriate" for a particular matter and the convention would wither away, as have so many other conventions during this Parliament.
Turning to the Bill, I would like to raise some of the issues that we shall want to consider in detail at the Committee stage. The Bill, at Clause 1(1)(b), provides for the imposition of burdens. Therefore, in legislation directed to the reduction of burdens, there is immediate provision for the imposition of burdens which affect any person in the carrying on of an activity but is,proportionate to the benefit which is expected to result from its retention".The key word "proportionate" has, as your Lordships will know, a quasi technical legal meaning, although it is far from precise. It means that an appropriate balance is struck between the interests of the individual and the public interest and that a particular burden is no greater than that which is judged necessary to achieve a particular object.
What is missing in the formulation in Clause 1(1)(c)(ii) is a primary requirement that the imposition of a burden should be necessary as well as proportionate. We believe that both conditions should be satisfied because it is possible for a burden to be proportionate but unnecessary.
In Clause 2, the word "burden" is interpreted imaginatively to embrace a restriction, requirement or condition, including one requiring the payment of fees or preventing the incurring of expenditure. That is a very different definition from that found in Section 1(5)(b) of the 1994 Act. That definition referred to a burden as one requiring the payment of fees and allowed the procedure set up in the Act to repeal such a requirement. This accords with the more conventional notion of a burden as an imposition, including one requiring the payment of fees.
By contrast, the definition in this Bill turns the conventional notion of "burden" on its head and defines the burden as something which prevents the charging of fees or of incurring expenditure. If one starts from the individual, this is better described as freedom from an imposition. If one starts from the view of the state, preventing a charge is obviously a fetter or burden on state power.
The marked difference of approach revealed in our language in 1994 and what is proposed in this Bill is a very eloquent way of noting the fundamental difference between promoting and preserving the rights of the individual, which is our focus, and extending state power, which is the Government's focus.
Yes, there may be many situations in which it is entirely right to levy a charge or to allow an expenditure where the existing law does not allow for that. It is quite another question to authorise such 858 charges using procedures which by their nature were designed speedily to eliminate the burden of regulation.
Moving on to Clause 3, we are not persuaded that the so-called limitations on order-making powers actually provides much of a limitation on the exercise of ministerial power. While we support the need to prevent the removal of any necessary protection, it is equally important to ensure that any new order does not impose any unnecessary protection, thereby adding to the burden of regulation. In essence we believe that the Minister must never lose sight of the fact that extra regulation must be necessary before making any assessment of how the regulatory burden is to be imposed.
We also have some concerns with regard to Clause 4 with the distinction between ordinary provisions, which require the protection of an affirmative resolution of each House, and something called a subordinate provision. The latter can go through on the nod without any consultation and be subject only to a negative resolution. What Ministers, and also their departments, might consider consequential, transitional or supplemental might actually be vital to those who may be more directly concerned with the proposal in hand.
That said, we would be more receptive to subsequent amendments to an existing order being treated in this way. At least there would already have been some consultation in relation to the principle and initial level of fees or requirements. The important point is that the so-called incidental details, when taken together, may tip the balance when considering issues of necessity and proportionality and it is right that the Minister should be informed by those most directly involved who are likely to be consulted as to the wisdom of the proposed action.
With regard to codes of practice, we are curious as to why, if a person is in breach of a particular provision, that person's position should be any different as a result of the failure of the enforcement officer to comply with the provision of any code of practice. If the basic regulation is too harsh or bites on too many irrelevant and incidental matters, the right solution is surely to amend the legislation. The fact that the enforcement officer may have taken zealous steps to enforce the law ought to be irrelevant. If the ccde contains the necessary procedural steps before liability can be established, those steps should be set out in the appropriate regulation. If the steps are not necessary, why should any court or tribunal take into account failure to abide by any code setting out such steps?
We believe that the whole process of deregulation can and should be further strengthened. To that end, we believe that there should be a requirement on the face of the Bill for a regulatory impact assessment to accompany any new regulations. Furthermore, we entirely agree with the House of Lords Select Committee in its suggestion of an additional potential safeguard in the form of a sunset provision which could limit the operation of the Act to a maximum 859 period of five years, unless renewed by an affirmative instrument for a further period. To that end, I would inform the Minister that we do not agree with him that this would create difficulties. We believe that the importance attached to the sunset clause would easily outweigh such potential difficulties. The provision should also, as suggested by the committee, require a report on the operation of the Act to be laid before Parliament at the same time as a draft affirmative renewal instrument, thereby ensuring that the Act is kept under frequent review and that the powers have been both appropriately and effectively used.
In conclusion, while we agree with the House of Lords Select Committee when it states that the potential gains are considerable, we are also very concerned to ensure that sufficient safeguards are put in place to avert any potential abuse of the power. We therefore give a very cautious welcome to the Bill, and look forward to careful consideration of the detail, including assurances from the Minister that we can rely on more than trust and constructive relationships before the Bill is passed.
§ 1.24 p.m.
§ Lord Goodhart
My Lords, I should like to start very briefly by explaining my own position on this Bill. I am of course a member of the Delegated Powers and Deregulation Committee. The unanimous view of the committee was that this Bill raises important issues which need to be fully debated in your Lordships' House. However, the committee felt that it was inappropriate to express any collective view on the merits of the Bill and the committee agreed that because it did not take a collective view its members should be free to express their own individual views or, as in my own case, speak on behalf of their own parties in this debate. I would like to add that the chairman, the noble Lord, Lord Alexander of Weedon, asked me to express his regret that he is unable to be present today. He would very much have wished to take part in this debate.
The Deregulation and Contracting Out Act 1994 has undoubtedly proved useful. Annex A contains a list of 46 deregulation orders which have been confirmed since the 1994 Act came into force. Perhaps two more should be added to the list: the Sunday Dancing and Sunday Licensing orders are awaiting affirmation. It is hoped that one of them will receive affirmation today. However, as the noble and learned Lord, Lord Falconer, said, the number of orders has slowed down noticeably during the past couple of years.
Appendix C to the memorandum by the Cabinet Office, which is published as Annex 2 to the Second Report of the Delegated Powers Committee for the current Session, contains a list of proposals which the Government either intend to implement or say could be implemented under the new Bill. There are 10 on that list which they intend to bring forward and 14 which they say could be brought forward. I now understand from what the noble and learned Lord said that there is a further list which has been placed in the Library. Some of these could be implemented under 860 the 1994 Act; for example, the proposal to remove the remaining restrictions on the size of partnerships. However we accept that some desirable reforms would involve the shifting of burdens from one body to another or the creating of new burdens in place of old, and that this cannot be done under the existing Act.
We have no doubt that making deregulation easier is a desirable objective. We support the Bill in principle: my noble friend Lord Razzall made that clear during the debate on the gracious Speech. We have received briefings from several organisations who support the Bill, such as the Local Government Association, the CBI and the Law Society. We have received no briefings against it, so it obviously has wide support outside your Lordships. House. However, the Bill is of constitutional importance, as the committee said, and it needs to be looked at with great care.
The Bill gives greater powers to government to legislate by order rather than by statute. The orders are of course subject to parliamentary control. Indeed they are in a sense subject to greater control than a statute would be as the right of your Lordships' House to reject an order is absolute, as was established during the last Session, and is not subject to the Parliament Act. It will of course take up less time—perhaps one day of debate, whereas even a modest Bill might take three or four days.
It is often said that the principal weapon of an Opposition in facing a clear majority in the other place is its power to delay, and it could be said that the Bill, by giving greater power to legislate by order, reduces the power of the Opposition to carry out its constitutional duty of opposing. I do not myself accept that argument. This Bill should be used mainly for relatively minor and uncontroversial reforms which, if they cannot be done by order, will not be done at all because parliamentary time will not be found for them. I therefore do not believe that the Bill weakens the powers of the Opposition.
Here we are developing a new form of order, the super-affirmative order, which appeared for the first time in the 1994 Act. There is now something very similar in the form of remedial orders under Section 10 and Schedule 2 of the Human Rights Act for the purpose of correcting incompatibility of primary legislation with that Act. We believe that a super-affirmative procedure is a good idea. It gives greater flexibility and creates a useful new tool for revising relatively uncontroversial primary legislation.
The procedure provided by Clauses 4 to 8 provides an opportunity for very wide consultation; for example, it enables the Delegated Powers and Deregulation Committee to take evidence in public from Ministers or interested parties, as the 1994 Act already provides. In some ways orders under the Bill will receive better scrutiny than many public Bills under present circumstances and, therefore, I have no complaints about the procedure in Clauses 4 to 8. I also have no complaints of any substance about the enforcement procedure which is dealt with in Clauses 9 to 11.
861 But there are some matters which will need to be considered very carefully at later stages of the Bill. As to that, we share some of the concerns expressed by the noble Baroness, Lady Buscombe. The first matter which concerns me is central to the nature of the powers which the Bill confers on the Government. Clause 1(1) sets out four objects for which an order may be made and each can be used independently of the others. Paragraph (a) is concerned with the removal or reduction of burdens; paragraph (b) deals with the re-enactment of provisions which impose burdens; and paragraph (d) is concerned with the removal of inconsistencies and anomalies. I see no objection to those provisions as they now stand.
However, paragraph (c) is objectionable. It provides that one of the objects of proceedings under this Bill is,the making of new provision having the effect of imposing a burden which— (i) affects any person in the carrying on of the activity, but (ii) is proportionate to the benefit which is expected to result from its creation. Taken by itself, that provision would enable an order to be made to increase burdens without any offsetting removal of other burdens. I can see that some such power is needed to enable existing burdens to be shifted from one body which is now subject to them to a more appropriate body, but I am unhappy with a free-standing power to impose new burdens. I believe that the thrust of the Bill should be deregulation. As the noble and learned Lord said in his introduction, the Bill is intended to facilitate a reduction in the burden of regulation. Therefore, we should consider whether the operation of Clause 1(1)(c) should be limited to circumstances in which it is necessary to create new burdens in order to remove or reduce other burdens.
The second matter is whether the references in Clause 3 to the Minister's opinion should be deleted. Clause 3(1), for example, provides that,An order under section 1 may be made only if the Minister making the order is of the opinion that the order does not (a) remove any necessary protection, or (b) prevent any person from continuing to exercise any right or freedom which he might reasonably expect to continue to exercise".The question is whether the test should be the subjective opinion of the Minister or an objective, factual test. The important difference is that the Minister's opinion can be overruled only by the court on judicial review if it is irrational, but if it is a factual, objective test the court could substitute its own view on the footing that the Minister's view, though not irrational, was wrong. I noted that in opening the debate the noble and learned Lord spoke as if the requirements in Clause 3(1) were objective.
One factor in this is that in practice the Delegated Powers and Deregulation Committee expresses its own view as to whether, for example, a proposed order removes any necessary protection. If the Minister and the committee disagree it may be difficult to get any orders through. Clearly, that issue requires debate in Committee.
862 The third matter which has already been touched on by the noble Baroness, Lady Buscombe, is whether, as the Delegated Powers and Deregulation Committee suggested—it did not make a recommendation—there should be a sunset clause together with provision for a review of the legislation on the face of the Bill. The noble and learned Lord said that he did not agree with that, but that is plainly an issue which needs to be debated in Committee.
I turn finally to the matter which causes me the greatest concern. It proved impossible during the consultation process to come up with a draft which would confer on the Minister powers only in appropriate circumstances. The committee accepted that that could not be done. It is of the greatest importance that there are effective safeguards to prevent an inappropriate use of the powers under the Bill. As matters now stand, I believe that safeguards do exist, especially in your Lordships' House where any government is unlikely to have a compliant majority. Paragraph 10 of the Explanatory Notes and paragraph 3.13 of the Cabinet Office memorandum, to which I have already referred, refer to an undertaking that the Government will accept a decision of your Lordships' House to reject an order. I hope that in winding up the noble Lord, Lord McIntosh of Haringey, will confirm that that undertaking still reflects the view of the Government.
The safeguard does not rest solely on that undertaking or convention but on the fact that, as clearly shown in the previous Session, in the last resort your Lordships' House has the power to veto an order which is not subject to the Parliament Act. In effect, it confers on your Lordships' House the power to say that it is inappropriate for a particular matter to be dealt with by order and if the Government want to get it through they must take it away and deal with it by way of primary legislation. The problem here is that it is generally believed that the Government are likely to seek to impose the proposals in the Wakeham report after the next general election. Recommendation 41 of that report reads:Where the second chamber votes against a draft instrument, the draft should nevertheless be deemed to be approved if the House of Commons subsequently gives … its approval within three months".If that was implemented any vote by your Lordships' House to reject a statutory instrument, particularly any order under this Bill, could be overruled immediately by a vote in the other place. That would make the existing safeguards against inappropriate use of the power under the Bill almost valueless.
I quite understand that the Government cannot now make any statement about how far, if at all, the Wakeham recommendations will be implemented. However, can they give noble Lords any reassurance that the rights of your Lordships' House to veto the inappropriate use of powers under this Bill will be preserved whatever view they may take of the Wakeham report in general? If no such undertaking can be given, I have serious concerns that the 863 safeguards are inadequate. Those concerns may affect the extent to which we wish to press amendments to restrict the powers in the Bill.
§ 1.39 p.m.
§ Lord Haskins
My Lords, in the light of three years at the coal face as chair of the Government's Better Regulation Task Force I believe it is helpful for me to comment on the purpose and value of the Bill. But before so doing, I should like to make four general observations about regulatory issues in a modern society.
First, increasing regulation somewhat contradictorily goes hand in hand with increasing affluence, a safer society and increased education. That curious paradox was also experienced by the founders of the National Health Service who thought that by making the nation healthier they would also save costs in providing that health service. Unfortunately, their success was undermined by the fact that we all started living too long.
Secondly, the pursuit of a risk-free society can lead to very bad counter-productive regulatory proposals. Thirdly, the culture of government bureaucracy, including a public accounts committee and a media which are intolerant of any regulatory failure—so different from the private sector—drives the system toward over-prescriptive gold-plated regulation. Fourthly, the parliamentary process itself can lead to excess of regulation which can prove wholly impractical when it is implemented. Recently this House approved an amendment restricting the use of extended dog leads in the countryside. It is an amendment which is unlikely to stand the test of time and, I suspect, will come to haunt some unfortunate law-enforcer in the future.
The Bill is a vital element in the Government's strategy for improving the quality and controlling the quantity of regulations. There are four strands to the Government's approach in this matter. The first is to test the need for regulatory intervention, which is done by extensive consultation with all interested parties. I am delighted that the Government have accepted our recommendation that that consultation should take a minimum of three months. The second strand is fully to evaluate the costs and benefits of any regulatory proposals. The third is to ensure that the regulation can be enforced effectively. If it cannot be—for example, the poll tax—do not regulate. Fourthly, in the case of an existing regulation, we should check whether it is still relevant.
The Government, with much encouragement from the task force, have put in place a number of checks and balances to make sure that these tests are rigorously pursued. First, the key departments have been asked to make one of their Ministers specifically responsible for the regulatory process in that department. Secondly, the regulatory impact unit in the Cabinet Office makes sure that the cost/benefit exercise is carried out on all significant regulatory proposals. That procedure is called the regulatory impact assessment.
864 Thirdly, the Better Regulation Task Force has established five principles of good regulation—transparency, proportionality, accountability, consistency and targeting—which are widely used to test new and existing regulation. The task force also publishes reports—eight this year—making recommendations to Ministers on how regulatory problems can be improved.
The strength of the task force lies in its independence and the credibility of its published reports. In its responses to our reports, the Government have accepted all but six of our 264 recommendations, although we shall be pressing to make sure that acceptance becomes commitment. The Prime Minister has been strongly supportive of the approach and work of the task force. He has also set up a regulatory reform panel, chaired by the Minister for the Cabinet Office. The other members include the Chief Financial Secretary, the Secretary of State for Trade and Industry, my noble and learned friend Lord Falconer, the Chief of the Small Business Service David Irwin and myself. The panel calls Ministers to account for controversial regulatory proposals.
So far, so good. Departments and Ministers are now much more aware of the pitfalls of poor regulation, particularly with regard to costs and effectiveness. There can of course be a political aspect to the need for new regulation—for example, the Social Chapter or rail safety; although I would argue that a worthy political goal, such as greater entitlement to parental leave, must be tested in terms of cost and effectiveness.
However, that is still not enough. To achieve real change Parliament must have the capacity to amend, improve or get rid of outdated and over-complex legislation in a more expeditious way than currently prevails. The Bill will significantly improve that process without undermining Parliament's powers to scrutinise government initiatives.
Regulations on the statute books can be unsatisfactory for all kinds of reasons: they may have been introduced too hastily without giving enough thought to unintended consequences which then emerge in the light of experience; or they may have been drafted badly, confusing both enforcers and those being regulated. Rapid scientific and technological change can make regulations obsolete, even though at the time they seem to make perfect sense. The regulation of e-commerce where the speed of change is breathtaking is a striking example of that. Changing public perceptions can make regulations redundant, irrelevant and ineffective. The laws against Sunday trading were largely ignored and ultimately amended, requiring a considerable amount of somewhat irrelevant parliamentary discussion in the process.
The parliamentary process itself is a major obstruction to reforming and modernising defective existing regulation. Until 1994, regulations which had required primary or secondary legislation to get onto the statute book had to go through exactly the same process if they were to be reformed or repealed.
865 Most departments have in their locker an ambitious package of legislative proposals for which they are allocated a restricted amount of parliamentary time. They inevitably have to prune their ambitions and prioritise, and, understandably, but unfortunately, departments always prefer introducing new, and, to them, important legislation, as opposed to getting rid of irrelevant existing stuff.
The previous Government started to address this problem with the Deregulation and Contracting Out Act of 1994 (the DCOA). That was a step in the right direction, but the powers under the Act have not often been used by the Government and Parliament.
The Bill is designed to increase Parliament's capacity to modernise the Government's regulatory framework in an efficient but, also, democratic way. Parliament rightly would be very suspicious of giving the Government too much power to amend or abandon existing legislation without proper scrutiny. Indeed, some have already suggested that the wide order-making powers of the Bill are anti-constitutional. But I do not agree. In addition to widening the powers of the DCOA, the Bill adds to the tests and safeguards governing their use. The new powers will be wide enough, but no wider than is required to deal with the regulatory reform which the Government wish to achieve.
All proposals for orders will have to undergo extensive public consultation. Following that, the Commons and Lords deregulation committees will simultaneously, but separately, consider the document for 60 days. It is estimated that the whole process should take nine months, not long in the legislative world, but not a procedure which unscrupulous Ministers can use to rush through radical change and bypass Parliament. Primary legislation could be enacted much more quickly than the Bill would allow.
The Bill strikes a proper balance between ensuring that proposals to modernise or withdraw existing regulation are properly discussed and tested by Parliament and its committees, and ensuring that essential and desirable reforms are carried out promptly, and without unnecessary and unreasonable bureaucratic obstructions.
Those are the technical aspects of the legislation. I want to move on to some examples of potential reforms under the Bill which would save time and money for ordinary citizens. Earlier this month I had a letter from a farmer pointing out that the British Wool Marketing Board was the last state-sponsored marketing board of its kind, and that he would be writing to the Office of Fair Trading asking for an investigation into how it handles its money. I thought it was a very good letter. MAFF has now suggested to the Cabinet Office that the wool board is an historic anachronism which could be scrapped under the Bill.
The Passport Agency has a database of all passport holders, but, at present, staff at the Department of Vehicle Licensing Authority are not allowed to use it to check the identity of people applying for driving licences. That means that anyone applying for a licence 866 must send their passport off to the DVLA in Cardiff for an identity check. This potential reform would allow DVLA to use the passport database and would save customers having to post off their passports with all the hassle and lack of security which that involves.
Over the past three years I have come across a number of existing or potential regulatory idiosyncrasies which might well benefit from being subjected to the powers of the Bill—the fact that a British loaf continues to exist, some absurd regulations about kneeling buses, and some potentially absurd regulations about the great British pint. However, the Bill is not just about removing obvious red-tape; one proposal is for the Department of Health to use the Bill to make much-needed changes to the Vaccine Damage Payments Act 1979. Up to now payments have been made only to children who are 80 per cent disabled. The proposal now is to lower that point to 60 per cent. Parents would also be allowed to make a claim until the child is 21, an improvement on the current six-year limit. This admirable proposal could be introduced quickly and to the benefit of all under the new Bill.
In closing, I suggest that the Bill builds on the strengths and eradicates the weaknesses of the DCOA. The scope of that Act was restricted to dealing with legislation which had been enacted prior to 1994. This new Bill can be applied to any legislation which has been on the statute book for more than two years. Furthermore, whereas the present Act can address only regulations affecting business, the Bill will enable Parliament to tackle regulatory issues affecting citizens, charities and the public sector, in addition of course to business. I commend the Bill to the House.
§ 1.51 p.m.
§ Lord Vinson
My Lords, it is a great honour to follow the noble Lord, Lord Haskins, whose commitment to better regulation is undoubted. Like many noble Lords, I welcome much of the Bill, but not all of it. When I was very young I had the good fortune in life to start a business from scratch—just me and one other—and build it up into a fairly substantial manufacturing public company. I could be described now, I suppose, as a "whizz-kid turned was-kid". But that gave me first-hand experience—something not everyone has had—of the application of regulation when it is done well and when it is done badly.
One of my criticisms of the Bill—the point was not mentioned by the noble Lord, Lord Haskins—is that it abolishes Section 5 of the Deregulation and Contracting Out Act. That part of the Act attempted to introduce a fairer and better balance between the regulator and the regulatee at the point of application of regulations. In other words, it dealt with enforcement procedures. The Bill changes what are currently statutory enforcement procedures into a wishy-washy voluntary code called a concordat. That is a new animal to me.
The existing Act was rightly designed to prevent the over-zealous application of regulation. That does happen. All of us sometimes get out of the wrong side of the bed. That applies to regulators as well. All of us 867 find it difficult to admit that we are wrong. That also applies to regulators. I have seen examples of over-zealous regulation—the threatening of the closing of businesses—when the purported error on the part of the business was minimal and had been misjudged by the regulator.
To meet that problem the previous Bill brought forward some sensible procedural arrangements to try to achieve a better balance between the regulator and the regulatee at the point of application. It was designed to put right things that were going wrong and to ensure better regulation overall. It was designed to help to prevent the incorrect application of the law. A simple leaflet was issued to those organisations that had begun to adopt this procedure. It stated:You are entitled to fair and consistent enforcement action, clearly explained … The right, where it is suggested that you should do something, to receive on request a written explanation of what you need to do, by when and why (eg. scientific reasons or legal requirement)… The right, if any immediate enforcement action is taken against you, to an explanation in writing as to why this action was necessary … The right to have your point of view heard before action is taken against you, unless immediate action is needed … The right to know how to appeal if formal action is taken against you, wherever an appeal mechanism exists".I find it difficult to see why any regulating officer could object to that. But the fact is that many do because it makes their job slightly harder, as it was meant to do. That very sensible statutory right of enforcement is now being substituted by a concordat which can be voluntarily adopted. So far it has been adopted by 75 per cent of the organisations, but not by the remaining 25 per cent of regulatory authorities. I should like the Minister to point out why it has not been more widely adopted. If it was designed to be voluntary, what are the problems that are preventing people from voluntarily adopting it?
It is true that the new concordat repeatedly uses the word "proportionality". That is at the heart of all good regulation. I welcome that emphasis in the new concordat but I do not welcome the fact that it is no longer statutory. In my view it will lead to many unfair applications of the law. In the subsequent debates in the Chamber on this matter I hope that the Minister will reconsider the nature of that concordat and certainly consider giving it more teeth with the overall aim of better and fairer regulation.
§ 1.57 p.m.
§ Lord Dahrendorf
My Lords, at the core of this important Bill there is an intriguing paradox. On the one hand, it is intended and supposed to alleviate, if not remove, the heavy hand of government or, in the words of the gracious Speech,to reduce regulatory burdens by removing inappropriate and overcomplex regulation".On the other hand, and in order to achieve that objective, it proposes considerably to strengthen the hand of government and to give government unprecedented powers to legislate by order.
The noble Lord, Lord Haskins, also called the Bill a paradox— a curious paradox. He described it as if it was entirely inevitable. Currently, a certain amount of 868 scepticism is in place. It is striking—it remains striking despite the explanations offered by the noble and learned Lord, Lord Falconer—that very few deregulation orders have been made in the past few years. Indeed, in the first three years after the enactment of the Deregulation and Contracting Out Act, there were 37; in the past three years there have been nine. If we hold that against the fact, of which, as a member of the Delegated Powers and Deregulation Committee, I am well aware, that there is a growing tendency for legislation to come before us which has enabling clauses for Ministers which in effect reduce the role of Parliament, a picture emerges which forces us in our role as a control and check on governmental power to be particularly attentive and to ensure that no mistakes which strengthen this double tendency are made in the future.
Having said that, I welcome the intention behind the Bill. The House should not be in doubt of my own support of the view that the deregulation element of the Bill is highly desirable. It is also only fair to recognise that there has been, if not unprecedented, then certainly highly desirable pre-legislative consultation on the Bill and on its effects. It appears that this will not be one of those Bills where we may expect dozens of government amendments in the process of our deliberations. I accept also that the "super-affirmative procedure" foreseen in the Bill provides important and, on the whole, satisfactory safeguards. However, it has to be said that some of the examples cited by the noble and learned Lord as candidates for deregulation are of quite major importance. The reference to fire services provisions in many places is both plausible and 'Indicative of the importance of possible action under the Bill once i t has been enacted.
I was also interested to see among the possible candidates for action under the Bill the reform of charity law, an area in which I am particularly interested. Indeed, there may be others. Some of the material sent to the committee from organisations such as the Law Society list matters of particular interest to particular groups. No doubt many others will submit such lists. In the light of that, and in the light of what I have referred to as the intriguing paradox at the core of the Bill, I believe that we have to be exceptionally attentive to the safeguards which we introduce for the operation of its provisions. Without wishing to repeat what others have said, I should like to emphasise two of those safeguards.
First, through the Delegated Powers and Deregulation Committee, I think that the House will have to gear up towards a procedure of scrutiny which will impose new burdens on noble Lords. However, those burdens will be utterly necessary because they will concern our core functions. Some reference has been made to resources. The main resource which will be needed is time, but I am sure that your Lordships' Delegated Powers and Deregulation Committee will wish to spend the necessary time on the scrutiny of orders which emanate from this Bill. However, as a House we shall have to consider precisely how we shall 869 enable the committee to carry out its job properly and how the House will find the time to look at the recommendations made by the committee.
My second point refers to the "sunset clause". As my noble friend Lord Goodhart rightly pointed out, the committee did not intend to make a recommendation to the House, but it did want to put before the House the suggestion that there might have to be unusual further safeguards. I for one shall be interested to hear the views of other noble Lords on this issue.
My own view is that, contained in the suggestion put forward by the Delegated Powers and Deregulation Committee, there is one element which I would regard as a minimal requirement for additional safeguard. I refer to the second bullet point contained on page 7 of the committee's report which refers to the requirement that a report on the operation of the Act should be laid before Parliament in order to ensure that the Act is kept under frequent review. Perhaps I may suggest that, in theory at least, it should be possible to require such a report to be laid, even without a sunset clause in place. In that sense, we shall be able to discuss the various alternatives for further strengthening the necessary safeguards to ensure that the beneficial effects of the Bill come fully into play on those from whom burdens are removed, but that the right of, and necessity for, Parliament to control important acts of government is equally fully observed and satisfied. Having said that, I hope that, after thorough debate, this Bill will in due course reach the statute book.
§ 2.5 p.m.
§ Lord Norton of Louth
My Lords, it is a pleasure to follow the noble Lord, Lord Dahrendorf. I agree with most of what he said and wish to reinforce some of the points that he made.
The fact that we are debating the Bill on the day before a Recess, indeed on the last sitting day of this millennium—and doing so in a very cold Chamber—should not detract from the fact that it is a major constitutional Bill.
As we have already heard, there is a general welcome for the Bill in terms of what it is intended to achieve, or rather, for the purposes for which the Government state that it will be used; that is, to remove unnecessary regulations from the statute book. However, the means designed to achieve that end are profound in their constitutional implications. Contrary to what one or two noble Lords have suggested, this Bill is not a modest extension of the provisions of the Deregulation and Contracting Out Act. It confers what the Select Committee on Delegated Powers and Deregulation has rightly described as an "unprecedentedly wide power". The Government have conceded that the scope of the Bill is broad. On that there is no dispute.
What we are called upon to do is to consider the relationship between means and ends. The position is 870 admirably summarised by the Delegated Powers and Deregulation Committee in its latest report on this measure:The potential gains are considerable—but so too, without stringent safeguards, would be the risks inherent in this unprecedentedly wide power. We consider the essential question for the House is whether the potential gains of effective regulatory reform can be achieved whilst providing sufficiently strong safeguards against potential abuse of the power".That encapsulates the problem. The committee, like the deregulation committee in the other place, has done an excellent job in delineating the nature of the problem. It is for noble Lords to decide whether the costs outweigh the benefits.
There are two principal problems with the Bill as presently drafted. The first concerns the powers conferred by the Bill; the second concerns the safeguards against abuse of those powers. They are obviously related but, for reasons I shall explain, they may be considered separately.
As to the powers conferred by the Bill, they are excessive in two respects. They take the Bill way beyond being a deregulation Bill. Indeed, the Title is instructive—the Regulatory Reform Bill—not, as in 1994, a deregulation Bill. As identified by the noble Lord, Lord Goodhart, the problem here is subsection (1)(c) of Clause 1. This confers a power to introduce an order to make a new provision imposing a burden. If Ministers were to ignore the other subsections of the clause—and, as the noble Lord, Lord Goodhart, pointed out, they are independent of one another—this has the potential to be an extended regulation Bill rather than a deregulation Bill. I realise that this power can be exercised only in relation to legislation which has the effect of imposing burdens. However, that is not much of a restraint.
Which brings me to the second component of the problem—that is, the definition of a burden. Under Clause 2 a burden is defined so broadly as to encompass most legislation. Most Acts create a restriction, requirement or condition, and even the definition offered under the clause is not exhaustive. We thus have a situation where a Minister may seek, by order, to impose or remove a burden—a burden that may be onerous and constitute a criminal offence.
The Government have made plain that the intention is to use the powers conferred by the Bill to get rid of regulations that are not controversial and do not impact, for example, on essential elements of our constitutional arrangements. The provisions of the Bill allow Ministers to go way beyond what they intend to do. The language of the Bill does not meet the intention.
The solution to the first element of the problem is to remove or considerably amend subsection (1)(c) of Clause 1. The solution to the second element is to bring the language into line with the limited intent. That, I appreciate, is a mammoth task. The Government have sought to find the language to limit the provisions to what they intend to do but have found it an impossible task. So, too, has the Delegated Powers and 871 Deregulation Committee. As the Committee explains in its second report of this Session—which is its latest report—on this Bill:The Committee has searched, over an extended period, for a way of limiting the order-making power contained in this Bill whilst at the same time enabling the substantial reform of the statute book which it would facilitate. Neither we nor the Government have found a satisfactory way of doing this".It may be that it is an impossible task, but we must not let this Bill through simply on the basis that we believe it to be so. We must test the provisions, through amendments, to see if the powers can be limited to those which the Government claim they wish only to use. I have discussed this with the noble and learned Lord, Lord Falconer. Since that discussion I have had one or two ideas for amendments, which may be brought forward to allow us to test it. That is the way forward. It may not be perfect and we may not meet hat particular task.
If we fail in that, then we have to look at the safeguards in the Bill. In other words, if we cannot limit the scope of the order-making power, then we have to ensure that the power is not abused. There are essentially three forms of safeguard identified in the Explanatory Notes—self-restraint by Ministers; statutory interpretation by the courts; and scrutiny and potential veto by Parliament.
Let me take those in reverse order. The scrutiny undertaken by both Houses of orders under the 1994 Act is far superior to any other scrutiny of secondary legislation. We can indeed learn a lot from it. The procedures adopted by your Lordships' House are especially rigorous. As the noble and learned Lord, Lord Falconer, mentioned, in addition to two-stage scrutiny by the Delegated Powers and Deregulation Committee, there is the capacity to table an amendable motion. There is scope to strengthen aspects of our procedures, but in so far as there is a problem for your Lordships' House, it is not primarily in terms of procedures but, as the noble and learned Lord, Lord Falconer, and the noble Lord, Lord Dahrendorf, have mentioned, it is in terms of resources. To scrutinise orders under the Bill may require a significant boost to the resources of the Delegated Powers and Deregulation Committee.
As for the potential to veto an order, the ultimate power of each House, there is always the possibility of the Government employing their majority in the other place. As has been touched upon, that places a particular responsibility on this House as the body to prevent an abuse of power. It bolsters the case for the House as presently constituted and operating. This House is likely to prove a far greater deterrent to the abuse of the order-making power than is the other place. If this measure is to be properly policed it is essential to protect this House.
As for statutory interpretation by the courts, this is clearly an important safeguard. The formal safeguards written into the Bill are to be delineated by the courts. The safeguards, as such, are welcome, but it means that we are dependent on the courts at some point in the future to determine the line between what is proportionate and what is not, what is a fair balance 872 and what is a legitimate expectation. The courts may or may not take a view sympathetic to the Government's position. I prefer, as far as it is possible to do so, to circumscribe Ministers' powers clearly and precisely by statute rather than by giving too much discretion to judges. Nonetheless, I accept that this form of safeguard is worth having. Ministers can be challenged by the courts.
The other safeguard is that of self-restraint by Ministers. This is the weakest safeguard. The noble and learned Lord the Minister tends to proceed on the basis of seeing the good side of everyone, or at least the good side of Ministers and officials. We saw that in the Freedom of Information Act and we see it in this Bill. One has to legislate on the basis that not everyone is well-intentioned. Ministers may consult—indeed they are required by the Bill to do so—but that does not mean that they listen. Assurances given by Ministers today may not be honoured by Ministers tomorrow.
The most effective way of taking temptation out of Ministers' way is to restrict the scope of the Bill in terms of the definition of burdens. If we cannot do that (or indeed, even if we can), we need to subject remaining provisions of the Bill to a test of potential exploitation—in other words, to ask: is this provision open to exploitation by Ministers? I gave as an example—one that was picked up by the Commons Delegated Powers and Deregulation Committee—the provision for subordinate provision orders. There is the danger that important changes may be slipped in by this route and escape parliamentary deliberation—not even, as was suggested, just nodded through; they would not reach that stage. At a minimum. the orders should be subject to the affirmative resolution procedure. We must look at other provisions with an equally critical eye.
I appreciate that the Minister will argue that, if there is an attempt to exploit the provisions, the other safeguards will kick in. That is not necessarily the case in respect of all provisions: subordinate provision orders could be used to circumvent the scrutiny afforded to other orders under the Bill. Hence the importance of the potential exploitation test. Furthermore, in practice, political realities mean that once Ministers have gone public with a proposal they may sometimes be reluctant to withdraw it and may persist in the face of informed opposition. This places particular pressure on this House to exercise the ultimate power of veto. It is far better to remove or limit the temptation in the first place.
For the reasons I have given, it is essential that we subject the Bill to the most rigorous scrutiny. The fundamental constitutional issues that it raises prompts me to conclude with a proposal as to how we might proceed in the future. It picks up and extends a recommendation made by the Delegated Powers and Deregulation Committee, but deals with it in a somewhat different way from those touched upon. Why not, in Bills that impose substantial burdens, make the burdens subject to sunset provisions, with renewal subject to scrutiny and recommended continuance by the Delegated Powers and Deregulation Committee—or committees, as I suspect 873 it may well become? That way of proceeding will obviate the problem at the heart of the Bill; namely, seeking to change primary legislation by order.
That, though, is for the future. Our immediate concern must be to get the Bill right. On that there is agreement between the two sides. It will require a major effort on the part of your Lordships during the remaining stages. That is, in large part, why we are here.
§ 2.17 p.m.
§ Lord Borrie
My Lords, as someone who has been involved in regulation and its enforcement for many years, I start out rather more wary than your Lordships about a Bill which will make it more possible than it has been in the past to reduce and eliminate regulation. The regulations with which I was concerned as Director-General of Fair Trading covered a wide range of law enforcement to promote such desirable principles as adequate competition in industry, consumer safety, and trying to ensure that consumers were not misled or cheated. I believed then, as I do now, that the kind of law and regulations to which I have referred are vital in today's complex market-place in order to ensure that markets work properly and fairly.
So I start out with a positive attitude—which I did not detect, for example, in the speech of the noble Baroness, Lady Buscombe. I start with an assumption and belief that in this modern world many valuable things can arise from regulation. Of course, I realise that in some spheres, as the Minister made clear, regulation is unnecessary, over-elaborate, overlapping and confusing. So I certainly favour the principles in the Bill to get rid of over-burdensome, outdated and ineffective regulation and to improve on the legislation of the previous government in 1994. I recognise also the detrimental and adverse financial effect that over-detailed legislation and regulation can have on the endeavours of British management, especially the management of small businesses, in terms of simply keeping abreast of legislation and regulation, whether from Westminster or from Brussels. I have in mind small businesses in particular, because they clearly do not have the resources of larger businesses to keep abreast of such matters. I should just like to mention the word "compliance" in that respect. Compliance with the regulations that govern industry today is a job that requires the most tremendous amount of effort.
However, in so far as concerns are held by your Lordships about this Bill—I listened with especially great interest to the previous speaker the noble Lord, Lord Norton of Louth—I am encouraged by the fact that this Bill does not deal merely with the simplistic matter of deregulation and getting rid of old regulations that we can cast on one side because they are of no value. Instead of being simplistic like the 1994 Act, this Bill has what the noble Baroness, Lady Buscombe, referred to as a "two-way street". But whereas the noble Baroness attacked it, I believe that 874 it provides a great advantage because it can deal with a whole raft of regulations that may in some way adversely affect industry and the community.
One does not just want to get shot of it all; one wants to bring it up to date, to replace it and to take advantage of the greater knowledge and experience that has arisen as a result of such regulations in order to reform it. It is most appropriate. The fact that this is not just a deregulation Bill is not a matter for disagreement and dislike: it is a regulatory reform Bill. With wider powers, which I value, it is appropriate that there should also be wider safeguards. As the noble Lord, Lord Haskins, reminded us—and, indeed, as has often been mentioned in other contexts in this House—we should all bear in mind that parliamentary procedures upon which both we and the other place have singularly failed to improve very much are really quite inappropriate for dealing with the mass of regulation that ought to be reformed. Therefore, to some extent it is faute de mieux, but it is also essential in this new millennium that there should be adequate procedures with appropriate safeguards, other than by way of primary legislation because that is clearly not enough.
I have one concern that I should like to flag up, so to speak, for the attention of the Minister. The Deregulation Committee in the other place expressed concern about the power in Clause 4(3) to make "specified provisions" of an order into "subordinate provisions". That subsection permits measures of regulatory reform to be designated as "subordinate", thereby enabling them to be subsequently amended without being subject to the very stringent and desirable provisions in Clauses 5 to 8 of the Bill. The Deregulation Committee in another place reported against the negative resolution procedure for subordinate provisions of an order.
I turn now to the other matters with which I should like to deal. Unfortunately, the noble Lord, Lord Vinson, is not now in his place. He is the only other speaker thus far today to concern himself with Section 5 of the 1994 Act. My concern arises in the following way. I wonder whether the use of the new powers will swing the balance too far against regulation and its enforcement. The noble and learned Lord mentioned Clause 3(1) in his opening speech. Much will turn on those words and how they are interpreted by him and his successors; and, indeed, by other Ministers. An order may be made only if the Minister believes that the order does not, "remove any necessary protection".
One aspect of the 1994 Act that seems to me to have been unsuccessful—judging by the fact that it was only ever used once—is Section 5. The noble Lord, Lord Vinson, did not mention the complete failure of that section. It was intended to protect businesses against overzealous enforcement by regulators. For example, Ministers were given powers to require enforcers to give notice that they were minded to take enforcement action before actually doing so.
According to paragraph 17 of the present Bill's Explanatory Notes, at the end of 1996, when the Conservative government proposed to apply Section 5 875 to trading standards and other fields, trading standards officers of local authorities and others expressed concern that to require them to give that "minded to enforce" notice before actually taking enforcement notice could be readily manipulated by rogue traders.
The Bill proposes a voluntary agreement by enforcement officers to an enforcement concordat. The noble Lord, Lord Vinson, described it as a wishy-washy approach: a concordat which, according to the Explanatory Notes, is to be drawn up by representatives of business, consumers and the enforcement community to ensure that business is given adequate warning of likely enforcement orders, that the enforcement is proportionate, and so on.
I hope that the Minister will assure me that the figure of 75 per cent referred to in the Explanatory Notes is not a round figure. Perhaps it has been increased since the Explanatory Notes were written. Seventy-five per cent of local authorities have signed up to the concordat. That is why the Government are taking only a reserve power in the Bill to set out a code of enforcement if the voluntary approach fails. I believe that a 75 per cent adoption of a concordat is not good enough, especially when one considers that one purpose is to ensure consistency of enforcement across the many local authorities in the country. If 25 per cent of local authorities through apathy, bloody-mindedness, or for whatever reason, have not signed up, it seems likely that the Government will have to use the reserve powers. We shall be back to the failure of the 1994 Act with a Section 5 which was largely unused.
This is my real concern. Clearly, every effort is being made to ensure the good behaviour of enforcement officers. I have nothing against that, whether it is done by concordat or statutory means. It represents best practice. Of course we want enforcement officers to behave. The Government's consumer White Paper—I somewhat unhappily remind them that it is 18 months old and that no such Bill was mentioned in the gracious Speech—states:Most businesses want to comply with their obligations and look to the authorities to assist them in doing so".But the requirements being laid upon enforcement officers could enable—it was the worry in 1996—manipulative rogue traders to continue their misconduct for longer periods than otherwise to the detriment of consumers. The Government, and perhaps the noble Lord, Lord Haskins, are fond of the phrase "light touch regulation". Light touch and better regulation are apt for the great majority of., but not all, traders. In taking action against the miscreant minority, I do not want enforcers to be hobbled from taking necessary strong measures. I hope that the Minister will be able to reassure me on that point.
§ 2.29 p.m.
§ Baroness Noakes
My Lords, we on these Benches fully support the aim of reducing regulatory burdens. 876 However, reading the Bill I was reminded of a line from Horace:The mountains laboured, and brought forth a ridiculous mouse".We have waited a long time for a real deregulatory measure. What we have is a relatively insignificant Bill in terms of deregulation.
One of the biggest concerns of businesses today is the burdens placed on them by the Government. Those burdens increase every year—they do not abate, or even stand still. The Institute of Chartered Accountants, of which I am a council member, carries out annual surveys on the effects of burdens on small and medium-sized enterprises. Those surveys show that the costs go up year by year. In the latest survey, small businesses estimated that over the past year it cost them £8,600 to introduce new regulations. Even for micro-businesses—those with fewer than nine employees—the figure was £3,600. Across the economy, that amounts to many hundreds of millions of pounds just for one year of additional regulation for small businesses.
However, money is not the only issue. The real cost to the economy is in the effort that is diverted away from running successful businesses. Every hour spent on regulation is not spent on innovating new products and services, marketing or streamlining business processes.
The Small Business Research Trust has estimated that small businesses spend around 25 hours per month dealing with the processes forced on them by the Government. That is around three working days per month lost to the economy for wealth creation. Just think what could be achieved if that time could be liberated.
I had hoped to find in the Bill a genuine desire to reduce burdens on business, but it is far from clear that it will do so. The Bill allows burdens to be reduced, but places no obligation on the Government to initiate their removal. It does not even start to create an environment that will promote the removal of burdens. There is nothing in the Bill to require a Minister to initiate a reduction of regulatory burdens. The Government can continue to ignore representations made about the burdens imposed.
What about introducing an external impetus for the reduction of burdens? If the Government are serious about deregulation, perhaps the Bill should give powers to, say, the Better Regulation Task Force, chaired by the noble Lord, Lord Haskins, or to the Small Business Service, to require Ministers to review regulatory burdens and then reduce them using the powers of this or another Bill, or to report to Parliament on why they have not done so. That would keep extra pressure on moving the burden of regulation in the right direction—downwards.
Several noble Lords have already referred to the provisions in the Bill to allow an increase in regulatory burdens. Any increase in regulatory burdens must be created in a direct way. The impact of regulatory 877 burdens is so important for the health of our economy that I hope that the Government will not seek to create a back-door method of harming British business.
If the Government pursue the ability to increase burdens, I hope that they will explain in detail how the assessment under Clause 3(2) is to be made. It requires the Minister to form an opinion that the proposed order strikes a fair balance between the public interest and the interests of persons affected by the burdens—being created. As the noble Lord, Lord Goodhart, has already pointed out, that is a subjective test.
How is that fair balance to be judged? Let me take the example of the increasing use being made by the Government of the business sector as their unpaid tax collector and distributor of benefits. The Inland Revenue's research shows that it costs small businesses £279 per employee to administer PAYE, national insurance and statutory sick pay. That is before the significant increased costs of the working families' tax credit are taken into account.
The Government will doubtless say that it is in the public interest to collect tax and pay benefits at the least cost to the public purse, but how would the burden on those unpaid administrators of those systems be weighed in a fair balance? Would the indirect impact of diverting companies from their proper purpose of pursuing profitable business be placed on the scales? I hope that, when we consider the Bill in detail, the Government will be much more specific about the judgments of fair balance.
Clause 1 is designed to prevent legislation or orders being amended within two years. If there is to be a provision to increase regulatory burdens, I can understand why a two-year wait would be appropriate. However, if we are talking about reducing burdens, why should we wait a minute longer than is necessary? Surely a regulatory burden needs to be reduced as soon as it is apparent that it is too onerous. Who gains from waiting?
Clause 5 contains provisions about consultations, giving the Minister concerned very wide discretion. I am concerned that these are not effective enough. The Government's code of practice on consultation goes some way to improving matters. But would it not be safer if Clause 5 were to require Ministers to publicise widely that they are considering making an order which affects regulatory burdens?
The vast majority of regulatory burdens impact most severely on small and medium-sized entities. Even if the Government resist a wider publicity requirement in the Bill, I believe that they should think again about SMEs. Clause 5 is silent. Surely SMEs and their representative bodies should always be consulted in any consideration of the burden of regulation. As a minimum, the Government's own small firms service should also be consulted. I hope that the Government will consider reflecting on those points in the Bill.
I welcome the opportunity in the Bill to reduce regulatory burdens on business, and I look forward to discussing the details of the Bill in Committee. I hope that at that stage we shall have an opportunity to make 878 the Bill more effective in providing a more active approach to deregulation for the benefit of business. The Bill may remain a mouse in terms of its deregulatory impact, but I hope that it will not end up as a ridiculous one.
§ 2.37 p.m.
§ Lord Harrison
My Lords, the Regulatory Reform Bill is welcomed by many people and institutions. I am pleased that the noble Lord, Lord Dahrendorf, mentioned the benefits that charities may hope to seek under the Bill. However, I want to concentrate particularly on business and especially on SMEs. This is a Christmas package to small businesses from the Government but, thankfully, not one wrapped up in red tape.
Previous governments said that they would do away with red tape. Noble Lords will recall that Mr Michael Heseltine was going to intervene before breakfast, lunch and dinner in order to light a bonfire of red tape regulations. As is so often the case with that particular gentleman, it rather turned out to be a bonfire of the vanities, as regulations increased and did not diminish under the previous administration.
The secret of this reform is the use of secondary legislation. The objection that has been raised that the Bill brings in certain constitutional issues should be considered. Nevertheless, I am satisfied, first, that the Bill has been introduced with the best purposes in mind. Secondly, I believe that sufficient safeguards are in place. I well recall that the noble and learned Lord, Lord Falconer, said that nothing could be removed from the face of the Bill which would be deemed to be a necessary protection and that existing rights or freedoms could not be revoked.
I also recall that at the time of the 1994 Act, referred to in the report of the Select Committee on Delegated Powers and Deregulation, the noble Lord, Lord Strathclyde, was quoted in relation to that Act as stating that nothing would be done which might effect large and controversial measures. Therefore, I believe that safeguards are already in place.
However, it will have the effect of trying to overcome the problem of limited parliamentary time, where otherwise we might have used primary legislation to deal with matters which confront business, and small business in particular. So those who pursue the constitutional argument should also acknowledge the imperative need for reform of our own Parliament's rules and regulations. In our own case here in the House of Lords, too much is done in the Chamber and too little done in the off-the-Floor scrutiny committees. This Bill is a step in the direction of changing that particular procedure. I agree with some of the comments made earlier by my noble friend Lord Borrie about such reform.
I dispute also the proposition of the noble Baroness, Lady Buscombe, that what will happen is that more decisions are made behind closed doors. I believe that there will be an improvement in the forms of scrutiny which will make law-making more open.
879 Also curious is the fact that both Houses have a Delegated Powers and Deregulation Committee. Why is that? Surely some rationalisation and concentration of great minds would be welcome in that regard.
The essential point is that small firms cannot for ever be waiting for Christmas. We need action now and this Bill supplies it. The Bill attacks red tape which can, from time to time, be simplified and rationalised. A very good example is given in the annual report of the Better Regulation Task Force chaired by the noble Lord, Lord Haskins. There he shows us, for example, the burden confronting small restaurants which need to be familiar with some 86 Acts of Parliaments before they ever serve up a dish. That is a veritable spaghetti junction of interleaving, interweaving and confusing legislation.
More examples are offered in the Bill's Explanatory Notes. However, I sound a word of caution. Example 22 refers to the removal of duplicatory requirements for the licensing of slaughterhouses for Acts which were relevant in 1974 and 1996. The good news is that £100,000 was thought to have been saved by that rationalisation. But those of us who recall the BSE tragedy know that the problem was compounded by the wrong kind of deregulation of abattoirs where the consumer was sacrificed to the farmers' lobby.
We need to find a happy balance between the needs and desires of business on the one hand and workers, consumers and those who want to support a good environment on the other. I reject the proposition from a Manchester law consultant's view of workers' rights which I found in some of the literature with which I was presented as background to this Bill where he made the declaration that a right for an employee is a burden for the employer. That is wrong. I support the Forum of Private Business's view of regulatory regimes: they need to be appropriate, consistent, simple, give guidance, demonstrate common sense and show understanding of the business environment. When those criteria apply, then the FPB says that such regulation,may well even provide a competitive advantage".Incidentally, I praise the Forum of Private Business for the joint venture work that it has undertaken with the TUC; for example, in the HSE audit for small businesses or its current initiative, the "Comply as you Complete" campaign. Each of those initiatives demonstrates that sensible regulation can give added value.
We must ensure that the small business community does not confuse manifesto commitments of the Government, like the minimum wage, parental leave or working time directive, with the areas covered by this Bill—tidying up accumulated layers of law which, like congealed wax in the ears, have clogged up the smooth running of small businesses and sometimes made us deaf to their needs.
Compliance has been mentioned. Many of the laws governing business often impact on small and micro-businesses disproportionately, certainly in terms of compliance. The noble Baroness, Lady Noakes, has already mentioned the ICA report which indicates that 880 there has been a 5 per cent increase in compliance costs. But when you look at micro-businesses with five people or fewer, there is a massive 112 per cent purported increase in those compliance costs. Something must be done about that. I recommend to the noble Baroness, Lady Noakes, that she updates her Horace. In the computer age in which we live., a mouse is now an important business tool.
We do not want to throw out the baby of high standards for workers, consumers and the environment with the bath water of deregulation, and that need not happen. I believe that we should encourage the Government to consider tax breaks, for instance, for the smallest firms which are differentially affected in terms of costs and staff time in ensuring that their enterprises conform to the law of the land. Their task is harder than that of well-resourced big businesses.
Enforcement of the law is a pertinent issue for small firms. The Bill's proposal to permit Government to intervene with the enforcement authorities to ensure that such enforcement is neither disproportionate nor overbearing is welcome. A recent survey of the food sector by the Forum of Private Business reveals that three in five respondents felt that existing legislation represented a real threat to the viability of their businesses. That may well be an exaggeration, but perception is all. If you feel threatened, you may develop a bunker mentality, and the bunker is no place to do business.
I turn to the European dimension of the Bill. The Forum of Private Business rightly state that SMEs want to compete safely with large businesses and with their European neighbours in a safe and compliant environment. But the Bill makes no mention of Europe or the single European market with which those small businesses need to contend. It was, indeed, the Prime Minister's premier job for the next government as listed in his priorities in his Warsaw speech. There is no mention of the European Commission's SLIM programme, simplifying legislation in the internal market, which should run in parallel with and be complementary to the work we are doing here. There is no mention of gold plating; that frustration when legislation often emerges from Brussels in a slim and viable form and becomes encrusted in the process here. Some unpicking of that would be useful. I am sorry that it is not mentioned. We must stop being forgetful of the "E" word or Europe, or in time Europe will begin to forget us.
We also need to acknowledge that the whole process of framing laws on the Continent is different from ours. Unless we adjust, or at the very least intervene more assiduously in the law-making process in Brussels, we shall be condemned as letting down the home side, especially our small businesses. I have still not solved the riddle of the sands, whereby Britain is the most deregulated country in Europe, yet British business is much more vocal than its continental counterparts in complaining about red tape.
I turn to my sunset point. At the dawn of the Bill we are already talking of things crepuscular. The noble Baroness, Lady Buscombe, suggests inserting a sunset 881 clause, but why? Markets are always changing. It is arguable that the most dynamic markets can never be completed because of their dynamism and change. Hence, why do we want to do away with a tool which will bring such help to British businesses at this early stage?
This is a good Bill which needs all the support it can get. I hope that before the end of the Parliament, the Bill will see the light of day.
§ 2.45 p.m.
§ Lord Skelmersdale
My Lords, I shall not follow the criticisms of existing legislative procedures made by the noble Lord, Lord Harrison, with his long experience of this matter, nor indeed his hyperbole. However, I am reminded that Horace said,I strive to be brief, and I become obscure".There is a long list of speakers at Second Reading of a Bill of such scope. It is surprising that the usual channels agreed that it should be the last major business before the Christmas Recess.
My noble friend Lord Norton of Louth got it in one—make no mistake about it—this is a Bill of prime constitutional importance. It is not surprising that those stalwart watchdogs of ours—I cannot actually see them at the moment—from the Delegated Powers and Deregulation Committee spent a great deal of time considering it. Despite its high strike rate, of which Michael Atherton to name but one would be proud, the Bill still leaves a lot to be desired.
I cannot think offhand of any recommendation that the committee has put forward that has not been accepted by the government of the day, more often than not without the need for the backing of your Lordships' House as a whole. It was therefore with some surprise that I noted the conclusion of its report on this Bill. It states:The main issue which the present draft Bill raises—the considerable widening of the power to legislate by order—is one for the House as a whole to decide".In other words, it made no recommendation on the central theme, as the noble Lord, Lord Goodhart, said.
The noble and learned Lord, Lord Falconer, will recall saying in relation to the major safeguard in the Bill—that of the burdens being proportionate—that it is like an elephant; we cannot describe it but we know it when we see it. It may, as he claimed, be an old saying, but, like many old wives' tales, it is untrue. I learned many years ago, in my time in Zambia, that from certain angles as night is falling, a small elephant with its trunk at rest can easily be confused with a rhinoceros.
That said, Christmas is almost upon us, so let us be charitable. Let us say that we can identify the noble and learned Lord's elephant. It is not being proportionate in my view that that is the elephant; it is the whole of the first four clauses of the Bill, especially Clause 1. You just have to look at it. It gives powers to reform legislation—unspecified legislation, so clearly that is either primary or secondary legislation—which 882 has the effect of imposing burdens affecting persons in the carrying on of any activity with a view, first, to their removal or reduction—that is basically what we have under the 1994 Act—and, secondly, to their re-enaction when they are proportionate to their retention. The obvious question there is: why bother? They are already on the statute book and in most cases can already be amended by order to take account of up-to-date circumstances.
Then we have the real elephant, the making of new provisions having the effect of imposing a burden not by primary legislation, but by affirmative instrument which in itself can subsequently be amended by negative instruments. I refer to subsections (3) to (7) of Clause 4. In the past I have dilated for far too long on the relationship between statutory instruments, whether the super-affirmative, the affirmative or the negative; it would be unkind to do so now. I have no doubt that I shall have plenty of opportunity during the subsequent stages of this Bill.
Lastly, Clause 1 refers to the removal of inconsistencies; anomalies which do not even have to be proportionate. Even if I understood, like at least one other noble Lord, what the word means in this context, why is not the great defence, which the noble and learned Lord sets such store by, included? Anyway, who is the arbiter of "proportionality"? The noble and learned Lord said it was legally binding. Is it the Select Committee of this House or of another place which will decide? Is it one or the other House of Parliament as a whole? If the new order gets through Parliament, is it justiciable? Will there be a defence upon which a judge, perhaps ultimately your Lordships in their judicial capacity, will have to decide? Who, in a word, is to identify the noble and learned Lord's elephant?
Even if the noble and learned Lord can answer those questions, the Select Committee states—mildly for the indignation I for one feel—that there are few limits to the power in Clause 1 to amend existing legislation and it goes much wider than the current deregulation power.
My noble friend Lady Buscome and the noble Lord, Lord Dahrendorf, mentioned that this Government have not used the present power very much. Indeed, I am informed that in the last Session of Parliament only one order was tabled, although ultimately it was split into two. Ironically, the last business today, before Royal Assent, is one. Is there really no more that can be done under the present Bill or, in relation to replacement, by the normal statutory order procedure?
To be fair, the Government have given examples of orders they would like to lay I refer to an order to simplify and rationalise the legislation governing fire safety, which we are told is enshrined in approximately 120 Acts of Parliament and a similar number of statutory instruments. Again, what is wrong with our normal procedure of a Consolidation Bill, with or without amendments, or a consolidating order? The Joint Committee on Statutory Instruments receives them all the time.
883 I refer also to Example 4 on page 18 of the Explanatory Notes; that of allowing school governing bodies to provide "pure childcare", whatever that may mean! What is "impure" childcare? But let us pass that to one side. Currently, they would have to do that by primary legislation. I understand that there is no power in the Education Acts, with their endless amendments, to do it by order. Therefore, unless time for primary legislation is provided, it would not happen. I take the point, but I do not take the point that it is a suitable subject for an order, ever. Not only would it be new policy, it would impose an additional cost on the governors of the schools concerned.
What the Bill does is shift the burden of legislation from primary, with all the parliamentary time that takes, to the speedier process of an order-making power, ultimately enabling more legislation to be put on the statute book. Last night from the Library I obtained a list of the number of pages currently on the statute book and by how much it had increased in recent years. However, it would not be appropriate to read it out.
As regards sunset clauses, I have had the opportunity of representing Parliament at two Commonwealth conferences on statutory instruments where 1 have learnt of the growing acceptance across the Commonwealth of the widespread Australian use of them. I am sorry that the Government have turned their face to the wall on this. After all, neither the 1994 Act nor the present Bill allows the reform of recent Acts of Parliament. One of the best rationales of the Bill is that the 1994 Act is now out of date. A properly framed sunset clause would stop this Bill from suffering the same fate. The Government ought to welcome it with open arms, obviating as it does the need for another Bill in another five or six years' time.
Finally, the Government are relying on the protection of so-called "super-affirmative" procedure, with prior consultation on a draft and then referring it to your Lordships' deregulation Select Committee, the deregulation Select Committee of another place and the noble and learned Lord's elephant. I make no comment on the committee of another place—it would be invidious to do so—but with the greatest respect to my noble friend Lord Alexander of Weedon and his committee members, past and present, our Select Committee is already overburdened. At the very least, it would need a consolidation sub-committee to achieve the work it does now and the enormous volume of work which a subject such as the fire safety example in the Explanatory Notes would entail.
The noble and learned Lord may recognise an elephant when he sees one but I see an albatross!
§ 2.58 p.m.
§ Baroness Miller of Chilthorne Domer
My Lords, I rise to associate myself with the comments made by other noble Lords on the concerns for small and medium-sized enterprises. I speak today with a background of the regulations which brought many farmers and small country abattoirs to their knees. I read the Bill with them in mind and thought what it would do for them in terms of regulation.
884 For that reason, I turned to the principles of good regulation, referred to earlier by the noble Lord, Lord Haskins, which his task force prepared. I found an excellent list of what we should be striving for and wondered whether those matters had been borne in mind in the drafting of the Bill. I want to make two points in order to illustrate that and to ask the Minister whether the draftsmen did in fact follow the principles when drafting the Bill.
There are two particular illustrations which I choose to take because of the interest in small businesses. The first is that where regulation disproportionately affects small businesses the state should consider supporting options for those who are disadvantaged. Clause 6 deals with what will be laid before Parliament when considering regulations and it refers to costs and benefits. However, no attempt is made there to define costs to large and to small businesses, and so the hidden costs to small businesses could be disguised by averaging out those costs. I think that is something that noble Lords may wish to consider as the Bill passes through the House.
The second issue is again on cost. One of the difficulties in the past has been that regulation has been brought in that applied to businesses, but resources have not been available to those agencies which are supposed to give support and advice on compliance Indeed, at a time, for example, when small food businesses such as restaurants and pubs were being hit with more and more regulations local authorities, who were supposed to advise and help them, were having their budgets cut. My question to the Minister is this: is he satisfied that the Bill as drafted follows all the principles of good regulation laid down by the excellent task force of the noble Lord, Lord Haskins?
§ 3.1 p.m.
§ Viscount Goschen
My Lords, as we have heard, the statute book is a weighty tome and it is getting fuller by the minute. We have heard of the Bills that have been introduced during this Session. To take just one of them, the Private Security Industry Bill will bring 300,000 people under a new licensing regime. There are good reasons for looking at that particular industry, but we are seeing a very rapid rise in the amount of regulation.
Clearly, deregulation was at the core of the efforts by the last Conservative government to reduce burdens on industry, and it was a ground-breaking move to bring forward the Deregulation and Contracting Out Act 1994. That legislation has worked well although clearly there are limitations to the type of issue that could be addressed by it. Of course that Bill was, rightly, very tightly drawn. Indeed, my noble friend Lord Strathclyde, in introducing it to this House, said that Parliament was being asked to grant unprecedently wide powers and that there would have to be a leap of faith by Parliament to grant those powers. Against that was a very tightly-drawn piece of legislation with very tightly-drawn objectives to remove that burden. Even so, I clearly recall the response of what was then the 885 opposition Labour Party and of the description by the noble Lord, Lord Peston, of this measure as a constitutional outrage.
We see a measure being brought before Parliament now which is much wider in scope and objective than the relatively more modest Deregulation and Contracting Out Act. So I welcome the Labour Party to the table of deregulation. Clearly this is a very important Bill which has wide-ranging constitutional implications. This House, in particular, should give it extremely close scrutiny. We have heard powerful arguments from my noble friend, Lord Norton, among others about particular areas of concern. I would not follow the line of the noble Lord, Lord Harrison, of, if I might say so, impatience over the time which scrutiny takes in your Lordships' House. The reason why we take time to debate issues on the Floor of the House is that we believe this House has a clear duty to scrutinise measures closely. The House has a powerful reputation in that particular field and I, for one, would not wish to see that role diminished.
The importance of the Bill has been underlined by the report of the work of the Delegated Powers and Deregulation Committee, to whom the House is in considerable debt.
Before we consider the detail of the Bill we should look at the Government's record on regulation and their attitude to Parliament. In this Bill the Government place great reliance on the super-affirmative procedure, which in turn means that they must accept decisions of your Lordships' House. I believe that events of the past month show that the Government are far from prepared to accept those decisions. I am glad that this Bill was introduced by the noble and learned Lord, Lord Falconer. He was associated with a number of measures on which your Lordships' House took strong views that were overruled. No better illustration of the attitude of the Government to Parliament, in particular this House, is the reintroduction of the Criminal Justice (Mode of Trial) Bill, the arguments against which were so ably put by the Attorney-General before he entered government.
A great deal of regulation has been brought forward by the Government—for example, the Working Time Directive, the working families' tax credit strategy, trade union recognition and many more—where there is compelling evidence from reputable bodies, such as the Institute of Chartered Accountants, about the great increase in financial burdens, particularly on small and medium size enterprises in ensuring that member firms comply with it. The background is a great increase in regulation and perhaps the cavalier treatment of Parliament. Therefore, we must be careful that we do not endorse what may be described as a smokescreen to give the Government some credentials in the field of deregulation while with the other hand they impose a greatly increased burden of regulation.
The main safeguards against the considerable powers which the Government invite Parliament to give them fall under the following categories: first, 886 parliamentary procedures, particularly those of your Lordships' House; secondly, criteria written onto the face of the Bill under which such measures can be taken forward; and, thirdly, the potential for challenge in the courts. Emphasis has been placed on assurances given by Ministers. While we accept those assurances, they are merely statements of intent by present government Ministers. I do not believe that we should legislate on the basis of promises.
My noble friend Lord Norton indicated areas in which greater safeguards could be written onto the face of the Bill. The Delegated Powers and Deregulation Committee felt that considerable safeguards would be required not only in relation to promises by Ministers but amendments to the Bill. Many of the assurances are open to interpretation. We understand that the noble and learned Lord is minded to give assurances during consideration of the Bill, perhaps in Committee, that the legislation would not be used for constitutional measures. We accept that. However, there is a question of definition. What is a constitutional measure? The House will recall that during the passage of the Disqualifications Bill the noble and learned Lord described it as a very minor measure to fill a lacuna in legislation. Almost every other speaker who contributed to the debate took a contrary view and regarded it as a major amendment to our constitution. It is by no means clear——I believe that the Minister himself demonstrated it—that there is unanimity as to what is and what is not a constitutional measure.
We are asked to give the executive considerable new powers. We are not asked just to give it these new powers in the context of deregulation, because we know from the breadth of the Bill that at the same time regulation can be brought forward with no direct link to a deregulation measure. Perhaps in Committee there may be scope to explore whether such a link should exist.
This is an important Bill. We have heard some powerful speeches today as to why this House should give it very particular scrutiny. I look forward to the later stages of the Bill
§ 3.10 p.m.
§ Lord Phillips of Sudbury
My Lords, I served on the first deregulation task force which looked into the legislation covering charities in the voluntary sector. I know how useful the 1994 Act was and is. Like other noble Lords, in the broadest of principles I welcome the Bill.
However, as the noble Baroness, Lady Buscombe, made clear, the Bill is about giving governments the power by secondary legislation to impose new burdens on society and organisations within it. The Government have readily accepted that to do so by secondary means is novel and potentially dangerous. I agree with noble Lords who urged the noble and learned Lord, Lord Falconer, to look at the issue of the potential of abuse wholly outside his own skin, so to speak, because we all know what a loveable and decent chap he is.
887 We can think of other elephants, perhaps not even elephants but rhinoceroses, of other persuasions and ilks. Like the noble Lord, Lord Norton of Louth, I accept absolutely that the potential for ill here would be formidable unless we ensure that the safeguards against the new powers are adequate.
I should like to look at a few issues concerning that matter. The first is a rather dry matter in the Bill. Clause 1 sets out the objects of the Bill and some preconditions which must be satisfied before new burdens can be imposed. I refer particularly to Clause 1(1)(c)(ii) which states that no new burden can be imposed unless it,is proportionate to the benefit which is expected to result from its creation".We then turn to Clause 3 subsections (1) and (2) and find further preconditions for the imposition of new burdens. Noble Lords have spoken about the language, but I am particularly keen to understand what difference there is between the test in Clause 1(1), that is proportionality, and the test in Clause 3(2) which says that there should be no new burden unless, taking the new provision as a whole, they,strike a fair balance between the public interest and the interests of the persons affected".It is particularly important that the drafting of this piece of legislation is as crystal-clear as possible. Perhaps we should come back to those two vital provisions; and I wonder whether they would be better put in one clause rather than separated?
I should like to turn to consultation. The noble and learned Lord, Lord Falconer, said in opening the debate that the Bill provided for "thorough and effective consultation". It does not. In the Explanatory Notes it says that the Bill provides for thorough public scrutiny. On the face of the Bill one cannot say that. There is no consultation period provided, although there is the 60-day period before the matter enters Parliament.
The noble and learned Lord made those remarks in reliance upon the fact that the Government are developing a code of practice on written consultation generally. That code has reached an advanced stage. No doubt the Government intend to put it into a final form and will tell us that we can rely on it. Well, we cannot. It is of persuasive and not legally binding effect. I strongly believe that if we are proposing to allow secondary legislation to create new burdens for citizens the issue of prior consultation should be anchored in some minimum period of consultation in order for any new burden to be imposed. If we told that that is not possible because of the exigencies of government in this age, we should at least insist that Clause 6(2)(j), which specifies the document that must be laid before Parliament when consultation starts with the two committees, spells out what consultation must have occurred and requires the Government to specify any variation from their own code of consultation.
I turn now to the criminal penalties that can be imposed under the Bill. This issue has not so far been mentioned. I am not at all happy with the way things 888 are left. Clause 3(3) provides that an order under Clause 1 can create a new criminal offence provided it is not punishable on indictment with imprisonment for a term exceeding two years. That provision exactly mirrors a provision in the 1994 Act and so the Government may be reassured that nothing new is happening. But that is not the case. The 1994 Act allowed the creation of new regulatory burdens only where they were "less onerous" than the existing burdens. The provision in that Act limiting criminal powers in the course of imposing these new but lesser burdens is in a wholly different context. In this Bill are talking about new and more onerous burdens. I am extremely unhappy about the thought that one could create an entirely new criminal offence in respect of an entirely new and unforeseen regulatory burden. We shall need to return to that point.
Finally, I should like to be a little more sanguine than many noble Lords appear to be about the satisfactory nature or otherwise of our present arrangements. First, I am struck by the fact that the Delegated Powers and Deregulation Committee can consider only technical issues vis-à-vis delegation and deregulation. It cannot look at the underlying policy of substantial issue. That is not within its remit. That is precisely where we as a House, as a revising Chamber and as a watchdog should be at our most vigilant.
Secondly, I should like to refer to the capacity of this House to turn back a statutory instrument put before it. Paragraph 10 of the Explanatory Notes states that,in the event of a motion hostile to a draft regulation order being agreed to by the House, the motion for the draft order would not be moved".There is also the right, which has never been used, of an individual Peer to put a parallel Motion before the House which, if passed, would have the effect of torpedoing the whole statutory instrument. When he was cross-examined by the committee, the noble and learned Lord, Lord Falconer, said that it was clearly the "strongest ultimate safeguard". I am totally unimpressed by what the noble and learned Lord called the "strongest ultimate safeguard".
We all know that the way in which such statutory instruments are dealt with almost ensures that one could never muster sufficient votes to defeat the Government. They are often tabled on a Friday to a thin House. Scrutiny of the substance of draft statutory instruments does not fall within the remit of the Delegated Powers and Deregulation Committee. I think that it is a blunderbuss remedy which has not been used precisely for that reason. As I have said, I am not happy about the safeguards currently available under the Bill for future impositions.
I wonder whether it would be possible to contemplate conferring on this House the power to amend a draft statutory instrument. At present, we have only an all-or-nothing blunderbuss remedy. However, that power is given in around 10 pieces of legislation: the Local Government Act 1933, the Emergency Powers Act 1920 and the Burma Act 1947. Those Acts are not modern; practically all of the relevant legislation was enacted before the last war. Nevertheless, I see no reason why we should not 889 contemplate introducing a provision in the Bill to allow a Motion which would amend a draft statutory instrument, thus allowing the House to vote on the amended resolution as a whole. That would be more constructive and would stand a far better prospect of appealing to both sides of the House. I put that suggestion to noble Lords as a point to which we should perhaps return during later consideration of the Bill.
Subject to those remarks, like other noble Lords, I hope that the Bill will eventually emerge in a form that we shall all be able to support.
§ 3.21 p.m.
§ Viscount Bridgeman
My Lords, I sense that my popularity with noble Lords will be in inverse proportion to the length of my speech. I shall endeavour to oblige.
Once again, we are indebted to the Select Committee on Delegated Powers and Deregulation for the high quality of its work and the subsequent report. We have become accustomed to expect such high standards from the committee. The Bill is to be welcomed in many ways as easing the path of deregulation. However, I must echo the points made by my noble friends Lady Buscombe and Lady Noakes. This Government have spent the last three years wrapping more red tape round businesses and not, with respect to the noble Lord, Lord Harrison, in a Christmas spirit. Last year, the Labour Government introduced over 3,400 regulations, the highest number on record. The Institute of Directors has estimated that, since coming into office, Labour has imposed an extra —2 billion a year on business. The Bill is effectively a housekeeper to help to keep the legislative home clean. Its effectiveness must not be compromised by a flood of unwelcome intruders entering the home in the form of new regulations, of which there is a regrettably increasing stream.
Perhaps I may cite one particular case where I feel that an improvement has been made over the 1994 Act. Under Section 3 of that Act, before making an order, the Minister is required to consult with parties likely to be affected by the order and other interested parties whom the Minister considers appropriate. This section will be replaced by Clause 3 of the new Bill which requires the Minister to be satisfied that the order does not,(a) remove any necessary protection. or (b) prevent any person from exercising any right or freedom which he might reasonably expect to continue to exercise".During the course of the 1994 Bill, I, together with the noble Baroness, Lady Turner of Camden, and the noble Lord, Lord Stallard, spoke of the concerns expressed by Westminster City Council as regards damage to the environment and services which it expected as a result of the wholesale repeal of the Shops Act and the consequent removal of restrictions on late night shopping. We thought that we had made an eloquent case, but we were unsuccessful in preventing the Shops Act from being repealed in full. 890 I feel that the additional safeguards offered by Clause 3 of this Bill give much greater protection to those potentially adversely affected by any order. However, I have some misgivings about subjectivity, a point raised by my noble friend Lady Noakes; namely, the subjectivity of the proportionality test under Clause 3(3).
Turning to Clauses 9 and 10, the codes of practice were treated with a certain scepticism by my noble friend Lord Vinson but with more eloquent enthusiasm by the noble Lord, Lord Borrie. These codes of practice have a certain attraction to Ministers as they require minimum consultation with relevant bodies and give a very wide measure of discretion to enforcement officers. Clause 9(2) could, for instance, be interpreted as giving legislative approval to the turning of a blind eye. While I note that these codes of practice are subject to negative procedures, I should like an assurance from the Minister that the code of practice route will not be used in substantially by-passing more effective scrutiny.
There was considerable misgiving at the time of the 1994 Bill that the then government's proposal would cut out the ability of parliamentarians to go through legislation, line by line, to make Ministers justify their actions, a role to which this House is admirably suited and which it performs, if I may suggest, to great effect. The Committee, in all fairness, stated that the Delegated Powers and Deregulation Committee procedures have worked well and that parliamentary scrutiny, far from being inhibited, has been enhanced.
However, we read in paragraph 51 of the Select Committee's report that the Delegated Powers Scrutiny Committee, as it was then called, drew attention to the powers conferred on Ministers by Part I, Chapter I of that Bill, describing them as "unprecedented in time of peace". I think your Lordships will agree that since the inception of that Act these powers have not been abused, thanks in no small part to the diligence of the Select Committee. It is however the view of that Committee that,that power pales into insignificance when compared with the powers which are proposed to be taken by the draft Regulatory Reform Bill".I am pleased to note that a number of safeguards and undertakings have been given by the Government. I shall particularly await the reply of the noble Lord, Lord McIntosh, to the point made by the noble Lord, Lord Goodhart, that the Government intend to accept any rejection of an order. On the subject of the Wakeham Commission's proposal that a decision by this House can be reversed in another place I am less sanguine. It will, however, be our duty during the course of this very significant Bill to satisfy ourselves that these safeguards are adequate.
§ 3.27 p.m.
§ Lord Sainsbury of Preston Candover
My Lords, in 1993, I was asked to be an adviser to the President of the Board of Trade on the subject of deregulation. It was my responsibility to co-ordinate the deregulation 891 initiative and to set up task forces. It is in that capacity that I want, very briefly, to make a few points relevant to good regulation as well as to deregulation.
Seven task forces were set up, spread across industry and commerce, plus one other, set up a little later, on the subject of charity. After a year, we came up with 605 recommendations—recommendations not to deregulate but to improve regulation. In some cases it was a question of repeal and in other cases it was a question of simplification, which made it easier to follow the regulation and easier to oversee it. Of those 605 recommendations, all but 76 were accepted by the government of the time.
In addition to those recommendations, the task force as a whole set out three very simple principles: first, to make sure that, when framing a new regulation, you start out by measuring the impact of that regulation on small firms; secondly, that we should always avoid regulations that are out of proportion to the benefits to be obtained; and, thirdly, that regulations should be goal-based rather than over-prescriptive. Those who came as outsiders, as it were, were very impressed by the terrific political pressure for more regulation at all times. Ministers were always, of course, pleased to claim that they were "entirely behind deregulation and a reduction in regulations, but that in their department they had a particular problem which would require—and so on".
As I worked through the details, I was very aware of what might be called the political knee-jerk: that something must be done, that I must be seen, as a Minister, to be doing something. What can a Minister do, other than invent a new, ingenious regulation? And the quicker it is brought to the attention of the public the better, in order that the Minister can be seen to be the hero of the hour. As a businessman, I was aware over many years of the inefficiency of some regulations, of the need for many regulations, of the importance of their being easy to follow and easy to monitor.
What, during my year, was set up as a task force to keep up the momentum of deregulation came to an end with the change of government, and the very good title of "better regulation" was invented for what had formerly been "deregulation". So far as I was concerned, better regulation also included deregulation, but I was pleased to welcome the continuation of the task force with its broad brief.
I was even more pleased to note—and I am sorry that the noble Lord, Lord Haskins, is not present to hear what I say—and to praise much of what the noble Lord's commission has done. It has adopted principles very similar to those that applied when I was concerned with deregulation. Usually the wording is different; however, I noted in the commission's last annual report that the wording was exactly the same in one important case: namely, the three words, "Think small first". For heavens sake, it is essential for us to think all the time of the effect on small business. Those of us in large businesses know perfectly well that the health and strength of an economy depends more than anything else on the health and strength of small 892 businesses, and on the ease with which they are created and the difficulties that can occur for a new business through foolish and badly drafted regulation.
Having had the experience at that time of welcoming many of the actions, policies and principles that are espoused by the present Better Regulation Task Force, I am conscious that it does not seem to have the clout that we had. We, after all, produced 605 recommendations in a year. The noble Lord, Lord Haskins, told us earlier that he had proposed 264 in three years. I think we can concur that there was greater productivity in my case!
Perhaps I may make three suggestions that are relative to assessing the wisdom or otherwise of new regulation and the relevance and value of existing regulation. Looking at the noble Lord, Lord Borrie, I say that because I favour deregulation, because I worked hard at it for a year, does not mean that I do not, as a businessman, recognise much of what he said about the importance to all business of sensible regulations. But experience tells me that there is a need today for a serious effort at risk analysis when it affects regulation. Before assessing the need for and importance of a new regulation, we want to have a clever, professionally refined discipline, with a credible intellectual rigour in terms of risk analysis.
Such information regarding the degree of risk that the regulation proposed is intended to alleviate should be published and be available for all to see. Moreover, before that risk analysis is made, government should consult in detail those who know most about the subject; that is to say, those who are most concerned. They should then publish that risk analysis so that others can see why it is in the public interest that a certain regulation be changed or a new one introduced. Transparency is another factor and one which the noble Lord, Lord Haskins, used in his annual report on better regulation. Transparency of risk analysis would make the importance of the new regulation easier to understand and to measure.
Compliance costs are also important. That has been included and I believe that it is now referred to as, "administrative cost compliance". When establishing good regulations, it is vital to include the cost of compliance. Before assessing the compliance cost, detailed consultation should take place. When dealing with Whitehall departments, I found that, very often, they had very little understanding of the real impact and consequence of what seemed on the surface to be perfectly reasonable regulations. So consultation must take place before the compliance cost is calculated.
I was also aware of the skill of officials to minimise the compliance cost whenever it was a matter about which they were particularly keen. Therefore, I suggest that there should, again, be transparency. Detail should be available for those concerned to see how the compliance cost was assessed and what principles were adopted. Thereafter, I believe that details of the compliance cost should be published before the regulation is finalised. Further, I believe that there should be independent verification of compliance cost assessments, together with an annual audit that could 893 go back on previous compliance costs to say whether certain aspects were either overstated or understated, and so on. We shall be living with new regulations for ever, so let us become good at understanding their impact. Let us have independent, professional audits of the methods used to assess compliance.
There is a case for undertaking a wholesale review of the spectrum of regulations, say, every five years— something along the lines of the 1993 initiative. This should involve perhaps as many as 10 task forces, coordinated by the chairman of the Better Regulation Task Force, so that much greater consultation can take place across the whole spectrum. In our day, we had 70 businessmen from small and large businesses. If the Government are really interested in having regulations that are needed and easy to follow, as well as being easy to oversee, a review every five or seven years would bring benefit to the economy as a whole because such regulations are bound to get out of date. Indeed, to use a popular word of the Government, it would be possible to modernise the regulatory regime every five or seven years.
Although I welcome the Bill in principle to the extent that it improves and deregulates, I question whether there is the necessary political will to lighten the burden on business imposed by over-regulation. I also question whether there is the ability to restrain EU directives, which increase that burden still further. Most of all, I welcome the statement by the noble Lord, Lord Haskins, that the Prime Minister takes a personal interest in deregulation. From my experience of the previous government—I am sure that this is true of any government—I know that deregulation, or better regulation, will never work significantly unless the Prime Minister is 100 per cent behind it and curtailing the Ministers' natural desire to introduce more new regulations.
§ 3.40 p.m.
§ Lord Kingsland
My Lords, I am sure your Lordships will all agree that it has been an outstanding debate. It has underlined in particular, that most important characteristic of your Lordships' House: that a substantial number of noble Lords are Members of your Lordships' House in addition to what they normally do. That factor has been underlined today in the contributions made. I know that the noble and learned Lord, Lord Falconer, and the noble Lord, Lord McIntosh of Haringey, will have taken note of everything said by those bringing their experience to the subject in hand.
Perhaps most surprising was the reaction of the noble and learned Lord, Lord Falconer, to the suggestion that the Bill might benefit from a sunset clause. "Oh, no", he said. The consequence of a sunset clause would mean that officials would be reluctant to bring forward measures because they would fear suffocation at the end of the five years. What a vote of no confidence in the Bill! Surely the noble and learned Lord should have said, "How wonderful". Every five years the Government would have the chance to explain to the nation the terrific success of the Bill and 894 how much deregulating legislation had been passed. It would have been a splendid opportunity to advertise the success of the Bill and to demonstrate the complete confidence of the Government in gaining a new endorsement for it.
Her Majesty's loyal Opposition should be extremely flattered by the fact that the Government have introduced this Bill. In 1994, when the former government introduced a deregulation Bill, it was received with much vituperation from the then opposition Front Bench. But we should not be deceived into thinking that the Bill before your Lordships' House today is the same kind of Bill.
It is clear that the 1994 Bill was a genuine deregulatory Bill. It was a Bill exclusively addressed to reducing burdens. Not so this Bill, as so many noble Lords have explained. There are provisions in Clause 1 of the Bill to impose burdens in certain circumstances. If this measure is pursued with enthusiasm by this Government and future governments, we shall see a dramatic change in the ratio between primary legislation and delegated legislation.
In our constitution, the procedures in your Lordships' House and in another place play a particularly important role. We are not a nation which has entrenched political rights. A Back-Bencher in another place is presented with an insoluble dilemma. On the one hand, he or she is responsible for keeping the executive in power and, on the other, at the same time, for keeping the executive under control. In the modern world, where party organisation is so powerful, the choice that that Back-Bencher makes is almost invariably the same: to keep the executive in power.
In the circumstances of any government with a majority, the only way to scrutinise their actions and keep them under control is through parliamentary procedures. If a substantially greater proportion of business in your Lordships' House and another place is by delegated measures, it will lead to a reduction in Parliament's power to control the executive. We should be in no doubt whatsoever, therefore, that this is a measure of major constitutional importance; and it should be scrutinised as such by your Lordships' House.
In that context, two concerns have emerged today that ought to be looked at carefully throughout all the procedures in your Lordships' House. The first relates to the role of constitutional conventions. The noble and learned Lord, Lord Falconer, has made much of the fact that it is a convention in your Lordships' House that if the responsible Committee is unhappy with a particular measure under the deregulatory legislation, its decision is binding.
I hear what the noble and learned Lord says; but he is well aware that constitutional conventions last only for as long as the people who are party to them choose to make them last. He need only reflect on the constitutional convention of ministerial responsibility for the acts of a Minister's official. I think that I am right in saying that on only two occasions since the 895 Second World War has that convention been respected by Ministers of the Crown. Nowadays it is almost unheard of, even for a Minister who is personally responsible for something that goes wrong to resign. What confidence, therefore, should we have in the protection of a constitutional convention? We need a clearer commitment from the noble and learned Lord than that before we are prepared to buy it as a satisfactory means of control of the powers that have been granted to the executive.
What are those powers? The noble and learned Lord has said that he cannot define what subjects would merit the truncated legislative procedure, but he would know them when he saw them. Of course, while the noble and learned Lord is in government, we can be confident that he will exercise his usual mature judgment and restraint in deciding what should and should not be subject to this legislation; but what of his successors? That is an important question when guarantees are not written into statutes.
A number of your Lordships have rightly said that the Devil is in the detail of the Bill. Our approach to the Bill will depend on the extent to which we succeed in persuading the Government that our amendments are worthy of adoption.
In conclusion, I draw the attention of Labour Ministers to one or two specific matters in the text of the Bill. I hope that the noble Lord, Lord McIntosh of Haringey, with his penchant for instant solutions, might even give me an undertaking on some of these points. I claim no originality for what I am going to say, because many of your Lordships have already emphasised these points.
The first point relates to Clause 1(1)(c), which refers to:the making of new provision having the effect of imposing a burden which— (i) affects any person in the carrying on of the activity, but (ii) is proportionate to the benefit which is expected to result from its creation. The word "proportionate" should be supplemented with the word "necessary". It is not enough to require proportionality. If the Government want to introduce a new burden, they must first prove that it is necessary. Only then should the test of proportionality apply. I should be much obliged if the Minister would give me some help on that.
Clause 2(1)(a) gives a curious definition of a restriction or constraint as,preventing the incurring of expenditure".I find that peculiarly worrying. It could easily be used by the executive as a licence to spend.
A number of your Lordships have already drawn the Minister's attention to Clause 3(1), where reference is made to the Minister making the order when the Minister is "of the opinion", and so on. There was some suggestion from the noble and learned Lord, Lord Falconer, that the test is objective. I believe that it would help the House enormously if that could be confirmed in such a way that it had the status of a Pepper v. Hart undertaking.
896 My final point refers to Clause 3(2) and concerns a matter that was very well explained by the noble Lord, Lord Phillips of Sudbury, when he drew our attention to the expression,strike a fair balance between the public interest and the interests of the persons affected by the burden being created".Is that, in effect, another definition of "proportionality" and is it an expression of what is already in Clause 1(1)(c)(ii)?
The Opposition look forward intensely to the Committee stage of the Bill in which we shall pursue our ends vigorously but, I hope, in a fair and sporting manner.
§ 3.51 p.m.
§ Lord McIntosh of Haringey
My Lords, I am in the same minority as the noble Lord, Lord Norton of Louth. He and I both believe that this is the last year of the previous millennium rather than the first year of the new millennium. This debate is none the worse for taking place on the last day that this House sits in the last millennium. Indeed, the quality of the debate has given sufficient evidence of that for there to he no need for us to apologise in any way for its timing.
It is not only the quality but the diversity of the debate which will cause me some difficulty. I shall try to put my response into some kind of order by dealing, first, with constitutional issues and the scope of the Bill, then with questions of safeguards, then with questions of process, and then I shall deal to the best of my ability and within a reasonable time frame with a whole series of points raised by individual Peers.
The first, I suppose, constitutional issue which must be tackled is whether the Bill represents, as is alleged, a fundamental change in the balance between primary and secondary legislation. I believe that the noble Lord, Lord Dahrendorf, described this as an intriguing paradox in that, in attempting to devolve power, we are, in his words, increasing the power of central government.
It is certainly true that the Bill introduces a powerful new tool for reforming primary legislation by means of secondary legislation. However, it is also true that the route for enacting parliamentary regulatory reform is unique—what is called the "super affirmative order", which provides for a uniquely high level of parliamentary scrutiny.
I shall not follow my noble friend Lord Harrison in making a judgment about the proportion of our business that should take place on the Floor of the House and that which should take place off it. But certainly, as, inevitably, a significant part of our activities takes place off the Floor of the House, it is important that we ensure that that which is carried on off the Floor should be as effective as possible and should represent and reflect the rights of individual Members of both Houses.
Therefore, I say to the noble Viscount, that this legislation does not undermine the position of primary legislation. That will continue to be the way in which the Government achieve their legislative ends. The restriction on the kind of subject which can be covered 897 by this Bill is set out clearly in Clause 1. I believe that significant safeguards exist which I shall be able to explain. Those safeguards protect the rights of the legislature in the face of increasing efforts of all Executives to diminish those rights.
I am grateful to the noble Lord, Lord Dahrendorf, in particular for his recognition of the degree of pre-legislative consultation which took place on the Bill. It has certainly led to very significant changes in the wording of the Bill since the earlier drafts.
Before I leave that point, the noble Lord, Lord Phillips, asked whether there would be power to amend regulatory reform orders. Yes, indeed, that could be done because a Motion could be tabled and debated and, if it were passed, then the draft order would have to be amended. That is a significant change from the existing provisions relating to secondary legislation.
I do not think that I can help the noble Lord, Lord Goodhart, who asked about the potential effect of any legislation to implement Wakeham or any other longer term solution for the composition and powers of the House of Lords. We must frame this Bill to reflect the current situation and, if any changes were to be required as a result of further reform of the House of Lords, then they would have to be debated at that time.
I turn now to a very significant part of the debate which is the claim that this Bill imposes new burdens rather than removing them, which was the purpose, it is claimed, of the 1994 Act. I am greatly comforted by the statement of the noble Lord, Lord Sainsbury of Preston Candover, that, when he took up the baton in 1993, he took the view that he should be concerned not with deregulation but with improved regulation and by his approval of the phrase "better regulation" which is the title of the task force chaired by my noble friend Lord Haskins.
My noble friend Lord Haskins has asked me to apologise to the House for his absence. There was only one seat available on his only train home and he had to take it. I am sure that the House will forgive him for that.
I find difficulty with the argument first used by the noble Baroness, Lady Buscombe, that in the 1994 legislation there was a one-way street and that it is somehow deplorable that this should be a two-way street; that somehow it is impossible to have better regulation which is achieved by exchanging some reduction of burdens with some increase in burdens, provided there are adequate burdens to ensure that any increase is proportionate. On occasions, one man's burden is another man's liberation. There is no simple spectrum which says the less burden, the greater net benefit there will be. As the noble Lord, Lord Sainsbury, will confirm from his experience, sometimes there must be regulation in order to protect certain interests. If, in removing the gross burden of regulation, you have sometimes to add other burdens, that is a price worth paying.
898 A number of noble Lords talked about the burden of regulation in this country, but the noble Baroness, Lady Buscombe, was forced to use an example from the United States' press rather than something closer to home.
I say as clearly as I can to the noble Baroness, Lady Noakes, who raised this issue in particular, that this Government are not more inclined to regulate than previous administrations. The noble Viscount, Lord Bridgeman, said in horror that we had over 3,400 regulations in 1999. In 1995, there were 3,367 regulations, so it is not a very great increase. Even if it were, I remind him that almost none of this regulation has any impact on business.
I simply rebut the accusation that this Government are increasing burdens on business by regulation. There is no significant change in the number of regulations. Where there have been increases in the burden on business—I acknowledge that there have been, particularly with the minimum wage and the Working Time Directive—I challenge the Opposition to say, as they did at the beginning but do not say now, that they are opposed to the minimum wage and the Working Time Directive. I notice that they have been conspicuously silent on those matters in recent months.
There is no sinister motive in the Bill behind the provision in Clauses 1 and 3, that on some occasions and in certain circumstances there may have to be an increase in burden. While people will in general find burdens eased, it is inevitable that some will find them increased, but only proportionately and in ways that preserve necessary protection, strike the right balance between the rights of the individual in society and preserve rights and freedoms that people could reasonably be expected to enjoy.
The noble Lord, Lord Goodhart, suggested that the word "appropriate" should be added, although I notice that the Delegated Powers and Deregulation Committee did not suggest that. I listened to the noble Lord, Lord Kingsland, say that the word "necessary" should be added. I do not believe that there would be any significant improvement in the wording of the Bill by either of those changes, and I am not able to give him the undertaking that he seeks.
Despite the comments of the noble Lord, Lord Goodhart, this is not a free-standing power to impose new burdens. It is a strictly limited power, for the purposes that I have explained. Any additional burdens would have to meet the strict requirements of the new safeguards: proportionality and fair balance. It would also have to be consulted on, including seeking the views of those who could be adversely affected.
The noble Lord, Lord Phillips, expressed doubt about the effectiveness of consultation. There is provision for parliamentary control of the way in which the consultation would be carried out. It would have to be acceptable to the Committees of both Houses. There is always a temptation to treat consultation as supporting the prejudices of those carrying it out. However, I believe that the safeguards provided here are adequate for the purpose.
899 There was an accusation that somehow the regulatory impact assessment system was not working and that it should be extended further. I am not sure which was the more significant accusation. We are determined that the regulatory impact assessment should provide a reliable estimate of the costs and benefits of proposed regulation. In August 2000 we published tough new guidance to departments on impact assessment. We believe that the regulatory impact assessment system provides a better and more robust analysis than the rudimentary system of compliance cost assessment which we inherited. All proposals under the Bill must be accompanied by a full assessment of costs and benefits.
I refer to the use of the word "appropriate". There is always a suspicion—not about this marvellous Minister of State for the Cabinet Office who sits behind me—that some future wicked Minister of State for the Cabinet Office or some future wicked Member of the Government would use this legislation to do unspecified wicked things. I notice again that the committees did not recommend any changes to the Bill in that respect. Perhaps I may say, in a most friendly way, that the noble Lord, Lord Skelmersdale, was particularly paranoid about that.
On the contrary, the Bill contains robust safeguards against misuse. The fact of mandatory and thorough public consultation and rigorous two-stage scrutiny by committees would make it a curious vehicle for the Government to use to do "wicked" things. A government who had a majority and were determined to do wicked things would be more likely to do them by primary legislation. In any case, under this Bill Ministers would have to show that the order preserved necessary protection; that it did not violate anyone's legitimate expectation that they could continue to enjoy any specific right or freedom; and new burdens would have to be proportionate and maintain a fair balance between conflicting interests.
§ Lord Skelmersdale
My Lords, I am grateful to the Minister for giving way. Will he accept that everything he said relates to the first time round, to the primary order? Subsequent to that, under Clause 4, there are likely to be, in many if not in most cases, supplementary orders flowing from the primary order. Therefore none of what he said about the processes attached to the primary order will last the test of time. By definition, the primary order will have to be amended at some stage.
§ Lord McIntosh of Haringey
My Lords, I was going to come to that point. It was raised not only by the noble Lord, Lord Skelmersdale, but also by the noble Lord, Lord Norton, and my noble friend Lord Borrie. The noble Lord is referring to the subordinate provisions.
In our view those provisions are key to the regulatory reform order-making process. In order to secure it, we are open to suggestions for amending that part of the Bill. Perhaps we could provide for such orders to be made by either positive or negative resolution. Either type of order could flow from this 900 provision. But we rely on the advice of the committees in each instance as to whether or not matters should be identified as subordinate and, if so, which procedure is appropriate. This is a matter we can certainly debate in Committee. But it gives me the opportunity to repeat the assurance given by my noble and learned friend in May of last year. At that time the Government undertook to continue to respect the convention that no measure under the Deregulation and Contracting Out Act should be forced through in the face of the committee's opposition. The noble Lord, Lord Goodhart, and the noble Viscounts, Lord Goschen and Lord Bridgeman, asked for that assurance and I am happy to repeat the undertaking today.
I turn to the issue of sunset provisions. There are two kinds of sunset provision. They can apply to the Bill as a whole or they can apply to individual orders. We listened carefully to what was said about sunset provisions. Of course it is always an interesting idea and was canvassed in the course of the passage of the Deregulation and Contracting Out Bill. It is raised again in the 18th report of our own Select Committee. But we see serious disadvantages in accepting a sunset clause for the whole Bill. My noble and learned friend clearly set that out.
The difficulty is that departments which are to be encouraged to use the regulatory reform order procedure will be persuaded to do so if they see that procedure as continuing into the future. If they think that they have not reached the point of putting a measure before Parliament before the sun sets—perhaps a considerable time before the time of sunset is advertised in the meteorological reports—then they will not do it. We might have—if we had, for example, a five-year sunset—only a three-year effective period.
§ Lord Goodhart
My Lords, I am grateful to the noble Lord for giving way. Is it possible to overcome that problem to a large extent by, for instance, allowing the renewal order for the Act to be passed, say, 12 to 18 months before the sun was due to set?
§ Lord McIntosh of Haringey
My Lords, that is an interesting suggestion and no doubt an amendment can be tabled and we can debate it. But it was not so much the time scale that concerned rne, though I used the timescale as an advantage. The difficulty is the uncertainty as to whether the provisions will continue. We accept that there is concern about the matter and that there are arguments, which we would like to debate in Committee, about the review of these important powers and at what stage that should be undertaken. I do not in any way want to close off debate on this important matter.
I noticed that the previous government opposed an amendment to the 1994 Bill as it went through Parliament and my present judgment is that they were right to do so. It introduces a note of uncertainty into the future of the power, a constraint which makes it less effective.
The noble Lord, Lord Norton, made a different point about a sunset order for all orders on the face of the Bill. That may happen and it may be appropriate 901 to do that. We are doing it for Part I of the Electronic Communications Act 2000—I shall be speaking to that in a few moments—and we have done so for the Football Disorder Act 2000. But we must balance the benefits of ending outdated regulations against the burdens of uncertainty and change. I am not convinced that a blanket sunset provision for orders would be appropriate, although I would not want to set the face of the Government against sunset orders where they seem to be appropriate.
I appreciate everything said by my noble friend Lord Harrison about the dangers of gold-plating European legislation and the many other valuable points he made about it. However, the Bill is concerned with domestic legislation and if we began to widen the scope we should be in serious trouble.
I turn to the issue which was raised in particular by the noble Lords, Lord Dahrendorf and Lord Norton. I am not accusing them of being paranoid, any more than I was really accusing the noble Lord, Lord Skelmersdale, but it is a fear of the control-freak government. No one is suggesting that this Government are a control-freak government—people shy away from that and quite right, too! However, I must emphasise that the legal safeguards on what is proposed in the Bill are very strict. I have already referred to the need for proportionality, for necessary protection, for a fair balance and for not damaging reasonable expectations. If we were to flout any of the restrictions and safeguards, we should be under risk of successful judicial review and we would hardly use a measure of this kind for that purpose.
I turn to the question of whether the Minister should make the decision and the fear that such a decision would mean that the test was not objective. That was raised by the noble Lords, Lord Kingsland and Lord Goodhart. It is for the committees to accept or reject that decision and therefore it comes back to the legislature rather than to the executive. The noble Lord, Lord Goodhart, recognised that the necessary protection is a concept taken over from the Deregulation and Contracting Out Act 1994 and it has been seen to work well. Where the Delegated Powers and Deregulation Select Committee and its sister committee have criticised proposals, in each case the Government have amended them to take account of the committee's views.
I turn to a point raised by the noble Lord, Lord Vinson, who has had to leave because he has the last seat on the last plane. He said that we should stick to Section 5 of the Deregulation and Contracting Out Act but my noble friend Lord Borrie rightly reminded us that the old Section 5 procedures were, in the event, hardly used. In December 1996 there was a consultation exercise on its use. The feedback for the enforcers was that enforcers—mainly local authorities—felt that the "minded to" provisions involved in Section 5 were too bureaucratic and could be manipulated by illegitimate businesses. Instead, we preferred to draw up the enforcement concordat, 902 which was the result of extensive consultation with business, the voluntary sector, the enforcement community and consumer groups.
The noble Lord, Lord Borrie, asked whether the 75 per cent figure for those who signed up to the concordat was correct. My answer is twofold. First there is a full list of those who have signed up on the Cabinet Office website. Secondly, the figure is rising. We are on target for 85 per cent compliance by the end of this year. I am sure that we can beat that. Surely under those circumstances it is better to secure agreement to a concordat rather than reviving provisions that were not effective.
There may well be other issues that noble Lords have raised that ought to be responded to, but in view of the hour, I think that your Lordships would wish me to write to those noble Lords to whom I have not responded. I see the Opposition Chief Whip expressing his approval.
The Bill is enormously important. None of us would be here unless it were. We have been very interested in and grateful for the comments that have been made, particularly as almost everybody—except, I think, the noble Lord, Lord Kingsland—said that they supported the general principles behind it. Let us ensure that when the Bill leaves this House those general principles, which have achieved widespread approval, survive and that the detail is as good as it can be.
§ On Question, Bill read a second time, and committed to a Committee of the Whole House.