1. On 16th May this year, the Government submitted to us a "Memorandum of Response on Regulatory Reform Order-Making". The Memorandum contained both a reply to our First Special Report of this Session (Further Report on the Handling of Regulatory Reform Orders, HC 389) and an overview of the first year's operation of the Regulatory Reform Act 2001.

2. On 2nd July, the Minister for Regulatory Reform, Rt Hon Lord Macdonald of Tradeston, appeared before us to discuss the Government's memorandum. The Minister was accompanied by Rt Hon John Spellar, MP, Minister of State at the Department for Transport, and officials from the respective departments. Both the Government's Memorandum and the transcript of that session were published later that month in our Second Special Report of this Session.[1]
3. Following that Memorandum and the oral evidence session which followed it, we understand that a settled view has now, for the time being at least, been reached between the Government and ourselves concerning the handling of regulatory reform orders. The first part of this Report comments on the operation of the Act in the first year, and deals with the particular matter of the timetabling of orders. In the remainder of the Report we comment on other matters still outstanding.

The operation of the Act in the first year

  4. We welcome the Government's decision to comment on the first year's operation of the Regulatory Reform Act 2001, notwithstanding its earlier commitment to make its first report on the operation of the Act after three years. Already some important lessons have been learnt, and these were fully discussed in the Government's memorandum and during the Ministers' appearance before us in July.

4. The new Act has already proved its worth. Although progress in the first year may not have been as substantial as we might have wished, nevertheless some significant and helpful legislative changes have been made. We note particularly here the regulatory reform orders making changes to the regulations governing premises-related work at voluntary aided schools,[2] and to the provision by local authorities of assistance for private sector housing renewal.[3] These orders could not have been made under the old Deregulation and Contracting Out Act 1994,[4] and may not have been capable of introduction were it not for the regulatory reform procedure.
5. The publication in February of the Government's "Regulatory Reform Action Plan"[5] offered the hope that many more useful changes might be made by way of the Act. We look forward to seeing proposals for those changes brought forward, and to ensuring that they receive the necessary degree of Parliamentary scrutiny.

Presentations from Departmental officials

  7. The regulatory reform proposals brought forward so far been both significant and useful. They have also been in several cases considerably more complex than the majority of proposals brought forward under the old Deregulation and Contracting Out Act. As a result, we have on a number of occasions invited Departmental officials to come before us in informal session shortly after the laying of proposals before Parliament to give short presentations on the proposals. These presentations have proved very useful, and as a result we have indicated to the Government our desire to hear presentations from officials as a matter of routine at the Committee meeting immediately following the laying of a proposal before Parliament.

6. Given the potential significance of some of these proposals, we believe that there may be occasions when other Members of the House may wish to be present to hear such a presentation. Any Member of the House would be welcome, by prior arrangement with the Committee office, to attend any presentation on any regulatory reform order which the Government may bring forward.

Timetabling

Background

  9. In its fourth and final Report of the 2001-02 Session, our predecessor Deregulation Committee expressed a wish that the Government "aim towards an even flow of regulatory reform business and so far as possible towards the objective that no more than one proposal for a Regulatory Reform Order or one draft Order will in normal circumstances be laid before Parliament in any one sitting week."[6] In its response to that Report, the Government expressed concern about the potential limitations which such a requirement could place on the number of regulatory reform orders which could be made in any one session.[7] In our subsequent response, we suggested that the Government's concern was premature.[8] Nevertheless in its most recent memorandum, the Government continued to maintain that a requirement ordinarily to lay no more than one item in any one week might cause a 'logjam' in its programme for regulatory reform.[9]

Effect of timetabling regulatory reform items

  10. The arguments on the subject are by now well-rehearsed. We have consistently made clear that we are keen to see full and appropriate use of the regulatory reform procedure. However, we are equally concerned to ensure that proposals for reform of primary legislation receive the requisite degree of Parliamentary scrutiny. This was clearly Parliament's intention in passing the Regulatory Reform Act. In particular, in order to ensure that we are able properly to undertake the task with which the House has charged us, we wish to avoid the situation whereby we are required to consider large numbers of potentially significant proposals in a relatively short space of time, followed by long periods with little or no business to conduct.

7. Our intention has never been to restrict the number of proposals which the Government could bring forward. In the light of the potentially large increase in the number of regulatory reform proposals coming before Parliament following the publication of the Regulatory Reform Action Plan and subsequent work by the Government, we have recognised that the requirement ordinarily to lay no more than one regulatory reform proposal or draft order in any sitting week may represent, in practice, an undesirable restriction on the number of orders which might eventually be made. In the light of our experience of conducting second-stage scrutiny of regulatory reform orders, which has generally been straightforward, and of a modest increase in the staff resources available to the Committee, we have therefore made the following proposal to the Government for the timetabling of regulatory reform proposals and draft orders.

Suggested arrangements

  12. We expect the Government to ensure that there is a regular and even flow of proposals and draft orders coming before the Committee, so that we can conduct the most efficient and effective scrutiny of those items on behalf of the House. So long as that is the case, we consider that we should have no difficulty in dealing with up to two items laid in any sitting week, provided that at least one of those is a draft order, at "second-stage" scrutiny. We also suggest that it may, alternatively, be possible for us to deal with the laying before Parliament of up to two of the less complex proposals at "first-stage" scrutiny.

8. We expect that, with proper planning by Departments of regulatory reform business, these arrangements will prove adequate to enable the Government to bring forward all appropriate proposals. We recognise, however, that short-term blockages may occur, and we are happy to repeat the assurance made in our First Special Report that we would be prepared to entertain occasional requests for more items to be laid before the House in any given week, should that prove necessary.
9. We also recognise that, if the process "takes off" in the way the Government hopes, even these arrangements may conceivably prove insufficient to cope with the volume of proposals coming forward. In those circumstances, as we noted in our previous Special Report, we and the House would have to consider how best to proceed.

  15. We now consider the other issues outstanding following the Government's memorandum, and the appearance of the Minister before us. Those issues are:

• procedures in the case of adverse reports from the Committee (paras 16 to 21)
• Standing Order procedures in the case of disagreement (paras 22 to 26)
• the appropriateness of the current scrutiny arrangements (paras 27 to 29)
• regulatory reform procedures in respect of the National Assembly for Wales (paras 30 to 31)
• disapplication of section 1(4) of the Regulatory Reform Act (paras 32 to 38)
• generating proposals for regulatory reform orders (paras 39 to 41).

Adverse Reports

  16. The Government remarks, "The Standing Orders do not appear to make provision for what should happen if, as a result of its 2nd stage scrutiny, the Committee were minded to report approving a draft order, but subject to the Department making certain changes or to some other recommendation. The Government is concerned that, if one or other Committee reported adversely at 2nd stage scrutiny but made recommendations as to the ways in which the proposal could be made acceptable, the Department concerned may need to re-start the scrutiny process, whether at 1st or 2nd stage. This could cause additional and unwelcome delay. The Government would appreciate the Committee's views on the options."[10]

2. We are happy to clarify the position as we see it in respect of cases where we may wish to recommend approval of a draft order only if (further) amendments are made to it. Should such a situation arise, we would in the first instance be obliged by Standing Orders to "afford to any government department concerned an opportunity of furnishing orally or in writing ... such explanations as the department think fit".[11] The Government would therefore always be well aware of the Committee's thinking in any particular case.
3. On receipt of our request for such explanations, two options would be open to the Government. The first option would be for it to withdraw the draft order immediately, with a view to re-laying, for further "second-stage" scrutiny, an amended version which met the Committee's objections. The Committee would not then be obliged to produce any report on the original draft order, but would proceed to consider and report upon the amended version. This is what happened in the case of the draft Deregulation (Correction of Birth and Death Entries in Registers or Other Records) Order 2001 earlier this year.[12]
4. If the Government does not wish to withdraw the draft order, it would presumably attempt to convince the Committee of the case for preserving the draft order in its original form. If the Committee is convinced, it will report accordingly and the order will proceed as normal. If it is not, it would make a formal report to the House recommending that the draft order not be approved, but would in its substantive report indicate that it would be likely to report differently to the House on an amended draft.
5. Following such a report, the Government would face three options:

• abandoning its proposal altogether
• at the other extreme, attempting to proceed with the original draft notwithstanding the Committee's report, under the provisions of Standing Order No. 18 (2)[13]
• withdrawing the draft order and re-laying an amended version.

If an amended version is laid, the Committee would then proceed to consider and report upon that version, as in para 18 above.

2. There is only one circumstance in which the concern expressed by the Government, that the procedure would have to start again at "first-stage" scrutiny, would be realised. That would be where a draft order was so far changed from the original proposal that it could not be said to be giving effect to the proposals contained within the document laid at first-stage scrutiny (section 8(1) of the Regulatory Reform Act). We would expect such a circumstance to occur only very rarely, if ever.