PRE-LEGISLATIVE SCRUTINY OF THE DRAFT
REGULATORY REFORM BILL
The draft Regulatory Reform Bill
27. The Government has now decided to publish the
draft Regulatory Reform Bill by Command Paper.[20]
The Command Paper includes a third version of the draft Regulatory
Reform Bill, together with Explanatory Notes (containing illustrative
examples of measures which could, or could not, be proceeded with
by way of regulatory reform and a draft regulatory impact assessment).
This current text of the draft Regulatory Reform Bill mainly reflects
the second text of the Bill which was the subject of detailed
scrutiny by the two committees and contains few substantial further
amendments. Analysis of how far the draft Bill meets our recommendations
follows at paragraphs 29-65.
28. Unlike the two previous texts, the current text
of the draft Regulatory Reform Bill is divided into three sections.
Clauses 1-8 set out the order-making power, the context of its
use, the definitions of terms and tests to be met by any proposed
orders as well as the mechanics of order making. Clauses 9-11
make provision for Ministers to establish codes of good practice
in relation to the enforcement of statutory requirements. Clauses
12-15 deal with supplementary matters such as repeals and savings,
consequential amendments, interpretation, short title and the
territorial extent of Bill.
Clause 1 — Power by order to make provision
reforming law which imposes burdens
29. Clause 1 (1), the main order-making power, confers
upon the Minister the power to make provision for reforming legislation
which imposes burdens.
"Subject to subsections
(3) and (4) and to sections 3 to 8, a Minister of the Crown may
by order make provision for the purpose of reforming legislation
which has the effect of imposing burdens affecting persons in
the carrying on of any activity, with a view to one or more of
the following objects..."
30. Paragraphs (a) to (d) and subsection (1) list
four objectives of the order-making power. The first three are
uncontroversial. Paragraph (a) covers the removal or reduction
of burdens. Paragraphs (b) and (c) permit a burden to be imposed
subject to the test of proportionality. The former allows an existing
burden to be re-imposed; the latter permits a burden to be imposed
on those who previously were not subject to a burden, or an increased
burden to be imposed on those who were so subject. The test of
proportionality was introduced at the stage of the first draft
of the Regulatory Reform Bill as a result of the earlier consultation
process (see paragraphs 11-15 above) during which we indicated
that we would carefully examine a draft order which might impose
a new burden, and would pay particular attention to consultation
and assessment of proportionality. The test, that the burden being
created is proportionate to the benefits, considered in general
terms, which are expected to result from its creation, was a welcome
response to our earlier concerns.
31. Paragraph (1) (d) refers to the "removal
of inconsistencies and anomalies". The introduction of this
as a goal of the order-making power first emerged in the second
draft of the Regulatory Reform Bill. At that stage we considered
that this concept lacked precision and clarity, and were concerned
that the term might be an attempt to revive the proposal to enable
Ministers to remove ambiguities in the law, as set out in the
consultation paper of 2 March 1999. This proposal to remove uncertainties
in the law was the subject of much discussion during our consideration
of the consultation paper last year.[21]
32. In seeking to clarify the concept, the Government
refers to the potential application of regulatory reform orders
to a whole regulatory régime (on which paragraphs 27 and
28 of the Explanatory Notes comment) and to implementation of
Law Commission proposals. Paragraph 26 of the Explanatory Notes
claims that
"an order could not
be used, for example, to remove burdens imposed solely by the
common law. Common law elements can only be dealt with
within the context of reform of legislation."
Paragraph 27 continues
"Where a burdensome
situation is caused by the interaction of common law and statute
régimes, an order may be able to clarify the situation
and consolidate the different régimes. This may necessarily
involve changes to elements of the related common law."
33. Read as a whole, the Bill would therefore seem
to permit the revision of common law so long as it was related
to legislation imposing a burden which contained inconsistencies
and anomalies. The Clause appears to reintroduce not only the
difficulties with amending common law on which we commented earlier[22]
but also the problem of identifying an inconsistency or an anomaly.
This requires that at least two provisions are interpreted in
such a way as to produce that inconsistency or anomaly. Such interpretations
may well be debatable. We welcome however the Government's explanation
that this provision would assist in enabling Law Commission proposals
which do not succeed in being introduced to Parliament through
pressure of time, being implemented by order, and would have fewer
reservations if this power could be relied on only for that purpose.
34. During the evidence session, we asked the Minister
whether he would be prepared to limit reliance on Clause 1 (1)
(d) solely to proposals emanating from the Law Commission or on
which the Commission had been consulted and given a favourable
opinion. The Minister's response was that proposals would be taken
from
"...the Law Commission
if they fitted the purpose of this Bill, but in preparing this
Bill we would not be preparing a Law Commission Bill."[23]
35. The evidence we were given made abundantly clear
that the Bill is intentionally drafted in broad terms; Ministers
are to be able to remove inconsistencies and anomalies, regardless
of whether any burden, in the usual sense, can be identified.
As it was put to us by Mr Bovey, Legal Adviser to the Regulatory
Impact Unit:
"What is objectionable
about these things is not that they are burdensome, but that they
are simply inconsistent or anomalous."[24]
36. We also sought further clarification on the Bill's
intended application to the common law. The evidence we were given
pointed to common law as the context in which statute law is applied
and the inevitable effect that amendment of the latter has on
the former. As it was put to us by Mr Bovey:
"If we look again at
fire, there is a basic common law obligation on any person who
occupies properties, or has employees, to look after their safety.
That is inextricably linked in with the statutory obligations,
which the proposals on fire are aimed at. There is no way in which
you can alter statutory provisions without affecting the common
law which exists around them and within them."[25]
37. We remain concerned at the prospect of regulatory
reform proposals which are no more than exercises in redrafting
the law and consider the rôle of the Law Commission as crucial
with regard to proposals which have the sole or main objective
of removing inconsistencies and anomalies. We put the Minister
on notice that we will examine with particular care any such proposals
not based on a Law Commission recommendation or which the Law
Commission has not approved after consultation.
38. Clause 1 (2) (a) and (b) refers to relevant enactments
which may be subject to the order-making powers. The revised clause,
to satisfy the concerns expressed by the Delegated Powers Committee,
introduces a two year rolling cut-off before new legislation can
be subject to an order. The Explanatory Notes state at paragraph
37 that the Regulatory Reform Bill, once it becomes an Act, will
in any case be excluded from the ambit of this Clause since it
cannot be described as legislation which imposes a burden. We
accept this explanation.
39. Clause 1 (3) amplifies Clause 1 (2) (a) in that
it prevents reform of provisions of a deregulation order or a
regulatory reform order where such an order has been amended during
the previous two years, unless the amendments were incidental
or consequential.
40. Clause 1 (4) introduces a new provision to take
account of devolution to the National Assembly for Wales. It provides
that the amendment of any measures which modifies or removes any
function of the Assembly would require the agreement of the Assembly.
41. Clause 1 (5) (b) enables burdens to be imposed
on Ministers or government departments.
Clause 2 — Meaning of "burden"
and related expressions
42. This section is largely uncontroversial, and
but for one minor change, mainly reflects the second draft of
the Regulatory Reform Bill. Clause 2 (1) (a) defines a burden
as including any restriction, requirement, condition (including
one requiring repayment of fees or preventing the incurring expenditure)
or any sanction (whether criminal or otherwise) for failure to
observe a restriction or to comply with a condition or requirement.
Clause 2 (1) (b) extends the definition of a burden to cover any
limit on the statutory powers of any person (excluding Ministers
or departments). As elucidated in the Explanatory Notes, an order
may "extend the statutory powers of a person, hence enabling
them to do something which they could not otherwise do because
there is no statutory provision for them to do it".
43. Clause 2 (2) (a) to (c) duplicates Clause 2 (2)
(a) to (c) of the second draft of the Regulatory Reform Bill.
The measures refine the definition of a burden.
Clause 3 — Limitations on order-making power
44. Clause 3 is an amalgamation of the former Clause
3 and Clause 4 in the second text of the proposed Bill. Clause
3 (1) contains the test of necessary protection, taken from the
1994 Act, reinforced by a test of reasonable expectations to the
continued exercise of any right or freedom. A further test is
that of fair balance at Clause 3 (2) introduced to modify the
broadening of the order-making powers to allow the imposition
of burdens. These three tests, in addition to the test of proportionality
at Clause 1 (1), are safeguards on the increased scope of the
order making powers.
45. Clause 3 (3) and (4) introduce maximum penalties
that can be imposed for a new criminal offence created under the
Regulatory Reform Bill. They contain no modifications from the
second draft of the Regulatory Reform Bill.
46. Clause 3 (5) appears novel but is inconsequential.
It limits the powers of forcible entry, search, seizure and power
to compel people to give evidence under the order-making powers.
Clause 4 — Statutory instrument procedure
47. This is substantially the same as the previous
text of the draft Bill at Clause 5. On that occasion we expressed
our concerns about the subsection permitting measures of a regulatory
reform order to be designated as subordinate, which would then
enable them to be subsequently amended without being subject to
the stringent procedures of regulatory reform.
48. It was our opinion that notwithstanding the measure
of protection afforded by the Deregulation Committees' scrutiny
of orders designating certain of their provisions as subordinate,
the clause opened up a potential for abuse. By obtaining the Committees'
agreement to the designation of provisions as subordinate, Ministers
would from then on be able to avoid subjecting proposals to amend
those provisions to the rigorous scrutiny which the regulatory
reform procedure provides. If an order to amend a regulatory reform
order is straightforward it can expect to have a smooth passage
through the procedures of both Houses of Parliament. If in fact
it is not straightforward it ought to be subject to those procedures.
We viewed this as an unwelcome development to which we were minded
to object strongly, pending clarification.
49. Paragraph 57 of the Explanatory Notes goes some
way towards providing the clarification which we sought. This
suggests that subordinate provisions orders would in practice
be very minor ancillary measures since they:
"...would usually be
included in schedules to the main part of the regulatory reform
order, in the same way as technical detail is omitted from Articles
in European Community legislation , but rather set out in Annexes.
"The kind of details that would be dealt with
by a subordinate provisions order (which could have been dealt
with under DCOA [the 1994 Act] would be matters of administrative
arrangement such as the precise detail of an application form,
the number of copies of the form required and any accompanying
fee, etc. In addition, a subordinate provisions order might cover
the more technical details of the legislation, such as procedures
needed to give effect to principles set out in the main part of
the order. Such details may change from time to time."
50. Clause 4 provides that (as at present) regulatory
reform orders will, after the consultation and "proposal"
stage, be proceeded with as normal "affirmative" statutory
instruments. In the case of the new category of "subordinate
provisions" order, however, there would not only be no consultation
or proposal stage, but the statutory instrument would be subject
to the weaker negative resolution procedure in Parliament. In
view of the constitutional delicacy of the deregulation procedure
as a whole, we believe that Parliament would be unwise to accept
this arrangement, even in the cases cited in the Explanatory Notes.
51. In giving evidence, the Minister emphasised that
the use of the subordinate provisions clause would extend to matters
such as application forms and fees. Our experience is that forms[26]
and fees are not always matters of mere administrative detail.
52. During the evidence session, the Minister undertook
to examine the use of the negative resolution procedure in the
case of subordinate provisions and to "...look at that point
about whether an affirmative procedure might give more protection
than a negative procedure."[27]
He has subsequently responded[28],
however, to the effect that "matters of the sort envisaged
for subordinate provisions orders would invariably be dealt with
by negative resolutions" if the order-making power were contained
in a Bill, and that he is "not yet persuaded that negative
resolution procedure is inappropriate," and offers as an
alternative the possibility that the Bill "could provide
discretion as to the most suitable vehicle."
53. We are disappointed that the Minister has
not, in the end, felt able to concede on this point, and his
failure to appreciate the crucial difference between powers granted
by full primary legislation and those granted at second-hand through
the deregulation process. His alternative suggestion is interesting,
but the only precedent for granting Ministers an option to use
the negative or affirmative procedure — in the European
Communities Act 1972 — is not encouraging, since experience
suggests that Ministers would (quite understandably) prefer the
former. It therefore does not amount to much of a safeguard.
54. Accordingly, we continue to believe that sub-section
4(6) (which applies the negative resolution procedure in these
cases) should be withdrawn from the Bill before introduction.
Whether or not the Government now accepts this advice, we further
recommend (as indicated in paragraph 8 above) that Standing Orders
should be amended so as to require this Committee or its successor
to consider and report on all "subordinate provisions orders"
before the expiry of praying time or before they are put to the
House for approval, as the case may be.
Clause 5 — Preliminary consultation
55. This is unchanged from the original 1994 Act.
It sets out the consultation procedure and the organisations to
be consulted before making a regulatory reform proposal.
Clause 6 — Document to be laid before Parliament
56. The bulk of Clause 6, with the exception of two
amendments, reflects previous texts of the draft Regulatory Reform
Bill. Clause 6 (2) sets out how, following consultation, the Minister
should lay a proposal before Parliament. It follows the pattern
of the corresponding provisions of the existing Act, but requires
the Minister to address in the Explanatory Document the additional
matters which result from the Bill's amendment, in particular
the three new tests.
57. The first amendment is at Clause 6 (2) (a) which
substitutes "the existing law" for "legislation".
This modification is consequential on the intention to apply the
order- making powers to reform of common law on which we comment
in paragraphs 32-37 above. "Existing law" is a term
that covers both common law and legislation.
58. The second (welcome) amendment is at Clause 6
(2) (g). This relates to information which must be provided in
support of measures which have been designated as subordinate
provisions (see paragraphs 47-54 above).
59. When we originally considered this Clause, we
were keen to ensure that Ministers proposing regulatory reform
orders should be placed under a statutory obligation to make,
and lay before Parliament, rigorous regulatory impact assessments
of the consequences of those proposals for persons likely to be
affected.
60. The Minister was reluctant to include a specific
obligation in the Bill since Ministers already prepare regulatory
impact assessments for all primary legislation and deregulation
orders which are placed in the Libraries. The Minister was particularly
keen to avoid duplication of information and confusion. He did
nevertheless state he would ensure that the guidance document
for departments on order-making procedure emphasised the need
for production and publication of rigorous regulatory impact assessments.
61. We pressed the matter of inclusion of a statutory
requirement on the face of the Bill to make and lay before Parliament
rigorous regulatory impact assessments. Our sister Committee,
in its evidence session with Lord Falconer, asked whether there
would be any difficulty in incorporating the requirement for an
RIA on the face of the Bill. Lord Falconer replied that it would
probably overlap with existing requirements contained in Clauses
6 (2)(h) and (i), which in his view were the "guts of a regulatory
impact assessment".[29]
However, he undertook to consider the Lords request.
62. We continued to press for the inclusion of the
requirement for an RIA in our evidence session,[30]
stressing the importance that we attached to this matter. In his
reply, the Minister assured us that he gave the same answer as
Lord Falconer, which was that he would consider the inclusion.
He expressed, however, a reservation about drafting on to the
face of the Bill definition of an evolving process, pointing out
that a particular title and definition may be too rigid, a point
which he subsequently re-affirmed in writing.[31]
If Ministers continue to refuse to place on themselves and
their colleagues a statutory obligation to provide an RIA in the
case of each and every proposed Regulatory Reform Order, they
should be aware that we (and our sister Committee in the Lords)
may have difficulty in clearing any proposal to which an RIA is
not attached, since it may not then be easy to assess whether
the proposed order would, overall, have the effect of removing
or reducing burdens.
Clause 7 — Representations made in confidence
or containing damaging information
63. Clause 7 is unchanged with the exception of Clause
7 (4) introduced into the Bill at our request. The previous text
of the Regulatory Reform Bill sought to address our concerns that
the Committee should have equal access to material submitted during
the consultation exercise as the Minister (see paragraph 17 above).
Disappointingly the previous text contained the relevant provision
in square parentheses to demonstrate that the Minister could not
guarantee that the provision would be introduced in the Bill.
However the square brackets have been removed and our request
has been granted.
64. Previously the measure referred to "any
disclosure which is required by any committee of either
House of Parliament". The present text refers to "any
disclosure which is requested....". This is merely
more precise drafting which presents little problem.
Clauses 8 — 15
65. We have no comments on Clause 8, Parliamentary
consideration of proposals; Clauses 9-11 on codes of practice
for enforcement raise no concerns; and we have no specific comments
to make on Clauses 12-15 (repeals and savings, consequential amendments,
interpretation, short title and extent).
Recommendations not taken forward
66. There are three matters about which we remain
very disappointed. The importance we attached to the simplification
of the law and to the duty of review was emphasised throughout
our consideration of the earlier drafts. A third matter, inclusion
of the requirement for regulatory impact assessments, was given
greater emphasis during the evidence session.
Simplification of the law
67. During our earlier consideration of the draft
Bill, we made a recommendations to the Minister to include a provision
which encouraged "modernising and simplifying the law".
We proposed that this provision should be strengthened by requiring
Ministers to have regard to the need to produce legislation comprehensible
to those affected by it. The Minister indicated that he was "sympathetic
to this point, and [he would] give it further consideration prior
to introduction of the Bill". However this provision has
been omitted from the current version of the Bill.
68. When we took evidence we asked the Minister why
the encouragement to Ministers to modernise and simplify the law
had been omitted from the draft Bill and our proposal to reinforce
it with a duty to promote comprehensibility had not been taken
up. On the first point the Minister explained that the overall
purpose of "reforming legislation" (now set out in Clause
1(1)) was a precise way of restating the previous reference to
modernisation and simplification.[32]
On the second he argued that the paramount need for clarity and
precision precluded the drafting of legislation in terms of "common
English usage."[33]
69. We are not persuaded by the Minister's argument
on either point. The substitution of a reference to "reform",
a subjective and imprecise term, for the earlier reference to
"modernising and simplifying" is perhaps not the best
example of the clarity and precision, the need for which the Minister
claims prevents the use of comprehensible language. We agree with
the Minister that legislation must be clear and precise; where
we part company is on his view that to achieve that goal requires
it to be written in a code accessible only to the specialist.
We invite the Minister to amend the draft Bill before introduction
so as to require Ministers making regulatory reform orders to
have regard to the desirability of modernising and simplifying
the law and to the need to render it comprehensible to the general
public.
Inclusion of the requirement for regulatory impact
assessments
70. During the evidence session, we reminded the
Minister that we had pressed for inclusion on the face of the
Bill, a statutory requirement to make and lay before Parliament
rigorous regulatory impact assessments. The Minister replied that
he would consider our request, but that there were concerns that
the writing in of a particular title and process could lead to
rigidity.[34]
71. The Minister wrote to us, giving a detailed account
of past and present procedure, but re-affirming his view that
"As I mentioned in evidence,
policy is developing, and I remain of the view that it would be
a mistake to ossify arrangements in the Bill. I am content that
the requirement in Clause 6(2)(h) and (i) for the explanatory
document to set out the essential elements of regulatory impact
assessment, is sufficient and also preserves flexibility for the
future."[35]
72. We continue to press for inclusion on the
face of the Bill, the requirement for a regulatory impact assessment.
We suggest that this could be drafted in general terms as a duty
to lay before Parliament a statement analysing the impact on persons
likely to be affected by the enactment of the provisions of an
order. Such a statement would overcome the difficulty of the rigidity
of terminology which appears to be the Minister's main concern.
Duty of review and annual report to Parliament
73. During our consideration of earlier drafts, we
made a recommendation to strengthen the Regulatory Reform Bill
by imposing a duty of review upon Ministers and a duty to report
annually to Parliament on the use of the powers by the Minister
for the Cabinet Office. Although the Minister noted our wish to
ensure use of the new powers, this duty of review and annual report
has not been incorporated into the draft Bill. We expressed our
concerns, during the evidence session with the Minister, that
unless departments gave sufficient priority to regulatory reform,
the enlarged powers of the Bill would remain as little used as
the powers of the present Act. We asked the Minister to reconsider
our proposal that imposition of a duty of review and a requirement
for annual report be included in the Bill.
74. The Minister's answer on these matters was disappointing.
He informed us that there were already mechanisms in place to
encourage greater use of the powers; the Prime Minister and the
Cabinet had set up a Panel of Regulatory Accountability, chaired
by the Minister for the Cabinet Office, to consider opportunities
within departments for regulatory reform; and the Better Regulation
Task force, chaired by Lord Haskins, had been set up by the Government,
as an independent body to report and put pressure on departments
and the Government to improve performance on regulation.[36]
The Minister informed us that;
"... the Government
is obviously sympathetic and welcomes the support and thinking
behind what the Committee is saying on that particular issue.
It may well be that there are other ways that we can look at reviewing
what is going on and finding out how much is going on in departments.
For instance, there is no policy or statutory requirement at the
present time to put a review of the regulations in a department
in the department's annual report and it might well be that is
a simpler and less rigid approach to achieving the same end side
by side with increasing the rigorous look at regulation that we
are taking, so that is why we have not put that particular clause
or that particular decision into the Bill."[37]
75. We therefore urged[38]
the Minister to reconsider the omission of these suggestions from
the current text of the Regulatory Reform Bill. The Minister has
already noted that our sister Committee put forward similar suggestions
to the Government. That Committee recommended a five-yearly review
of orders made under the order-making powers. We hope that Ministers
will give more sympathetic consideration to our suggestions, which
can only be of benefit to Departments, the Deregulation Committees
and the wider public.
76. If, as the Minister has now conceded,[39]
it is his intention to place on the appropriate website a document
which "pulls together" the relevant parts of Departmental
Annual Reports which record Departments' regulatory activity,
it would only be a short step (and, if nothing else, more courteous
to Parliament) to "pull together" that information into
a separate Annual Report which would also record the efforts of
his own Department to encourage and co-ordinate activity across
this field.
77. If, nonetheless, the Government does not concur
with the view that a formal, statutory, requirement to report
annually to Parliament should be incorporated in the Bill, we
can ourselves review, and report on, the regulatory reform process,
although we do not consider that this is an adequate substitute
for a formal report to Parliament. We in any case give notice
that we will require the relevant Ministers and their successors
to attend to give evidence on their stewardship of the Act.
Conclusion
78. Overall, the draft Regulatory Reform Bill
represents a sensible and welcome step forward in the process
of facilitating greater use of the Deregulation procedure, which
to some extent takes account of our concerns. There remain, however,
a number of points which the Government still needs to address.
If these are not resolved before the formal introduction of the
Bill, we think it likely that we or others will wish to move amendments
in committee to test the points further in debate. The lengthy
consultation process in which we, our counterparts in the Lords,
and the Cabinet Office, have been engaged is a welcome and healthy
example of full pre-legislative scrutiny in action, and we commend
the Ministers concerned for their encouragement of this process.
But it also indicates that there are practical limits to such
scrutiny; some issues remain unresolved, and can only be resolved
when a real Bill is put to the vote in the House.
20 op. cit. Back
21
op. cit., paragraphs 18 to
23. Back
22
ibid, paragraphs 30 to 38. Back
23
Q 17. Back
24
Q 3. Back
25
Q12. Back
26
See, for example, Third Report, Proposal for the Deregulation
(Deduction from Pay of Union Subscriptions) Order 1998,
HC 601 of Session 1997- 98. Back
27
Q 27. Back
28
Minister's letter of 11 May, appended to the Minutes of Evidence. Back
29
Lords Evidence Q 57. Back
30
Q 29. Back
31 Letter
of 11 May. Back
32 Q
33. Back
33 Q
32. Back
34 Q
29. Back
35 Letter
of 11 May. Back
36 Q
25. Back
37 Q
32. Back
38 Q
36. Back
39 Letter
of 11 May. Back
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