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Mr. Brian White (Milton Keynes, North-East): I have some sympathy with the first part of the hon. Gentleman's aim, which is a review after five years. However, the Deregulation Committee or its successor will examine the impact of the orders after three years. What is the hon. Gentleman trying to achieve that is different from the aim of the Deregulation Committee?
New clause 1 would provide for the order to expire. Reintroducing an order after five years in a completely different climate, which the hon. Member for Lichfield (Mr. Fabricant) mentioned, may not be the best way in which to proceed. Its effect would be re-regulation.
Mr. Lansley: I do not agree with the hon. Gentleman's first point, because, as I understand it, the review that the Deregulation Committee proposes would not allow a detailed examination of each order's effects. It would examine the process and the purposes for which the regulatory reform order procedure had been used. I hope that the volume of deregulatory activity under regulatory reform orders will be so substantial that examining each one in detail would be beyond the scope of a review by the Deregulation Committee. A flow of reports that would allow the House to examine the effect of individual regulatory reform orders is a better process.
On reviewing regulatory reform orders differently, future Ministers may find that, in practice, such orders create a new structure of regulation. One of the most obvious examples that Ministers have presented is the proposal to re-regulate the complex structure of fire safety legislation. I suspect that Ministers would freely acknowledge that the likelihood of their getting that structure right first time is limited. The prospect of having to return to the process is quite high.
We are not proposing that there would of necessity have to be the disapplication of the first regulatory reform order on fire safety legislation before bringing in another. It would be open to Ministers to bring forward a new order and to go through the normal process of scrutiny, for example, so as to deliver the objective.
The new clause is intended to introduce a review process, which is valuable in itself. In circumstances where the review gives rise to the conclusion, by Ministers or the House, that the regulatory reform order agreed to previously did not have the benefits that it was intended to have--it did not meet, for example, the fair-balance test, or in the event had removed necessary protection that should have been retained--the best way in which to proceed may be to disapply the order rather than to seek to start again with a new order.
The benefit of the new clause is primarily in the obligation which it lays before Ministers to present a review. Secondarily, it gives Ministers the opportunity to use the simple mechanism of disapplying an order before thinking again about how to deal with it.
Mr. Lansley: I am grateful to my hon. Friend for his support. I would be grateful for the support of the prospective parliamentary candidate to whom he refers, who I know happens to have many positive qualities.
My hon. Friend brings me to an important point. He says correctly that the principle of sunsetting--we are talking of a review provision that allows for that possibility--has wide support. Only about a week ago, the British Chambers of Commerce published its pre-election manifesto, entitled "Empowering Business". One of the organisation's objectives, in the context of a better regulatory environment, is that the Government should
Mr. Lansley: Yes, I take my hon. Friend's point entirely. I shall not be tempted by him to analyse health and safety legislation. I referred specifically to fire safety legislation because it is one of the most prominent examples that the Government have used of the way in which regulatory reform orders are intended to be used.
In this context, it illustrates rather well the importance of such a review procedure, because a regulatory reform order relating to fire safety legislation might be laid before the House to structure the whole fire safety system round risk-based assessment rather than the present prescriptive approach. I am sure that the Minister will recognise that that might be a novel way of trying to address this form of regulation. That is not a bad thing, and it might be a good thing. It would, no doubt, redistribute burdens, in that it would create burdens for some and reduce them for others. Prospective impacts would be expected to flow from it, and they would be speculative. It is, therefore, important to review the operation and structure of such legislation, and I hope that Ministers will recognise the value of the new clause in allowing that to happen.
I illustrated my case with the example of fire safety legislation. However, the new clause also fits with the business community's estimation of what a good regulatory environment should look like because it involves a constant
Mrs. Ann Winterton (Congleton): Bearing it in mind that the reviews would be held approximately five years after the introduction of the orders, does my hon. Friend believe that they would exert a downward pressure on the number of orders introduced, and that that could have a beneficial effect on the over-regulation of business?
Mr. Lansley: I indeed believe that, for a rather civil-servant, Whitehall reason, among others. I am loth to create a bureaucratic process that creates additional burdens for the sake of it. Far be it from us to do that; we want to do quite the opposite. The process of review by which Departments will have to bring back before Parliament and substantiate earlier decisions and judgments will be a constraint on those Departments under-estimating the costs and impacts that flow from new regulation, or over-estimating the benefits. I hope that such a review process would be a persuasive psychological constraint on those who introduce regulation in the first place.
My hon. Friend's intervention leads me to an interesting point. The five-year period would have a further benefit, because we would have allowed sufficient time to pass to understand the wider impacts of any regulation. There is a tendency, which we discussed briefly in Committee, at the point at which regulations are made, for the discussion of impacts to focus on the direct compliance costs, and the measurable, immediate, direct effects of introducing a regulation. However, the impacts of any legislation tend to be wider and longer. As my hon. Friend the Member for Lichfield (Mr. Fabricant) implied earlier, the impacts tend to be on an industry's relative competitiveness, and the relative costs to businesses.
I shall illustrate that point with one of the most forceful examples of the necessity of re-examining the kind of regulatory impact assessments that have previously been made by Departments. The House will recall the recent passage of the Regulation of Investigatory Powers Act 2000. At that time, a regulatory impact assessment was attached to the legislation. I have it here. The regulatory impact assessment on part I of the Act states:
The report then looked at the costs arising from the technical design requirements that would lead to the diversion of business away from UK suppliers to non-UK suppliers. It said that estimates of the overall cost to the UK vary considerably, but are likely to reach more than £1 billion a year by 2002.
The report's authors considered that the compliance costs in relation to part III were substantially underestimated, and that a five-year estimate would be of the order of £640 million. They then looked at the overall financial implications of the Act. They looked at the losses and leakage, as they put it, to the UK economy from diversion generally and the cost, and put those at a total of up to £46 billion in the first five years of operation.