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Legislative and Regulatory Reform Bill

My Lords, the noble Lord, Lord Jenkins, explained to your Lordships' House as he saw it what the effect of the amendment would be. We understand it slightly differently from the noble Lord; we think that the amendment would make it possible to remove or reduce burdens only from those exercising regulatory functions. Burdens could be removed only from regulators. This would exclude cutting red tape for the regulated, businesses, small and medium-sized enterprises and others that make up the essential backbone of the UK economy, and the voluntary and the charitable organisations that contribute so much to society. The noble Lord, Lord Kingsland, says it is an elegant solution, but its effect would be quite widespread. The Government are committed to removing and reducing burdens from the regulated, not just from regulators. For those reasons, we have to resist the amendment. Perhaps the noble Lord has another effect in mind for the amendment. The intended effect may be to restrict the order-making power in Clause 1 so that burdens can be removed or reduced only if they result from the exercise of regulatory functions. If that is the intended effect, I would again want to resist the amendment for the following reasons. It would be a substantial and, in our view, arbitrary restriction on the order-making power in Clause 1, as it would be used to preclude the removal or reduction of burdens in legislation that did not result from the exercise of a regulatory function. For the purposes of the Bill Clause 32 defines regulatory functions, and I assure the House that there are areas of the law that impose burdens for those businesses—I mentioned voluntary and charitable organisations before—that do not result from the exercise of a regulatory function. That is illustrated by the fact that many of the legislative reforms made by the regulatory reform order under the 2001 Act, which have delivered substantial savings to the United Kingdom economy, would not have been possible if this amendment had applied. I give an example. The regulatory reform order, which removed a law dating from the 19th century that arbitrarily restricted professional and other groups from forming partnerships of more than 20 people, would not have been possible. That order was sought by stakeholders, passed by Parliament, led to savings of £10,000 per relevant partnership and contributed, in our view, to the competitiveness of the United Kingdom economy. This amendment would have precluded the delivery of the reform, because the burden on business did not result from the exercise of a regulatory function, but from 19th-century legislation. Another regulatory reform order, which modernised and streamlined procedures for renewing or terminating business tenancies, led to estimated savings to business of about £19 million a year, would also not be possible if Clause 1 were amended in the way the noble Lord, Lord Jenkins, suggests. Again, the reason for that is that the burden reduced resulted not from the exercise of a regulatory function but from legislation that imposed requirements no longer considered necessary. Looking to the future and the further reform identified as necessary to boost UK competitiveness, the Department for Trade and Industry hopes to repeal the Limited Partnerships Act 1907 and amend the Partnerships Act 1890, in order to provide much-needed clarity regarding the law on limited partnerships, which are the dominant investment vehicle used in the UK for venture capital and private equity investment funds. It is estimated that private equity investment accounts for 1.1 per cent of UK GDP, with businesses backed by private equity employing some 3 million people. Clarifying the law on limited partnerships is therefore expected to have a substantial and positive impact on investment capacity in the UK, and on the competitiveness of the economy as a whole. Business has sought this reform to ensure that limited partnerships remain attractive vehicles for venture capital investment in the UK in an increasingly competitive market. Businesses have told us that they believe these reforms will maintain the UK’s pre-eminent position within Europe. The reform is likely to have a substantial and positive effect on our competitiveness, precisely the kind of reform orders we should be able to deliver. Yet the noble Lord’s amendment would preclude any such reform, because again in this instance the burden is neither on a regulator nor from the exercise of a regulatory function, but the result of outdated legislation. If I have properly understood the intended effect of the amendment, such reforms, despite their clear benefit to our economy, would not be possible because they remove burdens arising from legislation and not from the exercise of a regulatory function or from a regulator. In summary, either of these restrictions would be arbitrary and would preclude a Minister from reducing or removing burdens that were sensible, desired and sought by business and by those in the voluntary and charitable sector. So, for those very practical, hard-nosed reasons, which could have a serious consequence if we were to go down this route, and notwithstanding the elegance of the amendment, I invite the noble Lord, Lord Jenkins, to withdraw it.