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Legislative and Regulatory Reform Bill

My Lords, I beg to move that this Bill be now read a second time. I welcome Peers to this debate on this important Bill. I look forward to a fruitful debate that reflects the considerable expertise on this subject in your Lordships’ House. The purpose of the Bill is to provide an alternative legislative mechanism to Bill procedure for the Government to deliver swiftly those better regulation initiatives that are not highly controversial. Business and other organisations tell us time and again that they need there to be such an alternative procedure. The CBI, for instance, in a statement made yesterday, considers that the Bill provides the right structure for quick regulatory reform of unnecessary or over-complicated regulation and a risk-based approach to the making and enforcement of regulation. Miles Templeman, director-general of the Institute of Directors, and representatives from the British Chambers of Commerce and the Forum of Private Business have told me and other Ministers in person that they want this Bill and they want this Bill to deliver. The Bill is but one part of a much wider, more ambitious government agenda to effect real change in the UK’s regulatory environment, and it must be considered within that broader context. Therefore, in opening this debate, I will provide noble Lords with some of the broader context before setting out the main provisions of the Legislative and Regulatory Reform Bill. I am most grateful for the constructive reports on the Bill by both the noble Lord, Lord Dahrendorf, and his committee, and the noble Lord, Lord Holme of Cheltenham, and his committee. We welcome the conclusion of the Delegated Powers and Regulatory Reform Committee that the order-making powers in Clauses 1 and 2 are not inappropriate. We note the committee’s strongly held view that implementation of Law Commission recommendations by order is not appropriate. I shall return to that issue later, but I assure noble Lords that the Government will consider it very carefully and will continue to listen to noble Lords’ views on this and other matters. As always, these committees have provided lucid and comprehensive reports in a very short space of time. I am sure that these reports will be an invaluable aid to our deliberations today and throughout the passage of the Bill. The Government will consider the recommendations made in the reports very carefully. The Government have already demonstrated their willingness to listen in another place. It is essential that we achieve the right balance in this Bill between effective powers and the appropriate parliamentary scrutiny of any order. I very much look forward to hearing the views of noble Lords today on how that can best be achieved. Noble Lords will agree that it is of crucial importance for the continued competitiveness of this country that any Government pursue as many measures as possible to ensure that regulation is kept to an absolute minimum so that businesses—multinationals and small businesses—as well as the public and voluntary sectors can concentrate their efforts where they add most value. The United Kingdom is one of the best places in the world to do business. Independent surveys consistently place the United Kingdom high in any ranking table of competitiveness. For instance, a survey by the World Bank published in September 2005 rated the United Kingdom second in the EU and ninth in the world for best business conditions. This and other independent reports show that the United Kingdom is doing well, but in a cut-throat global economy with emerging markets full of youthful vigour it is essential for all United Kingdom citizens that we ensure that the UK retains its competitive edge. This Government have acknowledged that more needs to be done to change the actual culture of regulation across Government. In the March 2005 Budget, the Chancellor of the Exchequer, therefore, set out a radical programme of reform to reduce regulatory burdens. That radical programme of reform includes the acceptance in full of the recommendations made in the report by Philip Hampton, chairman of J Sainsbury plc, on how to deliver effective regulatory inspection and enforcement, as well as those recommendations in the Better Regulation Task Force’s report Less is More, which recommended ways to control the development of new regulations. The report also urged the Government to complete the review of the Regulatory Reform Act 2001, with particular reference to the need to improve the delivery of non-controversial proposals for simplification. The Bill is of course the result of the consultation and review of that Act, which was carried out last year. The Government’s radical reform agenda tackles onerous regulation in a number of other innovative ways. The Government are committed to measuring and reducing what it costs business in time, money and effort to comply with particular regulations in their Administrative Burden Reduction Project. Once the burdens have been identified and quantified, every government department and regulator will set targets to reduce them. Final targets should be announced around the time of the 2006 Pre-Budget Report. The outcome of this work and the concerted push across government departments for better regulation will be reflected in concrete simplification plans containing specific deregulatory measures from each government department to be published later in the year. Further initiatives that contribute to the Government’s strategic commitment to reduce red tape include a new website, launched in September 2005, allowing stakeholders to submit electronically regulatory reform proposals, a number of which have been taken forward by government departments. The website is only one of the routes through which stakeholders can submit proposals. Over 270 proposals have been received of which, after careful consideration, so far 28 have been taken forward by departments. The initiatives also include an independent review led by the noble and learned Lord, Lord Davidson QC, investigating the transposition of European regulation into the UK and whether ““goldplating”” needs to be addressed more rigorously. An interim report will be published next month. In addition, Richard Macrory, professor of environmental law at University College, London is conducting a review to consider options for the reform of regulatory sanctioning regimes. There are also the regulatory impact assessments, under which government departments and regulators must assess the total cost of any proposed future legislation for their potential impact on those who will be affected it. It is in the context of those and other wide-ranging and entirely novel initiatives that this Bill must be considered. The Bill, therefore, is intended to be one of a number of mechanisms for turning the aims of better regulation into reality for the end users on the ground—those in business who create wealth and jobs in our economy and those in our public services and in voluntary and charitable organisations who work to improve the lives of our citizens. If we deliver on those better regulation objectives, the benefits will be considerable. The Better Regulation Task Force has estimated that we could boost British national income in the long term by as much as 1 per cent a year. The UK is not alone in its effort to deliver wholesale reform and instil a real culture change in regulation. The Dutch are far advanced in reducing regulation and have already reaped substantial benefit to their economy. And, as noble Lords will be aware, following in particular the recent debate on the excellent report by the European Union Committee, chaired by the noble Lord, Lord Grenfell, better regulation is also a priority for the European Union. The Commission has dropped more than 65 proposed pieces of legislation and has undertaken to simplify up to 1,400 individual pieces of Community legislation, with the aim of lightening the burden of EC legislation. This Government and other member state Governments continue to support and encourage the Commission and the European Parliament further to pursue such better regulation initiatives. After that somewhat lengthy bit of scene-setting, I will turn to the specific ways in which the Legislative and Regulatory Reform Bill will contribute to that culture change in regulation across government. The Bill before us now is not the one that noble Lords may have heard about with concern when it was first introduced in another place. The Bill has been amended substantially by the other place. Most significantly, the Bill now contains powers that are focused clearly on delivering better regulation initiatives. The Bill will replace the Regulatory Reform Act 2001. That Act has made some real difference, but it has fallen short of the hopes that were established when it was created. There have been fewer orders than expected, both generally and in relation to the implementation of Law Commission recommendations in particular. I believe that the Bill before the House will be more fit for purpose than the order-making power in the 2001 Act has proved to be. In broad terms, that is because the rationale for using the better regulation powers will be focused on practical outcomes, including on removing or reducing the burdens of financial costs, administrative inconvenience, or obstacles to efficiency, productivity or profitability. Part 1 of the Bill contains three order-making powers. They will not be the appropriate or even necessary mechanism for every single better regulation initiative, but in many instances they will provide real tools, where appropriate, for departments to pursue their ambitious plans for removing unnecessary regulatory burdens without having to compete for precious time on the Floor of this House. Better regulation initiatives that the order-making powers will allow us to deliver include: the reduction or removal of administrative burdens such as form filling or information-giving requirements; ensuring that inspection is risk-based to reduce the burden on those who comply with regulation, and concentrate inspection on those who do not; simplifying and making more transparent and less onerous the ways in which people and businesses need to apply for consent from public authorities; the exemption in certain key instances of small and medium enterprises, charities and others from burdensome regulation to allow them to concentrate their effort where it is most needed; ensuring that regulatory activities are carried out in a way that is transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed; the delivery of mergers to the extent that they reduce burdens by, for example, reducing the burden on the regulated who are currently on the receiving end of multiple inspections by different regulators; and finally, of course, the delivery of Law Commission recommendations. These are wide powers. The Government have no intention to use them inappropriately but understand the importance of defining when they could be used. The Government have therefore included on the face of the Bill stringent safeguards for the use of the order-making powers. As I shall explain, these safeguards will ensure that the order-making powers will not be used in an inappropriate way. One of the most important safeguards in the Bill is the power for relevant committees in either House to veto orders. The veto is linked to the purpose of the powers and the preconditions for their use. The Government have noted the recommendation in the report of the Delegated Powers and Regulatory Reform Committee that the veto should be exercisable on any grounds. We have also noted the Select Committee on the Constitution’s view that allowing relevant committees in either House to veto orders on any grounds would strengthen parliamentary procedures appropriately. As we said in another place, the Government want to get all procedures for parliamentary scrutiny of draft orders right. We have said that we would continue to listen about how best to achieve this. Having listened and having spoken to a number of committee chairmen in another place, I am pleased to announce to noble Lords that the Government accept the view of the Delegated Powers and Regulatory Reform Committee and the Select Committee on the Constitution and are content to remove from the face of the Bill the criteria for use of the veto. I am confident that this power of committee veto on any grounds will still allow the Government to work together with relevant committees in both Houses to deliver the reform for which orders are intended. However, I urge noble Lords to accept that we must always keep uppermost in our minds the fact that the order-making powers and the procedures for their use must work in practice to deliver real regulatory change on the ground. In suggesting amendments, I urge noble Lords not to lose sight of the overarching, practical objective of the Bill: that the order-making powers must deliver regulatory reform. The CBI has made very clear the need for this balance between due parliamentary procedure and the ability to deliver better regulation. In a statement made yesterday, it urged parliamentarians debating the Bill not to lose sight of its intended outcome—for an elected Government to be able to deliver more and swifter deregulatory measures for the benefit of business and society at large. The Bill includes a number of other stringent safeguards to ensure that the order-making powers in Part 1 are used only for those initiatives that are appropriate. These safeguards consist of rigorous preconditions that must be met before an order is made, as well as requirements that proposals must be subject to public consultation and rigorous parliamentary scrutiny procedures that should apply before an order can be made. The preconditions in the Bill state that an order can be made only if the Minister considers the following: that the policy objective cannot be satisfactorily attained without legislation; that the order is proportionate to its aim; that the order strikes a fair balance between the public interest and the interests of anyone adversely affected by it; that the order does not remove any necessary protection; and that the order does not remove any right or freedom that persons might reasonably expect to keep. In addition, I can reiterate two key government undertakings: that the Government will not deliver highly controversial measures by order and that we will not force through orders in the face of opposition from the parliamentary committees. There is also the substantial safeguard that orders may not remove a burden falling only on a Minister or government department unless it affects the Minister or department in the exercise of a regulatory function. Examples of the latter are the pesticides directorate, which is part of Defra, or Companies House, which is part of the DTI, each of which exercise regulatory functions. This guarantees that the Bill cannot be used to remove core functions from government, such as the provision of free education or healthcare, simply because they impose a financial cost on government. Finally, the Bill precludes the order-making powers in Part 1 from amending the Human Rights Act or Part 1 of the Bill itself. Before I turn to other parts of the Bill, there are three specific areas in relation to Part 1 on which I should like to comment briefly: the ability to confer by order the power of legislating; the implementation of Law Commission recommendations; and the effect of the Bill on the constitutional convention whereby Parliament does not legislate on matters internal to the Church of England without its consent. As the Government also made clear in another place, we acknowledge the view, which has since also been expressed in the Delegated Powers and Regulatory Reform Committee report, that further discussion is necessary to consider options to restrict the ability of certain orders to confer the power to legislate on any person. None of us doubts that the Law Commissions do excellent work, but all of us know that their work is often not implemented quickly. This problem is long-standing and has not gone unnoticed. As long ago as 1993, the Hansard Society described Law Commission Bills as probably among the most carefully prepared of all Bills: these legislative cakes are properly baked. Conflicting views have usually been reconciled and objections overcome. Therefore, unless they arouse opposition on political, moral or social grounds, they should be ready for a simple passage into law. There has of course been some progress in implementing Law Commission recommendations. Parliamentary procedures, such as the Special Public Bill Committee—the Jellicoe committee—have been developed. However, these have not provided a really effective means of breaking the backlog of unimplemented reports. That was recognised by John Halliday in his quinquennial review of the Law Commission in 2003. He recommended that the search for procedural reform to implement Law Commission recommendations should not be abandoned. The Government have acted on that recommendation. We have consulted on the proposal that there should be an order-making procedure for implementing Law Commission recommendations. The outcome of the consultation was favourable. Of course, we accept that some Law Commission recommendations are not suitable for anything other than a full Bill procedure, such as, for example, the commission’s recent report on cohabitation. We believe that the veto and the other safeguards in the Bill provide adequate controls over the possible misuse of this power. We have, however, noted the serious reservations—