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Legislative and Regulatory Reform Bill

moved Amendment No. 5: Page 12, line 29, leave out ““the exercise of”” and insert ““determining any general policy or principles by reference to which the person exercises”” The noble Baroness said: My Lords, this amendment is grouped with Amendments Nos. 6 to 10. There are two issues here, and I shall deal with Amendment No. 5 first. It aims to limit the application of the better regulation principles to issues of policy rather than to individual regulatory decisions. The better regulation principles are fine things. Indeed, many regulators across Britain are moving to adopt them and to build them into their practice. But my concerns about them being applied simply at policy level rather than at the level of individual regulatory decision is that they are capable of being challenged on the grounds of the principles rather than on the grounds of practice. I shall explain what I mean by that. I believe that being able to challenge regulators on the principles in their regulatory decisions will mean that they will face more litigation. Even if they do not face more litigation, they could behave very defensively and regulatory decisions could take longer and be more costly. Of course, that flies in the face of the Bill and its otherwise excellent intentions to ensure better regulation—not slower, more bureaucratic and expensive regulation. There are a number of individuals for whom that would be a good avenue through which to challenge regulatory decisions. Vexatious individuals who know that they cannot challenge a case on their compliance or otherwise with the law as to whether they created the nuisance or damage, or whatever the law is aiming to prevent them doing, would instead bring a procedural challenge against a decision either to delay or to have a decision overturned. Defendants who could not hope to succeed in challenging their culpability in a case might still bring that procedural challenge. For example, if a decision were made entirely on the principle of being risk-based, which is a fundamental principle of better regulation, it might be challenged on the basis that it was not consistent, which is another fundamental principle of better regulation. The two are fine judgments and placing this as a statutory requirement means that we will have to test the fine judgments more often in the courts. I am sure that regulators will be able to defend their actions successfully in such cases, but I am not sure that that is the best use of public funds or that it is in the interests of better regulation to have to do so. Were the principles to apply at the policy level, rather than at the level of individual regulatory decisions, I believe that there would be sufficient spur to the regulators to behave in consistency with the principles, rather than propelling them to be defensive, slower, more bureaucratic and lengthy in the face of the risk of vexatious legal challenge. That is the content of Amendment No. 5. On the Government’s side, I have no doubt that we will be told that the solution to this problem is the proposed listing order. However, one needs to be alert to the nature of the listing order because it will be brought upon one at some stage in the future. The intention is to list all the regulatory functions that will be subject, first, to the principles and, secondly and separately, to the code. Considering the number of regulatory functions in this country, it will be a very long and complex list and it will apply different standards for different regulatory functions. It will be consulted on and a decision will be made on it in this House, so I am prepared to be very bored and confused by it. The worst issues will not be our boredom and confusion, but that it will not provide the businesses, which we aim to regulate more effectively and with less bureaucracy, with the clarity they need and the transparency which the Bill promotes. I do not think that the clause as it stands is an example of better regulation and I believe that my amendment would help. Amendments Nos. 6 to 10 contain only one issue, which is the nature of the compliance code. I have considerable concerns about its being a statutory code. I would prefer to see it reframed as normal ministerial guidance. At the moment, the Bill has a statutory statement of the principles and although the code operates at a general policy and principle level, rather than at the level of individual regulatory decisions, I believe that the same sorts of vexatious litigation that I have outlined in regard to Amendment No. 5 will be possible in regard to Amendments Nos. 6 to 10. The code is a one-size-fits-all proposition. Regulators come in many shapes and sizes. Indeed, we are told that, in the principles of good regulation, flexibility to meet individual circumstances is an admirable quality, but alas, that is not to be the nature of the code. It is to be a one-size-fits-all code, which I believe is very inflexible. For example, the draft code requires regulators to intervene only where there is a clear case for protection, but what sort of protection? Different sorts of protection require different principles to be invoked. In my primary background of environmental protection, the precautionary principle has to be invoked from time to time and the regulator has to intervene before there is a clear case to prevent future damage to the environment. It is unfortunate that we have to agree the nature of the code when we have not yet seen a near-final draft. I urge the Government to ensure that, if there are substantial codes fundamental to Bills, as happens from time to time, we have the opportunity to see them at that near-final stage before we are asked to approve the Bills. The code will not be applied only at general policy level, but I believe, as I said with regard to Amendment No. 5, that the same opportunity of challenging individual regulatory decisions while masquerading as a challenge on policy and principle will be taken by those who wish to be vexatious. Some areas of legislation are already more vexatious than others. If the contents of the statutory code were reframed as guidance, these concerns would be removed while still giving guidance to regulators on how to implement better regulation. That would mean that we could take account of progressive regulators who already have in place their own non-statutory codes and would not be penalised for having made good progress. All regulators, including the laggards, could be required to draw up their own strategies in line with the guidance but tailored to the needs of different individual regulatory regimes. There could be a requirement on them to report annually on their performance and progress. I hope that this admirable Bill will not be marred by failing in its own principles. I look on it as one that regulates the regulators; in the context of the code, it will fail the test of better regulation if we end up with mechanisms that result in the more defensive, slower, less flexible and more expensive behaviour of regulators as they seek to make their decisions wholly defensible in the face of potential vexatious challenge under the code. I recognise that it is very late in the day to be raising this issue—alas, I have not been able to take part in the Bill’s proceedings for some time. I hope that we can get some assurances from the Government that they will at least take account of the fears that I have expressed about the ultimate nature and application of the code to minimise the opportunity for vexatious legislation. I beg to move.