Select Committee on Deregulation First Special Report


The Deregulation Committee has agreed to the following Special Report:—



1. The Regulatory Reform Bill [Lords] was passed by the House of Lords on 19 February, and is expected to receive a second reading in this House on Monday 19 March.

2. The Bill's provisions will come into effect on Royal Assent, and proposals for the new form of Regulatory Reform Orders may begin to be deposited in Parliament by Ministers shortly thereafter. This Committee and its sister committee in the Lords (the Delegated Powers and Deregulation Committee) have already been notified informally that there will be no great delay before the first such proposals are deposited.

3. Assuming that the Bill receives Royal Assent in something like its present form, the introduction of the new form of Orders will require amendments to the order of reference of this Committee, and some adjustment to other Standing Orders of the House. In order to ensure that the Committee and its successor after the next General Election are fully empowered to carry out the scrutiny of proposals and draft Orders under the new arrangements, these Standing Order changes will need to be made at an early date after the Bill receives Royal Assent.

4. For this reason, this Special Report explains the changes required in Standing Orders, and sets out (in Annex I) a revised version of the Committee's order of reference (currently Standing Order No. 141). In order to explain the detailed changes proposed, we also set out below a brief explanation of the amendments made to the Bill in the House of Lords.

The amended Bill

5. The Regulatory Reform Bill was published in draft in April 2000[10], after a lengthy period of informal consultation between the Cabinet Office and the two Deregulation Committees. We produced a formal report on the draft Bill in May 2000[11], and commented further on the Government's observations on that Report in July[12]. Like our sister Committee in the Lords, we were generally welcoming of the draft Bill's expansion of the scope of deregulation and regulatory reform, but both Committees had reservations about some of the detail, not all of it of a minor nature. Nonetheless, the Bill finally introduced in the Lords in December was identical to the draft Bill which we had considered during the formal pre-legislative process.

6. During the Bill's passage through the Lords, however, a number of significant amendments were conceded by the Government, and the Bill to be considered in the Commons[13] is as a result more palatable to us, as well as to our Lords colleagues.

The main changes in the Bill so far are as follows:

7. Objects justifying the power to make orders (Clauses 1 and 3):

Clause 1(1) of the Bill in its original form contained four separate objects which could individually or together justify the making of a regulatory reform order; these are retained in the amended Bill, but a new sub-section 1(3) introduces a major restraint on the order-making power by requiring that all orders made under the Act must include provision aimed at the first of those objects (ie the removal or reduction of a burden), and Clause 3(2) is amended to prevent the creation of new burdens unless the Minister is satisfied that these are made desirable by the overall reduction of burdens (or other beneficial effects for the persons affected) in the proposed order as a whole. Together, these amendments require

    (a)  that every regulatory reform order must contain an element of deregulation (ie the removal or reduction of burdens); and

    (b)  that the reduction of burdens and the "other beneficial effects" are together sufficient to justify any new burdens which are created by the order.

They therefore significantly reinforce the conditions of proportionality to which both Committees had paid particular attention during the various stages of the pre-legislative consultation.

8. Subordinate provisions orders (Clause 4):

    (a)  The Committee expressed considerable concern during the formal pre-legislative stage about the provision in Clause 4 that any "subordinate provisions" order would not require the approval of each House before coming into effect, but would be subject only to annulment under the negative statutory instrument procedure. Ministers had previously argued that provisions likely to be designated as "subordinate" would be of a minor, administrative or technical nature, and that in any case it would be open to either Committee to object at the initial consultation stage on a proposed Order to the designation of any of its provisions as subordinate. The issue was not raised by the Lords Committee themselves, but during the committee stage in the Lords the Government nonetheless accepted an amendment, the effect of which is that the parent Order may now specify the procedure to which a subordinate provisions order made under its authority should be subject - annulment, normal affirmative procedure, or approval by each House within 28 days of being made and coming into effect. Although this is not precisely the position proposed by us (which would have required the normal affirmative procedure in each case), it may be thought to provide sufficient safeguards against abuse, since it would be open to either Committee to insist on the upgrading of the procedure required during consideration of the proposal for the parent Order.[14]

    (b)  The Lords agreed on Report to a further proposal which has the effect of excluding subordinate provisions orders from the new requirement referred to above (in Clause 1(3)) that Orders under the Bill must contain an element of deregulation: this seems a reasonable exemption (particularly in the light of the greater safeguards otherwise introduced for subordinate provisions orders), in that such orders might well, as the Minister pointed out in the Lords, be used for such matters as future increases in fees for a particular purpose; but we note that the latter consideration merely reinforces the wisdom of allowing the possibility that they might have to proceed as affirmative, rather than negative, statutory instruments.

9. Estimates of cost (ie Regulatory Impact) (Clause 6):

    (a)  Both Committees expressed some concern during the pre-legislative scrutiny stage about the refusal of the Government to include in the Bill a requirement that the document containing a proposal for an Order should contain (amongst the various matters listed in Clause 6(2)) a full regulatory impact assessment: Ministers responded to both Committees in evidence that what was required in paragraphs 6(2)(h) and (i) of the draft Bill in any case constituted the "guts of an RIA", and that "including more rigid language on the face of the Bill would limit artificially the information provided".[15] Although Ministers have not moved entirely from that position, they conceded a further amendment on Report in the Lords which has the effect of requiring (under Clause 6(2)(h)) details both of "the reasons why savings or increases in cost should be expected" and "if it is practicable to make an estimate of the amount, that amount and how it is calculated". In view of the repeated Ministerial assurances of good faith in this area, and given the potential for future Committees of either House to turn down a proposed Order if they are not satisfied with the extent or detail of the information provided, this concession goes a good way towards meeting our difficulties.

10. In addition to these welcome amendments to the text of the Bill, Ministers gave a number of undertakings in the House of Lords about the future operation of the procedure which generally reinforce our impression that they have made considerable efforts to meet the views of both Committees, in the hope of ensuring that the new legislation is introduced, and may be implemented, with the widest possible support. Most of these undertakings are referred to in the relevant sections of the Explanatory Notes accompanying the amended Bill[16], and are also discussed in our sister Committee's own commentary on the passage of the Bill through the other House[17]. They cover, in particular, the continuation of the conventions that Ministers would not force through a draft Order in the face of opposition from the Committees, and that the use of the procedure will be restricted to measures which are not "large and controversial".

11. There is also a new commitment to report to Parliament, three years after enactment, on the working of the new Act, although we note that this undertaking will not prevent our successors from carrying out their own annual inquiry into the Government's stewardship of the new procedure, an intention of which we gave notice to Ministers last year[18].

Other outstanding issues

12. There remain a number of relatively small points outstanding from the pre-legislative process which have either not been covered or have been covered only partially by amendments or undertakings in the House of Lords, which may be raised further on second reading or in committee in this House.

13. Modernisation and simplification of the law: One more significant issue remains unresolved. During the various stages of pre-legislative scrutiny, we proposed that the Bill should include a specific provision to encourage the "modernisation and simplification of the law", and to require Ministers to have regard to the need "to produce legislation comprehensible to those affected by it". Although Ministers initially indicated some sympathy with this proposal, no such provision is included in the Bill. Ministers have argued that such a provision is unnecessary, on the grounds that the desired objectives can be subsumed in the overall purpose (stated at the beginning of clause 1) of " reforming legislation".[19] We are unconvinced by this argument, and our objectives remain the same. If the Bill is not amended to this effect we (and, we trust, our successors) will nonetheless scrutinise all future proposals and draft Orders with these objectives in mind, and will expect Ministers to do the same.

Changes required in the Committee's procedure and Standing Orders

14. The Deregulation Committee was first established in November 1994, following a Report from the Procedure Committee[20] which also spelt out the arrangements for the consideration of the Deregulation Committee's Reports and draft deregulation Orders on the Floor of the House. The procedures are spelt out primarily in Standing Order No. 141 ((Deregulation Committee) and Standing Order No. 18 (Consideration of draft deregulation orders). These procedures have on the whole worked well.

15. The new Bill, while enabling the new form of Orders to cover a significantly wider range of legislation, leaves the basic procedures for public consultation and parliamentary scrutiny in tact. In particular, the period of sixty days for parliamentary scrutiny of proposals for Orders remains unchanged.

16. In this situation it might seem that all that would be required is a series of amendments to Standing Orders to change the references to the relevant legislation, and to alter the nomenclature employed. For two reasons, however, this approach will not quite solve the problem:

17. First, Clause 12(2) of the Regulatory Reform Bill permits the continuation in force of the deregulation provisions of the Deregulation and Contracting Out Act 1994 in respect of any documents containing proposals for Deregulation Orders already laid before Parliament before the new Bill receives Royal Assent. We have already been notified that at least three such documents are likely to be laid before the earliest expected date for Royal Assent. At the same time, Clause 5(4) of the Bill allows proposals for the new form of regulatory reform order to be based on consultations carried out prior to the passing of the Act, a provision agreed during pre-legislative scrutiny by the Lords Committee and by ourselves. For a period of at least some months, therefore, both deregulation orders and regulatory reform orders may be made, and the powers of the Committee and the procedures of the House will need to be defined by reference to both the 1994 Act and the new Act.

18. Second, the Regulatory Reform Bill introduces a new category of "subordinate provisions order" (see paragraph 8 above) which will be similar to other statutory instruments, and not subject to the consultation and scrutiny procedures required for the main regulatory reform orders. These could in principle be considered in the normal way by the Joint Committee on Statutory Instruments. However, that Committee is excluded (under Standing Order No. 151) from considering draft deregulation orders, and will obviously therefore need to be excluded from considering draft regulatory reform orders under the new Act. Moreover, we (and our successors) and our counterparts in the House of Lords will continue to have a role to play in the designation of the statutory instruments procedure to be followed in the case of subordinate provisions orders, and we believe that our successors will want, at least initially, to play a continuing role in monitoring the use of this further elaboration of the deregulation system.

19. We understand that the House of Lords Committee has already taken the view that it, rather than the Joint Committee on Statutory Instruments, should have the job of scrutinising subordinate provisions orders on behalf of the other House. We have come to the same conclusion. The amended Standing Orders will therefore need to provide appropriately for this Committee's consideration of subordinate provisions orders, and to divest the Joint Committee on Statutory Instruments of that responsibility.

20. Proposed changes to the relevant Standing Orders are set out in Annex I to this Special Report. For the reasons explained above, some simplification of the Standing Orders will eventually become possible, probably towards the end of the current calendar year, when the last deregulation order under the 1994 Act has completed all stages of consultation, scrutiny and approval. We recommend that the proposed changes should be brought forward for approval by the House as soon as possible after Royal Assent to the Regulatory Reform Bill [Lords], in order to ensure that the operation of the new Act is not delayed by procedural obstacles and that the House and its Committee are able to carry out a full scrutiny of the first regulatory reform orders within the timescale provided by the legislation.

The Committee's future

21. For the same reasons, we feel it necessary to draw the attention of the House to the need for a successor Committee to be appointed at the earliest opportunity after the beginning of the next Parliament. Although the clock will stop during the General Election on the sixty-day period for parliamentary scrutiny of any proposals for deregulation or regulatory reform orders which have already been laid, it will begin to tick again on the first day of the new Parliament. So long as a successor Committee is not appointed, however, the scrutiny role of Parliament in respect of those proposals will not be able to be undertaken, and the intentions of both Houses in insisting on this rigorous scrutiny process may thereby be frustrated.

22. Finally, we also believe that we should put on record our expectation that adequate resources will be made available for the administrative and legal support of the Committee and its successors. Because of the relatively thin flow of deregulation orders during the last two years, the staffing of the Committee has been appropriately limited. The provisions of the new Act are likely to produce an increase in both the significance and complexity, and the volume, of proposals and draft orders, as was made clear in a written answer from the Parliamentary Under-Secretary at the end of last year, which we reproduce as Annex II. Although we appreciate the need to put staff resources to the best and most economical use, we expect the Department of the Clerk to respond speedily to any significant increase in activity in this area.

Annex I

Proposed changes to Standing Orders

[Note: new text is highlighted, deletions are struck through]

Standing Order No. 141 (Deregulation and Regulatory Reform Committee).—(1) There shall be a select committee, called the Deregulation and Regulatory Reform Committee, to examine

(i) every document containing proposals laid before the House under section 3, and every draft order proposed to be made under section 1, of the Deregulation and Contracting Out Act 1994 (the 1994 Act) or under section 6 of the Regulatory Reform Act 2001 (the 2001 Act;

(ii) every draft order proposed to be made under section 1 of the 1994 Act or section 1 of the 2001 Act; and

(iii) every subordinate provisions order or draft of such an order made or proposed to be made under sections 1 and 4 of the 2001 Act.

(2) The committee shall report to the House, in relation to every proposals document containing proposals laid before the House under the said section 3referred to in paragraph 1(i) of this order, either

(a) that a draft order in the same terms as the proposals should be laid before the House; or

(b) that the proposals should be amended before a draft order is laid before the House; or

(c) that the order­making power should not be used in respect of the proposals.

(3) The committee shall report to the House, in relation to every draft order laid before the House under the said section 1referred to in paragraph 1(ii) of this order, its recommendation whether the draft order should be approved.

(4) The committee may draw the special attention of the House to any subordinate provisions order or draft order referred to in paragraph 1(iii) of this order, and may report its opinion whether or not the order or draft order should be approved or, as the case may be, annulled.

(5)(4) The committee may report to the House on any matter arising from consideration of the said proposals, draft orders or subordinate provisions orders.

(6)(A)(5)(A) In its consideration of proposals the committee shall consider in each case whether the proposals

(a) appear to make an inappropriate use of delegated legislation;

(b) remove or reduce a burden or the authorisation or requirement of a burden;

(c) continue any necessary protection;

(d) have been the subject of, and take appropriate account of, adequate consultation;

(e) impose a charge on the public revenues or contain provisions requiring payments to be made to the Exchequer or any government department or to any local or public authority in consideration of any licence or consent or of any services to be rendered, or prescribe the amount of any such charge or payment;

(f) purport to have retrospective effect;

(g) give rise to doubts whether they are intra vires;

(h) require elucidation, are not written in plain English, or appear to be defectively drafted; or

(i) appear to be incompatible with any obligation resulting from membership of the European Union.

(B) In the case of proposals presented under the 2001 Act, the committee shall also consider whether the proposals

(j) prevent any person from continuing to exercise any right or freedom which he might reasonably expect to continue to exercise;  

(k) satisfy the conditions of proportionality between burdens and benefits set out in sections 1 and 3 of the Act;

(l) have been the subject of, and take appropriate account of, estimates of increases or reductions in costs or other benefits which may result from their implementation; or

(m) include provisions to be designated in the draft order as subordinate provisions;

and in the case of the latter consideration the committee shall report its opinion whether such a designation should be made, and to what parliamentary proceedings any subordinate provisions orders should be subject.

(7)(B) In its consideration of draft orders, the committee shall consider in each case all the such matters set out in sub­paragraph (A) above (6) of this order as are relevant to it and the extent to which the Minister concerned has had regard to any resolution or report of the Committee or to any other representations made during the period for parliamentary consideration.

(8) In its consideration of subordinate provisions orders the committee shall in each case consider whether the special attention of the House should be drawn to it on any of the grounds on which (in accordance with paragraph 1(B) of Standing Order No. 151 (Statutory Instruments (Joint Committee)) the Select Committee on Statutory Instruments may draw the attention of the House to a statutory instrument; and if the committee is of the opinion that any such order or draft order should be annulled, or, as the case may be, should not be approved, they shall report that opinion to the House.

(9)(6) The committee shall consist of eighteen members.

(10)(7) The quorum of the committee shall be five.

(11)(8)Unless the House otherwise orders, each Member nominated to the committee shall continue to be a member of it for the remainder of the Parliament.

(12)(9)The committee shall have power—

(a) to send for persons, papers and records, to sit notwithstanding any adjournment of the House, to adjourn from place to place within the United Kingdom, and to report from time to time;

(b) to appoint specialist advisers either to supply information which is not readily available or to elucidate matters of complexity within the committee's order of reference;

(c) to appoint a sub­committee, of which the quorum shall be two, which shall have power to send for persons, papers and records, to sit notwithstanding any adjournment of the House, and to adjourn from place to place within the United Kingdom;

(d) to communicate its evidence and any other documents relating to matters of common interest to any committee appointed by this House and to any committee appointed by the Lords to examine deregulation and regulatory reform proposals and draft orders.

(13)(10)The committee and the sub­committee shall have leave to meet concurrently with any select committee appointed by the Lords to examine deregulation and regulatory reform proposals and draft orders and any sub­committee thereof.

(14)(11) The committee and the sub­committee shall have the assistance of the Counsel to the Speaker and, if their Lordships think fit, the Counsel to the Lord Chairman of Committees.

(15)(12) The committee and the sub­committee shall have power to invite Members of the House who are not members of the committee to attend meetings at which witnesses are being examined and such Members may, at the discretion of the chairman, ask questions of those witnesses; but no Member not being of the committee shall otherwise take part in the proceedings of the committee or sub­committee, or be counted in the quorum.

(16)(13) It shall be an instruction to the committee that before reporting either

(a) that any proposal should be amended before a draft order is laid before the House, or

(b) that the order­making power should not be used in respect of any proposal, or

(c) that any draft order should not be approved,

it shall afford to any government department concerned an opportunity of furnishing orally or in writing to it or to the sub­committee appointed by it such explanations as the department think fit.

(17)(14) It shall be an instruction to the committee that it report on every draft order (not being a subordinate provisions order) not more than fifteen sitting days after the draft order was laid before the House, indicating in the case of draft orders which it recommends should be approved whether its recommendation was agreed without a division.

Standing Order No.18 (Consideration of draft deregulation etc orders).—(1) If the Deregulation and Regulatory Reform Committee has reported under paragraph (3) of Standing Order No. 141 (Deregulation and Regulatory Reform Committee) that a draft order laid before the House under section 1 of the Deregulation and Contracting Out Act 1994 or under section 1 of the Regulatory Reform Act 2001 should be approved and a motion is made by a Minister of the Crown to that effect, the question thereon shall—

(a) if the committee's recommendation was agreed without a division, be put forthwith;

(b) if the committee's recommendation was agreed after a division, be put not later than one and a half hours after the commencement of proceedings on the motion.

(2) If the committee has reported that a draft order should not be approved, no motion to approve the draft order shall be made unless the House has previously resolved to disagree with the committee's report; the questions necessary to dispose of proceedings on the motion for such a resolution to disagree shall be put not later than three hours after their commencement; and the question shall be put forthwith on any motion thereafter made by a Minister of the Crown that such a draft order be approved.

(3) Motions to which this order applies may be proceeded with, though opposed, until any hour.

Standing Order No.151 (Statutory Instruments (Joint Committee)):

line 20, at end insert "or under section 1 of the Regulatory Reform Act 2001, or any subordinate provisions order made or draft proposed to be made under that Act."

Annex II

Proposals which may be brought forward under the Regulatory Reform Bill

Mr Gareth R. Thomas: to ask the Minister for the Cabinet Office what proposals the Government plan to bring forward under the Regulatory Reform Bill

Mr Stringer: The Government have a number of proposals under preparation that could be implemented under the Regulatory Reform Bill. These are aimed at:

simplifying the complicated fire safety rules;

replacing the rules surrounding weights and measures with one new piece of legislation;

allowing school governors to provide out-of-school child care for their own pupils and other children-this is something many schools have asked for;

removing the remaining constraints on the number of partners that professions such as GPs, chartered surveyors and investment trust managers may have;

removing from businesses the costs of having to adhere to two different sets of regulations surrounding unfair contract terms;

removing the outdated regulations surrounding trading stamps to make it easier for business;

making it easier for directory publishers to gain repeat business by simplifying the process for renewing directory entries;

promoting innovation in the building and construction industry by not penalising those who do things in a different way from what is laid down in guidance;

allowing longer for local authorities and others to transfer housing stock;

simplifying, speeding up and making fairer the procedures for renewing business leases;

placing local authority business tenants on the same footing with lease renewals as other business tenants;

easing the administrative and other burdens on charities;

making it easier to correct errors on birth and death certificates;

simplifying the arrangements for undertaking building work at voluntary-aided schools;

removing the requirement for some charities associated with the NHS to submit two sets of accounts;

ending the renewal of manufacturers' and wholesale dealers' licences for human and veterinary medicines and introducing continuous licensing;

putting cautions, reprimands and final warnings on the same footing as other criminal records, giving offenders a 'clean sheet' after a certain period;

changing the rules about access to victim material in sexual offence cases to protect the victim and remove restrictions from lawyers;

letting pubs open later on New Year's Eve from next year onwards;

allowing restaurants to open later without a requirement to provide live entertainment;

allowing a greater variety of gaming machines to be installed in bingo clubs;

allowing customers to use banknotes and smartcards when playing with gaming machines.

According to the procedure laid down in the Regulatory Reform Bill, all these proposals would be subject to thorough public consultation followed by rigorous scrutiny by both Houses of Parliament.

[HC Debs., 27 November 2000, col. 369-70W]

10  Publication of the draft Regulatory Reform Bill, April 2000, Cm 4713 Back

11  Second Special Report, Session 1999-2000 (Pre-Legislative Scrutiny of the draft Regulatory Reform Bill), HC 488 Back

12   Third Special Report, Session 1999-2000 (Further Report on the draft Regulatory Reform Bill), HC 705 Back

13   Bill 51 Back

14  There is a certain obscurity in the drafting of one aspect of this new provision, in that paragraph 4(7)(a) now refers to orders "not made by a Minister of the Crown". This is not explained in the Bill, or in the Expanatory Notes, although our understanding is that it is probably intended to refer only to subordinate provisions orders which might, under the authority of a parent Order, be made by the National Assembly for Wales acting alone (and should therefore be subject to such scrutiny as is required by the Assembly). Back

15  see Third Special Report, Session 1999-2000 (Further Report on the draft Regulatory Reform Bill), HC705, page ix Back

16   Regulatory Reform Bill [HL]: Explanatory Notes [Bill 51-EN] Back

17   Committee on Delegated Powers and Deregulation, 10th Report, Session 2000-01 (Regulatory Reform Bill [HL] - Further Report on the Bill's passage through the House of Lords), HL 38 Back

18   Second Special Report, Session 1999-2000 (Pre-Legislative Scrutiny of the draft Regulatory Reform Bill), HC 488, paras. 73-77 Back

19  ibid., paras. 67-69 Back

20  Procedure Committee, Fourth Report, Session 1993-94 (Parliamentary Scrutiny of Deregulation Orders), HC 238. Most of the Committee's recommendations were accepted by the then Government: see Procedure Committee, First Special Report, Session 1993-94 (Parliamentary Scrutiny of Deregulation Orders: Government Response to the Fourth Report 1993-94), HC 404  Back

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