House of Commons - Deregulation and Regulatory Reform

Select Committee on Deregulation and Regulatory Reform First Special Report

APPENDIX

Government Response on Regulatory Reform Order-Making: Deregulation Committee's 4th Report, 2000-01

Introduction

2. Its predecessor, the Commons Deregulation Committee, published its 4th and final report of the 2000-01 Session on 11 May 2001. This report centres on three final proposals for deregulation orders [the proposed Deregulation (Correction of Birth and Death Entries in Registers and other Records) Order 2001, the proposed Deregulation (Bingo and other gaming) Order 2001, and the proposed Deregulation (Restaurant Licensing Hours) Order 2001.][22]

3. This memorandum does not address the Committee's recommendations in so far as they concern the proposed deregulation orders. The Government believes it would be more appropriate to address such recommendations in detail in separate correspondence or in the formal statements that will accompany the draft orders when laid for the final 15 day scrutiny period. Instead, this memorandum seeks to address the overarching issues raised in the report as to the operation of the order-making process itself under the Regulatory Reform Act 2001. The views it contains are prospective. It may reassure the Committee to note that, during the passage of the Bill, the Government undertook to report to Parliament on the third anniversary of enactment. That report is due in April 2004, and will cover the operation of the order-making process to that date and any associated constitutional and procedural issues — in short, it will provide a formal opportunity for debate in Parliament on how the system is working.

4. The Government agrees that it is important that order-making should be conducted in a transparent and planned manner, and the Government sets out its proposals later on in this memorandum. The Government also considers that it is vital to the success of the regulatory reform order-making programme that there is a shared understanding as to the extent of the powers and safeguards in the new Act.

5. Looking ahead, the existence of a suite of precedents will be of great value to Departments — but, as yet, the principles in the Act have not been tested from start to finish. Departments will need to overcome their natural caution when faced with an entirely new, unproven but potentially very powerful tool. And the Committee and its sister Committee in the Lords will, therefore, play a highly influential role in shaping how power is used.

6. One concern that we have for future order-making is the prospect of abortive work, particularly in view of the heavily front-loaded nature of the regulatory reform order-making process and of the scale of some of the RRO proposals. There is the risk of misunderstandings or the prospect that the Committees might consider particular technical solutions underpinning large orders to be flawed and that these may only come to light after a proposal has been laid for scrutiny. Of course, it is an essential part of the scrutiny process to probe the robustness of the Government's case. But the Government hopes that there may well be occasions where differences on particular technical issues could be identified earlier on in the process — this would benefit the Committees in freeing them up to concentrate more on matters of substance and would also reduce the prospect for the Government of abortive work. It could also help raise public confidence in the order-making process. While the Government does not want to do anything that would detract from the highly effective scrutiny that RROs undergo, we would want to stress the consensual and co-operative nature of what is essentially a co-decision process. The Government would welcome any suggestions from the Committee as to how best to approach this issue and accepts that any mechanism would need to be without prejudice to the formal elements of the order-making processes.

Regular flow of Regulatory Reform Orders

8. The Government's overall aim under this agenda is to secure an impressive and achievable programme of regulatory reform that is to the benefit of business, charities, the voluntary sector and the individual. The Government intends the regulatory reform process to be an attractive alternative means of legislative reform and intends to make significant and early progress. It appreciates that the Committee's predecessor also wanted to see more reform brought forward.[23]

9. Subject to that overall aim, the Government accepts that both it and Parliament should work to achieve an even flow of regulatory reform order-making. It is clearly in no-one's interests for the Government to over-burden the Committee with proposals, but the Government notes that, assuming a standard Parliamentary session, the Committee's proposal would result in an expected maximum completion rate of only 18 RROs made per session.[24]

10. The Government is not convinced that the best or only way to achieve an even flow of work is to apply an artificial limit at this early stage. In that respect, it notes that deregulation order-making peaked at 23 orders in 1996 under the last Conservative Government. The Government would want, if only in theory, to be ale to achieve at least an equivalent degree of regulatory reform, but under the Committee's proposal it would not even be able to match the level of order-making achieved in 1996.

11. The Government is also mindful of the comments that the Committee has made in the past, deploring the low throughput of deregulation orders in the past[25] and anticipating a "full

and appropriate"[26] use of the regulatory reform order-making power. It also notes that MPs on either side of the House have through Parliamentary Questions shown themselves interested in the number and/or scope of order-making.[27]

12. The Government, therefore, believes that it is premature at this stage to seek explicitly to restrict the possible level of order-making throughput. After all, the Committee has only one draft order before it at present, although more are in the pipeline as set out at paragraph 23 below. Instead, we consider there to be two other approaches, which are not mutually exclusive, that could be adopted:

Wait and see: we are at the outset of order-making, and arguably it would be better to wait until a steady state has been reached and we have sufficient experience on which to base a judgement before turning the tap down. This would mean waiting until a sufficient number of RROs have passed through all stages so that the peaks and troughs of order-making are clear. At the moment, we do not know whether there will be such a thing as a "typical" RRO. There may, for instance, be a learning curve effect if there is a standard pattern to order-making, which in turn could increase the Committee's effective capacity. We would not want to rule out these possibilities at this stage.

Forward look reports: a more pragmatic approach would be to keep actual throughput under constant review and in the light of the forward look reports, as discussed at paragraphs 18 to 23 below. If the conclusion at any point is that the workload the Government was placing on the Committees was in danger of becoming unsustainable, the Committee could then apply an appropriate, rather than an artificial, limit to throughput.

13. Subject to the Committee's views and as an alternative to imposing limitations from the outset, the Government intends to strive to achieve a regular and predictable flow of order-making. This will involve monitoring carefully the load placed on the scrutiny Committees. It expects that, in turn, the Committee will not hesitate to make their views known should the forward look reports indicate that the likelihood of an unacceptable workload.

14. It is the Government's view that, should the Committee become over-burdened by the scrutiny of a large and continuous volume of RRO proposals, the level and nature of the resources available to the scrutiny Committee would be a matter that is properly for the House to decide. Ministers repeatedly made this clear during the passage of the Bill. For instance, Mr Stringer stated that:

Similar statements were made by the Government in the House of Lords.[29]

The Government notes in passing that the House has provided for a number of Standing Committees to deal with proposals for primary legislation.

15. On a more minor note, the Government is not convinced that the same weight should automatically be given for scheduling purposes to 2^nd stage draft orders as for 1^st stage proposals. Those returning to the Committees for 2^nd stage scrutiny will normally have been amended to reflect the recommendations of both Committees, and the Committee will be familiar with the issues raised by the proposal. The Government considers it unlikely that a 2^nd stage draft order would consume anything like the same level of resources as a 1^st stage proposal.

16. The Government also welcomes the Committee's suggestion that any scheduling arrangements need to be flexible enough to allow for exceptional circumstances. There will, for example, be occasions when the Government might need to make speedy progress. In the case, for example, of the proposal for voluntary-aided schools[30], the final order will need to be made in advance of the start of the relevant financial year in order to allow time for the parties involved to make any necessary preparations. DfES are planning their work accordingly, but they may need to move quickly from one stage to another in order to reduce the possibility of slippage. The Government believes that it must strike the right balance between, on the one hand, the desirability of ensuring that RROs implement what will be generally beneficial change as soon as is reasonably practicable and, on the other hand, the burden it is placing on the scrutiny Committees.

17. The Government regrets that it had no alternative but to table the proposal for the Special Occasions Order for initial scrutiny before your Committee was established. This was because, in the event, the timetabling for order-making was such that it would otherwise have been impossible to make the order before the Christmas holidays. The Government's reasoning on this proposed order has been further elaborated in the separate Memorandum from the Department of Media, Culture and Sport. It is worth repeating the point from that Memorandum that the Government does not in any way regard that as setting a precedent for the handling of any future order and is grateful for the Committee's speedy consideration of the substance of this particular proposal.

Scheduling the Flow of Order-making

19. As explained above, the Government recognises the importance of open and helpful communication with the Committee, both at Ministerial level and at official level. It agrees that such a report could form a useful tool for planning purposes and is happy to provide such a report on a regular basis. The Government will use its best endeavours through the Cabinet Office to provide the Committees with the best quality information possible, initially on a quarterly basis, on the likely flow of proposals for order-making at consultation, 1^st scrutiny and 2^nd scrutiny stages. But the Government believes there would be little practical value in the Government producing a formal report during Recesses. The Government therefore proposes reporting for January to March, May to July and October to November. The Government hopes this will be acceptable to the Committee.

20. The Government will provide the best and most up-to-date information possible. But the government hopes that the Committee will accept that, as a result of the collective process, it will often be difficult to predict with any great accuracy the exact date of the publication of a consultation document or the laying of an order until very shortly before publication takes place. In such cases, the Government will aim to provide an ad-hoc report if practicable. The Government also hopes that the Committee will accept that, as with any forward look, there will be the possibility of slippage. In turn, the government fully accepts the desirability of not springing surprises on the Committee.

21. The government wants this new legislative took to be put to good use as part of the wider regulatory reform agenda. In order to provide impetus and a more systematic approach, the Prime Minister has asked "all departments to draw up a list of wide-ranging and significant reforms which can be delivered through the new Regulatory Reform Orders so that we can publish an action plan by the end of the year". This action plan will also cover measures aimed at improving public sector delivery, proposals for time-limited regulations ('sun-setting') and post-implementation reviews of major pieces of regulation. More details are given in the Press Notice attached at Appendix A.[31]

22. The Government intends that publication of this regulatory reform action plan will not only help generate more proposals for RROs but will also set a baseline for future reporting. Departments are currently working hard to prepare their contributions to the regulatory reform action plan — but as yet are some way from completion given the target date set by the Prime Minister. In the circumstances, it would be very helpful if the Committee were to feel able to accept the publication in December or thereabouts of the Government's regulatory reform action plan as its first report on scheduling for RROs, although it will also cover other regulatory reform issues in the plan.

23. In the meantime and in time for the return from Recess, the Committee might find it useful to note for the period up to the Christmas Recess that it is the Government 's intention to:

Publish the following consultation documents:
1.	Credit Unions	October
2.	Amending Charities Act 1993	January
3.	NHS Accounting for charitable funds	early New Year

Table the following proposals for 1st stage scrutiny:
1.	Invalid Care Allowance	November
2.	Vaccine Damage Payments Scheme	November
3.	Voluntary aided schools capital funding arrangements	November
4.	Golden Jubilee amendment to Special Occasions	mid-November
Order
5.	Housing renewal	Mid-December
6.	Abolition of 20 partner limit	Early new Year

Table the following draft orders for 2^nd stage scrutiny:
1.	Housing Transfers	Late October
2.	Restaurants licensing hours	Late October
3.	Special Occasions Order	Mid-November
4.	Births and deaths	November
5.	Bingo	November/December

The Government must stress, though, that these plans are provisional and that, despite its best endeavours, slippage could occur.

The ability of RROs to implement substantial policy changes

policy

25. This has caused us some difficulty — and may be open to mis-interpretation. One interpretation could be that the order-making process is inappropriate for implementing any substantial policy change as that is what bills are for. Another interpretation could be that it is inappropriate only for those substantial policy proposals that, by both their controversial nature and scale, require a Bill.

26. The Government hopes that the former is not the Committee's intention. This is because the Act does not limit the order-making power in relation to substantial policy changes, and the Government is concerned to ensure that the Committee should not construe the Act too restrictively. It notes that every deregulation order, however minor, reflected a change in policy and implemented that change.

27. In repealing the 1994 Act, Parliament accepted the Government's intention that it should be used to implement substantial and worthwhile change. Lord Falconer (21 Dec 2000: Column 853) made it clear that the Government "should like to see a shift in gear. Until now the deregulation process has produced generally small, but significant, proposals. We should like to see this high quality scrutiny process used for more substantial items, such as reform of fire safety legislation currently spread over 120 Acts; or reform of weights and measures legislation. Those are the sorts of worthwhile reforms that are well overdue and may not otherwise see the light of day."

28. The reforms the Government proposes to enact under the Regulatory Reform Act are not concerned merely with tidying up unwieldy pieces of legislation or fine-tuning existing burdensome regimes. On the contrary, as the list of examples shows, they include major reforms of policy. The Government made no secret of this during the passage of the Bill, and it was clearly Parliament's intention to pass a piece of legislation capable of implementing a very wide scope of reform. It was made very clear that, as Mr Russell Brown MP — a member of the Committee and its predecessor — put it:

29. The level of attention paid to such proposals is certainly no less than primary legislation receives. As Mr Pike MP himself pointed out during the Bill's 2^nd Reading, the procedures it inherited from the 1994 Act if anything allow for even greater scrutiny of proposals than the procedures for scrutinising primary legislation. He said that it had:

30. The Government agrees that primary legislation tends to be of higher profile, but considers that the super-affirmative order-making procedure, with its thorough consultation and weighing of evidence, is well suited to the objective consideration of complex issues. It is ideal where the judgement of experts is required; for issues on which a group of reasonable people, given the relevant facts, would be likely to reach consensus without compromise.

31. That said, the Government repeated on many occasions during the passage of the Bill that the order-making power would not be used to enact measures that were both large and controversial. For example, Lord Falconer of Thoroton said in the House of Lords during the Report stage of the Bill:

This remains the firm view of the Government. Ministers made it equally clear during the passage of the Bill that the power could be used to implement important policy changes: for example, the proposed reforms to fire safety legislation, which were cited frequently in debate, would involve a major change in policy from an inspection and certification regime to a risk-based system. This would mean that inspectors would concentrate their time on high-risk premises; and that the occupiers of premises would be responsible for assessing their own level of risk. The government is committed to bringing this reform forward as an RRO. It is clearly a major change in policy, but one that is ideally suited for the RRO procedure. The proposal will first go out to thorough and wide-ranging consultation and then be subjected to the careful weighing of evidence by the Committees. The Government believes that these changes will be widely welcomed and that they are not politically controversial, but that they do involve a significant policy innovation.

32. The list of illustrative proposals announced during the Bill's passage through Parliament contains many such examples that involve significant policy changes. These include, for example, the proposal from the HM Treasury and Office of National Statistics for a thorough-going review of the Civil Registration Service. Given the prominence attached to the illustrative examples of the scope of the order-making power during the Bill's passage, the Government firmly believes that they should be treated as an expected use of the order-making power. The Government believes that the RRO procedure is an excellent tool for implementing such complex policies.

33. The issue of what would be appropriate subject matter for RROs was thoroughly explored in debate on the Bill, and is rehearsed in the Explanatory Notes as finally published at paragraphs 40 to 46. This can essentially be defined as the political acceptability and feasibility of the proposal. Clearly it is not possible to draw up in advance a list of politically controversial items. It is the Government's opinion that proposals should be assessed on a case-by-case basis. It is likely that, because of the mandatory consultation on proposed reforms, the true extent of the controversiality of particular proposals would be spotted early. The decision could then be made as to whether it would be better promoted as a bill. Once a draft order has been tabled, the Committees themselves should reach their own views as to appropriateness in the light of Parliament's clear expectations as to the expected uses to which the order-making power could be put.

34. The Government is happy to repeat its commitment not to implement measures that are both large and controversial using the power in the Act, and hopes that the Committee's interpretation at paragraph 8 of its report (see paragraph 24 above) took account of this undertaking.

35. The Government believes that the consensual approach enshrined in the Act, together with the extensive public consultation, is an excellent means of approaching a large range of policy issues. The Government also considers that the operation of the order-making power is to some extent self-policing — it would be a foolish Minister who chose to use an RRO to do something wicked as the process would require him to consult at length and in detail on the extent of the wickedness of the proposal, and then document it thoroughly to the Committees so that they could report publicly on its wickedness.

36. That it is self-policing is not enough: the Committees will scrutinise proposals thoroughly, paying specific attention to appropriateness in doing so, and it will ultimately be for Parliament itself to decide whether any particular policy proposal should be made as an RRO. The Government is confident, as was Parliament in passing the Act, that the safeguards it contains are more than sufficient to ensure that the power is used in an appropriate fashion while tackling significant change in major areas of policy.

Other issues

37. It would be helpful to consider two further aspects of order-making:

       a. Standing order procedures in the event of disagreement: the order-making process is essentially one of consensus-seeking co-decision based on thorough consultation, and the scrutiny Committee acts on behalf of the House in considering proposals for order-making. There is also, of course, the Government's undertaking not to proceed in the face of adverse Committee reports.[35] The Committee will be aware that Standing Order No.18 provides a mechanism for debate in the House to decide cases in which agreement between the Committees and Government cannot be achieved. This is set out in the Explanatory Notes to the Act as recently published, and it is worth noting that this mechanism was never used in the case of deregulation orders.



While the Government will continue to aspire to unanimity with the Committees on particular proposals, there may occasionally be cases where it disagrees with a particular recommendation by the Committee and, after failing to negotiate a mutually acceptable solution, considers that the matter should be put to each House. This is as provided for in Standing Orders.



It may be that, where the two Committees take a different view on the same aspect of a proposal and the Government cannot broker a solution acceptable to all parties, the matter should be put to the House of Commons as a whole.[36] The Government envisages that, in the Commons, recourse to the Standing Orders procedure would be very much a last resort, that it would be in relation to disagreements on particular aspects of proposed orders rather than to cases where the Committee had expressed outright opposition to the draft order as a whole, and that it could only take place after attempts to re-lay the order in an acceptable form had failed. But it also acknowledges the need for the Standing Order procedures, given the scale and complexity of some of the proposals, and that it is the Government's expressed intention — and Parliament's will in passing the 2001 Act — to use the order-making process to achieve a substantial programme of regulatory reform.



       b. Interpretation of vires: in debating the Bill, Ministers did not attempt to portray the order-making power as tightly circumscribed. Instead, they described it — and each House accepted it — as a Henry VIII^th order-making power of very broad scope.



Clearly, the scope of the order-making power will be tested to the full on particular proposals for reform, which will establish and set precedent for key aspects of the vires. But the Government's starting point is that the vires are to be interpreted widely. For example, Parliament accepted that the terms in the Act such as "reform" and "burden" are to be given their natural meaning. The latter is central to the operation of the order-making power, and the Government is preparing on the basis of refined legal advice a guidance note on the meaning of burden which it will circulate widely throughout Whitehall. It is our intention to share that note with the Committee in due course.

Conclusion

38. The Government hopes that this memorandum will be a useful contribution to the debate on regulatory reform, and looks forward to an open and constructive relationship with the Committee in delivering an impressive programme of order-making.

Cabinet Office

October 2001

22 The outstanding proposal - the proposed Deregulation (Disposals of Dwelling-houses by Local Authorities) Order 2001 - was dealt with in the Committee's 3rd Report. Back

23 "Overall, the draft Regulatory Reform Bill represents a sensible and welcome step forward in the process of facilitating greater use of the Deregulation procedure", paragraph 78, Deregulation Committee's 3rd Special Report, 1999/2000. Back

24 The Modernisation Committee, at paragraph 14 of its 1st Report of the 1998/99 Session, said that a "typical Parliamentary session (the session which has just ended, being the first of a new Parliament, was not typical) involves about 160 sitting days, spread over 36 weeks, some of which are part weeks". Back

25 "In view of our concern, we took evidence in April 1998 from the then Chancellor of the Duchy of Lancaster, the Rt. Hon. Dr David Clark, and in June from Lord Haskins, Chairman of the Better Regulation Task Force. Both acknowledged in their evidence their disappointment at the small number of proposals coming forward under the procedure, and indicated the being made to raise interest within Government Departments. But Dr Clark in particular felt that the powers in the 1994 Act were restrictive, and he indicated that, largely as a result of the Committee's initiative in taking evidence at that time, he was then embarking on a re-assessment of the Act, with the possibility of an amending Bill coming forward during the life of the present Parliament.", paragraph 12, Commons Committee's 2nd Special Report, 1999/2000. Back

26 We look forward to being apprised of the means by which the Minister will encourage full and appropriate use of this new legislation, and keep us informed of progress in so doing, and remind him that we have given notice of our intention to take evidence from the relevant Ministers and their successors on their use of the powers", paragraph 11, Deregulation Committee's 3rd Special Report, 1999/2000. Back

27 A sample of PQ's tabled in the last 2 sessions on deregulation and regulatory reform is set out below:

MP	Question	Date laid	Hansard ref
Peter Pike MP	To ask the Minister for Cabinet Office, How many deregulation proposals her Department expects to be introduced in 2000.	06/12/99	101570
Peter Pike MP	To ask the Minister for the Cabinet Office, What action she has taken to improve the scope of deregulation since October 1999.	27/07/00	128671
John Bercow MP	To ask the Secretary of State for Trade and Industry, how many deregulation orders have been passed in each of the last three years.	01/11/00	136407
Desmond Swayne MP	To ask the Minister for the Cabinet Office, How many deregulation orders she plans to introduce in the next 12 months	16/11/00	139193
Dr Douglas Naysmith MP	To ask the Minister for the Cabinet Office, What further items of regulatory reform he plans to introduce following the implementation of the Regulatory Reform Act	27/06/01	1891
John Bercow MP	To ask the minister for the Cabinet Office, How many draft regulatory reform orders have been published since the passage of the Regulatory Reform Act 2001.	27/06/01	1875

Back

28 Commons Hansard: 2 May 2001, Column 899. Back

29 Lord McIntosh (LH 13 Feb 2001, Column 202 - 2003) explicitly stated that "the resourcing and structure of the committee is a matter for the House, not for the Government. My noble and learned friend Lord Falconer and I have both said more than once that we support any move to look in detail at the issue of the resourcing of the committee. That is as far as we can go. The argument for resourcing ... s not one which we can accept. It would involve the Government usurping the privilege of the House. We are not in a position to dictate to the House how it should run its own affairs." Back

30 Voluntary Aided (VA) Schools in England: Proposals For Governing Body And Local Education Authority Financial Liabilities and Funding For Premises, available from http://www.cabinet-office.gov.uk/regulation/act/condocs.htm#vaschools. Back

31 Not printed. Cabinet Office press notices are available on the World Wide Web: http://www.nds.coi.gov.uk/coi/coipress.nsf Back

32 Commons Hansard, 19 March 2001, Column 93. Back

33 Commons Hansard, 19 March 2001, Column 48. Back

34 Lords Hansard, 13 February 2001, Column 186. Back

35 Mr Stringer stated during the first committee stage of the then Bill: "I am happy to give the hon. Gentleman the commitment that, in the light of an adverse report, the Government will not proceed, but will reconsider the proposal. They would either withdraw it or represent a different order." This reiterated an undertaking given in the Lords: "it gives me the opportunity to repeat the assurance given by my noble and learned friend in May of last year. At that time the Government undertook to continue to respect the convention that no measure under the Deregulation and Contracting Out Act should be forced through in the face of the committee's opposition... I am happy to repeat the undertaking today." (Lord McIntosh of Haringey, 21 December 2000: Column 899.) Back

36 Procedures in the House of Lords differ slightly. In that House, all deregulation or regulatory reform orders are debated on the floor of the House, regardless of whether there is any disagreement between the two Committees. Back