Select Committee on Regulatory Reform Minutes of Evidence

Examination of Witnesses(Questions 80-92)



  80. I am not all that much the wiser as a result of that, but perhaps other members are quicker than me. Mr McNulty, can you just explain to me where the buck stops, because you must have dealt with constituency cases and I suspect most of us round the table deal with constituency cases when you want to know whose door you can go and bang on to get something done or the tenant knows who they can take to court. As a result of this, supposing we go back to your replacement windows scenario and the windows have been put in at number eight and perhaps a Mrs McNulty is not happy with the way in which the replacement windows have been put in because the water is streaming down them and the condensation is really bad and she wants to get something sorted out, but the people who put the windows in say it is not their fault, it is the ventilation strip above the window, does that mean she still has the same rights in the future as she has now either to go to court or to go and bang on the door of the managing agents and get them to redress the problem rather than having to take on a variety of people who are providing the services?
  (Mr McNulty) I think ultimately the council are still the landlord so the responsibility lies there. I think what this does is bring into play both the overall agent, i.e. the lead contractor and to an extent the subcontractor. I wish that the sort of problem Mr Bennett is outlining was unique to the introduction of PFI and housing but it sounds terribly familiar in all sorts of other ways.

  81. I am not suggesting that. I am suggesting it is a fairly common problem. What I want to know is that as this goes through it will not make it any more difficult to get the matter resolved because in the end the buck will stop with one individual rather than it being divided up between the responsibilities of several people.
  (Mr McNulty) Despite the subsequent division the council is still the landlord and the final arbiter and the key democratic focal point. It may increase the targets for the council subsequently to get their pound of flesh once the buck does stop with them in terms of their legal responsibility being with other agents, but I do not perceive, given the detail of this, it worsening Mrs McNulty at number eight's accountability trail at all.

  82. So what is the point of taking out the phrase "as agent"?
  (Mr McNulty) The very much less than understandable legalese that my colleague on my left just went through for you. I think it is more about the division and the ability to subcontract down, as I understand it in my pidgin legalese, has to be duly apportioned elsewhere. "As agent" means you are acting on behalf of the principal, i.e. the council. That is no longer the case if you are subcontracting down and the subcontractor is acting on behalf of the main contractor who is acting on behalf of the principal. So "as agent" is too restrictive in legalistic terms and it means no more than that as I understand it.


  83. Mr White is our expert on plain English so I am going to ask Brian to come in.
  (Mr McNulty) With the best will in the world, that does not help us where lawyers are concerned.

Brian White

  84. One of the things this Committee has to do, Minister, as you will be aware, is not just allow departments to take legislation and copy it from somewhere else, it has to look at whether it is in plain English or not, if it is comprehensible and simply to copy it is not good enough. Why did not the Department, in bringing forward a Regulatory Order, in looking at regulatory reform, not ensure it was in plain English? Why did you not try and make subsections 13 and 14 understandable so that you could have answered the question rather than refer it to the lawyer?
  (Mr McNulty) I suspect a lot of troubles in the language looks like that is exactly what we have done. You will know that however much we ask departments or individuals to use plain English, there are a set of specific legalistic buzz words that, whatever we think they might mean, mean something specific and in that context and under contract law agent has a whole range of legalistic consequences that go far beyond mine or your ken or mine or your affiliation and affection with plain English.

  85. So why are the explanatory notes not better?
  (Mr McNulty) It says in our notes, "The Department . . ."—it should say Office—". . . would like to apologise for any lack of clarity in the explanatory document." I think that could have been explained far better than it was and I would duly apologise to the Committee for that. I cannot apologise either for the English legal system or its vocabulary.

Chris Mole

  86. Minister, the Department's explanatory note observes that in Unison's response they raise a number of pertinent points in relation to staff who transfer to a PFI contractor. What do you mean by the "pertinent points" in respect of the Unison response and what was the general reference to workforce issues?
  (Mr McNulty) I think in the broadest sense, as it says in paragraph 14 above that, much of Unison's concerns were about TUPE positions, the transfer of undertakings, the protection of employment regulations 1981, they were very much in that context. I think if clauses 100 and 101 of the Local Government Bill secured in Second Reading yesterday go through that will regularise some of the positions that many of the unions have difficulties with under TUPE, but I think Unison's principal concerns were in regard to TUPE and general pertinent workforce issues. If I was party to it at the time I would have said otherwise, although the first port of call in terms of unions was the TUC which seemed rather strange to me in terms of a wider public consultation, but subsequently it did go to all the relevant and pertinent public sector unions, Unison, Amicus, GMB and UCATT, so their concerns are along the lines of TUPE and the transfer of staff.

  87. But you have not responded specifically to their points in your departmental response.
  (Mr McNulty) Because there is no specific variation of the current national provision in terms of TUPE or any other transfer of staff or undertakings that are unique to this Order in any way, that is why there has been no specific response to their concerns other than the other points they made about contract specifications and those sorts of elements which will partly address some of their concerns with the workforce.

  88. So you could give an assurance to this Committee that the Regulatory Reform Order does not worsen the position with regard to employment protection for those who transferred from one contractor to a subcontractor?
  (Mr McNulty) Absolutely. That would prevail under the current TUPE arrangements that prevail in the national domain. Hopefully, should the will of the Government coincide with the will of Parliament in terms of the Local Government Bill, as I read them they will be enhanced anyway in the context of some of the elements we are dealing with in the local Government Bill.

Mr Havard

  89. As I understand it your Office has given the assurance to Unison in relation to ALMOs that they will have this protection in the way you have just described. However, one of Unison's problems is if the whole proposal gives extra flexibility to local authorities presumably it helps to improve their management processes, which would probably be a jolly good idea as well, it gives them more flexibility, but they may choose to use it more broadly than they are currently using it. I am unclear as to how they will use it and where and I have heard statements that there are no plans to do much more with it at the moment, but Unison's problem is should it then be used more extensively in the housing management field or other parts of local authority activities and does the same protection then follow. You have given them specific assurances about the current situation, but if you are giving flexibility to broaden it even further how are they protected in those circumstances?
  (Mr McNulty) There is nothing in the short term with these two or three PFI contracts in mind that may or may not come to fruition with or without the Order. If ALMOs, TMOs or any other variation or model of public sector social housing were to go down this route, the one thing I cannot rule out is any change or otherwise to the TUPE system in future. As of now, the assurance already given to Unison is that there is nothing in here that worsens the protection of their members in terms of TUPE regulations and that will prevail in the future. I hope my interpretation of the clauses in the Local Government Bill are right, that changes we are doing elsewhere in a national context to TUPE especially in terms of pay and conditions for those work forces who do transfer will be enhanced and that enhancement will follow through on this, but as I understand it there is absolutely nothing in here or any subsequent utilisation of this in areas outside the PFI contracts that will lessen the protection afforded to public sector workers under the TUPE regulations now. It is a point of real concern.

Andrew Bennett

  90. You have told us you have a problem with the five or six PFIs that are coming along. You could have chosen to have gone for a very narrow piece of regulatory reform to deal with those. You have actually chosen to go for something that is wider, as you told us earlier, which deals with a whole lot of problems. Would it not have been fairer to have dealt with the very specific problems of these five in this Order and then left the wider issues for the Housing Bill which is going to come along in due course?
  (Mr McNulty) I do not think so, not least because the problems are the same. The problem is the legalistic point to do with the sub-delegation of the housing management function in the sense that there are two or three PFI contracts that may be able to be let by local authorities and in a far more satisfactory way as a result of this Order than they would otherwise. I do not think it would have been a terribly good use of the RRO process just to do it specifically round those contracts given that its application and its reform had far wider implications, neither can I prejudge the direction and evolution of ALMOs, TMOs or some of these other aspects or how they utilize them. The reform process is about deregulating a particular piece of what we now see as inappropriate legislation and a burden and barrier to flexibility for local governments. How that is utilized I think is a secondary point. It is not our job to pop back to the Committee any time we fancy changing or deleting something for specific contractual purposes but to look at the widest application and whether it is appropriate to reform things in the widest context, which is what we have done.

  91. But this is not really deregulation, this is actually new regulation and different regulation. Does the Department have a clear line as to what should be done by primary legislation and what should be attempted through this channel?
  (Mr McNulty) I think we do. I do not think we do, I know we do. We have the draft Housing Bill and we have the Local Government Bill which in a wider context will impact on local Government, so that has some degree of impact on this. The best advice we have in terms of the Parliamentary dimension is even if—and it does not really accord with our timetable—the Local Government Bill would have been the appropriate vehicle, it would have pushed the scope of that Bill in parliamentary terms beyond its long title, so it was not an appropriate vehicle. We are very clear on what we want in terms of secondary legislation and aspects of the deregulatory route in terms of securing what we want in terms of housing.


  92. Any other questions from members? Is there any point you feel you or your team have not made and would like to make before you go? There were a couple of points where we have said you would give a written reply. You will recognise our time-tabling means that if you want these to be taken into account they have to be dealt with speedily. Is there any point you wish to make before you depart from us?
  (Mr McNulty) I would make three simple points in conclusion. Number one, I think I would disagree with Mr Bennett, this is deregulation and a release of burdens or at least an expansion of flexibility rather than otherwise, which is part of the definition of burden. Number two, it has been a great privilege to be the first Minister to appear before a Joint Committee in terms of the specifics of an RRO. Thirdly, can I simply put on record Lord Rooker's apologies for not being here. I think most of the Committee are fully aware why I am here rather than Lord Rooker. I should have said that at the beginning. Thank you very much for your time.

  Chairman: We are sorry that Lord Rooker could not be with us. We more than welcome you here, but we do understand the unfortunate situation which has prevented him from being here. Can I thank you very much for coming along.

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