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Legislative and Regulatory Reform Bill

I am grateful as ever to those noble Lords who have contributed to this short debate, but it is a rerun of a debate we had at Second Reading, and, as the noble Lord, Lord Jenkin of Roding, said, a debate we had before we entered into the Committee stage. There appears to be a measure of agreement among noble Lords on the Opposition Benches, although perhaps not absolute agreement. The noble Lord, Lord Goodhart, seemed to accept that there are two perhaps, three, new areas. The noble Lord also accepted that the old procedure under the 2001 Act for instruments of deregulation is too onerous. He then described how he thought that the Act could be amended and took the point that amendments to the procedure for deregulating by order would need to be substantial. So there is a measure of agreement, but there is also a measure of disagreement in the views of opposition Members as to how we should improve or modify the Bill. At the heart of it, for opposition Members, the question remains why we did not simply amend the 2001 Act. Of course, we could have done and the Bill clearly builds on the strengths of that Act. However, if we had amended the 2001 Act, the legislation would have been spread over two enactments. It would have been messy and, I would argue, difficult to use by departments which must deliver better regulation. If anything can be learnt from the experience of the 2001 Act, it is that it must be clear how departments can deliver better regulation by order. What is really important here is evidence about why the Bill should work better, and deliver more than the 2001 Act, and specifically what the Government intend to deliver through the Bill. This is what I shall focus on in responding to the points made by Members of the Committee. What is clear from the debate in this House is that we all agree that there is a need to deregulate. What has been lacking so far is the actual and swift delivery of wide-ranging better regulation measures to effect real change on the ground. The order-making power in Clause 1 will allow us to remove or reduce burdens in a way that the 2001 Act did not. The definition of burden in the Bill is substantially different from that in the 2001 Act. It is outcome-focused—focused on why legislation should be reformed, rather than on how legislation can be reformed. What I mean by that is that the 2001 Act required disproportionate and sometimes nugatory analysis. The department proposing an order had to carry out a large amount of legal analysis on whether the proposal removed, reduced, re-enacted or imposed specific legal restrictions, requirements, conditions, sanctions, or limits on statutory powers. The analysis required by the 2001 Act often had little to do with the desired better regulation outcome of, for instance, reduced costs on business or charitable organisations. It is certainly not as direct as the current definition of burden, which will require Ministers to focus on the financial costs or obstacles to productivity that the order would reduce or remove. Those stakeholders whom we consulted argued forcefully that orders should be an outcome-focused tool to deliver better regulation. To cite but one of those consulted, the Federation of Small Businesses, it told us: "““The concept of a burden as a legal one means that there is a wide gap between what the small business man or woman would consider to be a burden and what a legislator—or even an enforcer—would consider to be a burden””." The new definition of burden in the Bill does exactly this: it forces those using the order-making power in Clause 1 to focus on the practical benefits that the order will deliver; it forces those using the order-making power to focus on the financial cost, administrative inconvenience, obstacle to efficiency, profitability or productivity or sanctions that the order will reduce or remove. That is not necessarily about reducing analysis that has proved a disincentive for departments’ use of the 2001 Act, but about ensuring that the analysis and evidence is proportionate and is focused on the costs and impacts, on the economic, financial and other practical evidence that reforms are worth while. It is also about ensuring that the policy makers and economists focus on the evidence that demonstrates why a proposal is necessary. The change in emphasis that the definition of burden in Clause 1 requires is therefore completely different from the justification necessary under the 2001 Act. As we have stated on a number of occasions, the Bill, and Clause 1 in particular, does not stand in isolation and neither can we consider it in a narrowly-focused way. The Bill is part of a much wider government agenda of cutting the red tape that is such a burden on the public sector, businesses, charities, and so on. As part of this agenda, the Government are also measuring the costs of all administrative burdens. The outcome of this work and the concerted push across government departments for better regulation will be reflected in concrete simplification plans from each department, to be published later in the year. In those plans, government departments will identify deregulatory measures, which they will deliver with the most appropriate measures available to them. The Government have also accepted in full Philip Hampton’s report on more efficient approaches to regulatory inspection and enforcement, in which he recommended the merger of regulators into seven thematic groups. The Government’s better regulation aims have become more ambitious since 2001, when the present Act was devised. We have found that the 2001 Act does not offer the appropriate alternative mechanism that the radical programme of reform demands. It may be helpful if I cite four examples of generic better regulation proposals which orders under the 2001 Act could not deliver: first, the reduction of administrative burdens if no legal burdens in the narrow technical sense of the original Act are reduced or removed; secondly, delivering uncontroversial Hampton mergers to reduce the burden of inspection and compliance on the regulated; thirdly, the limited power to sub-delegate, which meant that under the 2001 Act carrying risk-based inspections and enforcement through to the detailed level of regulations was more difficult; and fourthly, reducing the burdens on individuals or others that affected them passively rather than actively. There is recognition here and at EU level of the need to identify and remove administrative burdens. That is why the Government have done their ground-breaking analysis of the cost of all administrative burdens on the regulated. In their simplification plans, departments will set challenging targets to remove unnecessary administrative burdens.