Examination of Witnesses (Questions 1-19)
16 NOVEMBER 2004
RUTH KELLY
MP, MR SIMON
VIRLEY AND
MR PHILIP
CLARKE
Q1 Chairman: Good morning. Let us start
a couple of minutes early because I know you need to be away promptly.
You are very welcome here and I hope it will be a useful session
for you and for the Committee. Would you like to introduce your
team?
Ruth Kelly: Thank you, Chairman.
First of all, it is good to have a chance to come in front of
this Committee and discuss some of the issues arising from the
Regulatory Reform Act. In particular, I would like to say a few
words about the letter I wrote to the Committee on 13 September.
I have with me this morning Simon Virley, who is Director of the
Regulatory Impact Unit; and Philip Clarke, Head of the Regulatory
Reform Strategy Team in the Regulatory Impact Unit. As you know,
I am the newly appointed Minister with responsibility for promoting
and developing the Government's better regulation agenda. I would
just like to say that this really is a key priority for me and
it was something that, on my appointment, the Prime Minister himself
was very keen to emphasise as a key aspect of the job. I have
been struck, when looking over this area, about the open constructive
nature of the approach taken by the Committee and the good relations
between officials and your Committee, Chairman, which is really
valuable from my point of view. I hope we will manage to continue
such a relationship. May I just say a few words about the working
of the Regulatory Reform Act. Regulatory Reform Orders are a crucial
part of the Government's Regulatory Reform Agenda, and there is
some decent progress to report. We have now delivered 20, I believe,
Regulatory Reform Orders, and 28 have been laid for either initial
or final scrutiny. All the Orders we have made have fixed specific
problems and reduced burdens. Some, including the Business Tenancies
Order and the licensing proposals, have delivered substantial
benefits for business—some £6.5 million per year in
the case of Business Tenancies, and £9 million per year for
the licensing reforms. There are also some very important Orders
on their way through the process at the moment—not least
Fire Safety and Patents. I am sure you may want to talk more about
some of those later. Chairman, as you and the Committee will be
aware, the overall number of RROs delivered to date is less than
we had anticipated or hoped for. Back in 2002 the Government set
itself a very challenging target of 60 RROs by the end of the
financial year 2005-06. In this year's Spending Review we have
set ourselves, I believe, an equally challenging target of 75
Orders by March 2008. The 2005-06 target was always going to be
one which was difficult to meet. On the basis of current trends,
I think it is highly unlikely that we will actually manage to
achieve that target, despite the work being done by officials
in the Regulatory Impact Unit and others. We have sought views
from other Departments on some of the barriers that exist to increasing
the flow of RROs. The issues raised were set out in my letter
to the Committee. Issues were raised about the workings of the
Act, including the two-year rule and an express power to sub-delegate,
and some procedural issues, like the need for mandatory presentations
and streamlining RRO consultation documents. I look forward very
much to hearing the Committee's views on those proposals. I have
not yet taken any decisions about how the Act could or should
be amended at this stage and I will not do so without this Committee's
input into that process although, as you are no doubt aware, the
Prime Minister has indicated a willingness to act if it is thought
an amendment to the Act could achieve greater regulatory reform.
Of course, RROs are just one part of our better regulation agenda.
We have delivered over 300 of the regulatory reform measures listed
in the Regulatory Reform Action Plan. The Prime Minister and the
Chancellor both strongly support this agenda. As the Committee
will also be aware, the Prime Minister recently chaired a new
Cabinet Committee called the Panel for Regulatory Accountability.
I chair meetings of a separate ad hoc Panel between those chaired
by the Prime Minister on a quarterly basis. We have also been
working hard to improve the way in which policy proposals are
developed and consulted upon. We have now got to the point where
every Government proposal that goes out to consultation has an
RIA attached to it, which presents the costs and benefits of different
options; and we are now working to improve the quality of each
Regulatory Impact Assessment. Moreover, over three-quarters of
Government consultations are now more than 12 weeks in length.
This year Departments, for the first time, have had to report
on their performance on the better regulation agenda in their
departmental annual reports. These are available for scrutiny
not just by Members of Parliament but also by the general public.
There is progress to report—not only in terms of regulatory
reform, but also in terms of transparency and accountability.
In conclusion, I would like to thank the Committee members for
the very co-operative and helpful way in which they have worked
with the Government and with officials over the past year. I am
sure that we all share the desire to make full and effective use
of the Regulatory Reform Act. I look forward very much to hearing
your views as to the operation of the Act and whether it could
be improved and to working together over the coming months.
Q2 Chairman: Thank you. Obviously you
referred to your letter of 13 September and the two annexes, Annexe
A and Annexe B. We did, of course, have a previous letter from
your predecessor on 22 July. You will be aware that when the 2001
Act went through there was an argument as to whether there should
be an annual review, an annual report, and it was agreed that
there would be a review after about three years. Is it the Government's
intention at any stage to publish a report on what has been done,
and perhaps have a debate in the House on the progress and use
of the Regulatory Reform? You will of course appreciate that the
Act of 2001 replaced the Deregulation Act of 1994.
Ruth Kelly: Yes, I certainly think
there should be a proper review of the Act at some point—the
question is: at what point? As I understand it, officials before
I arrived in this job were already in exploratory discussions
with Departments about the operation of the Act and taking evidence
from them, which informed the letter which I then set to this
Committee in September. It is my view that a proper review of
the Act should probably wait until a major proposal has fully
passed through scrutiny by this Committee and reached its final
stage; and that will probably take a little bit longer than that.
Once that has been done I think there is a case for a thorough
review.
Q3 Chairman: You referred in your opening
comments to the Prime Minister, and we all know the Prime Minister
said he is prepared to amend the Act to get rid of redundant regulation.
You have obviously indicated at the moment there is no firm decision
on the type of reforms to be made. Would it be true to say that
the Prime Minister to date has been disappointed by the numbers;
that we actually have not delivered the level of regulatory reform
and the removal of burdens that this Government would have wished
to have seen?
Ruth Kelly: I can only talk from
my point of view and my understanding of his view of the better
regulation agenda, which is that we have moved forward; that he
wants to see the outcome of better regulation and regulatory burdens
reduced wherever possible; that the RRO process should be one
key part of a process to deliver those outcomes. I do not think
I certainly would sign up to a view that says it has to be delivered
via an RRO if it is to serve the appropriate purpose. However,
I think both I and the Prime Minister share the view that the
RRO vehicle is potentially an incredibly important part of the
process and could be more fully used; which is why I think there
is a case for examining this operation to date and hearing your
views, and why officials were talking in some depth to other Departments
about its use so far. I think its full potential has not yet materialised.
Q4 Dr Naysmith: One reason for commenting
here is to give my apologies to the Minister, for whom I have
a great deal of respect. I have to be in Bristol for one o'clock
to give a speech and will be leaving shortly. The Chairman has
graciously allowed me to ask you a question. My question relates
very closely to what you have just been saying. We think on this
Committee we have been underused and we have not really been supplied
with enough material on the way through for us to get our teeth
into and produce a better performance, and that will emerge later
on in other questions. One of the ideas I had and put to one of
your predecessors was that one of the sources of getting ideas
for reforming regulation is Members of Parliament themselves—many
of whom say that "It would be nice to get rid of this, that
or the other and improve it". I suggested it would be a good
idea if we produced a leaflet or some kind of information to give
to Members of Parliament. I know something along that line has
happened but has not been very effective; I wonder if you would
agree with me?
Ruth Kelly: I certainly think
that Members of Parliament could be better used to identify areas
where reform might be appropriate; and that is something we should
fully consider. We also have to explore all the other channels,
of course. One of the most important things we can do is not only
by the Regulatory Impact Unit producing the sort of quick guide
that they have for Departments, but also working very closely
with the Legislative Programming Committee to see whether there
are proposals which come forward in Bill form which could actually
be taken through in RRO form; and working very closely with Regulatory
Reform Ministers in each Department to fully explore the potential
of RROs. You are absolutely right that MPs are potentially a very
valuable input into this process.
Q5 Chairman: The Prime Minister referred
on 18 October to the CBI and said he would be scrutinising Departments'
records on regulation, and now you are obviously in this post.
Would it be true to say that as a result of moving into this position
the Government is up-profiling the use of the regulatory reform
procedure to really make sure that Departments are addressing
what they could perhaps achieve by using the 2001 Act?
Ruth Kelly: Yes, I think regulatory
reform, better regulation and removing burdens of regulation are
really a key priority of the Prime Minister, and of the Department
of Trade and Industry as well, when it comes to the business agenda.
The question for us is: how do we best deliver that, whether it
is through an RRO—and the potential there, as I say, I do
not think it has been fully utilised and we could make more of
it, and there is a case to consider of whether there have been
any barriers to its operation—but also through other mechanisms
as well. As you rightly say, this is a key priority.
Q6 Brian Cotter: My apologies for arriving
late. I probably have a fundamental misunderstanding of the whole
thing, but when it came forward in the last Parliament to say
we were going to have a strengthened and more effective Committee
I, from my bench, supported that idea but colleagues in the Conservative
(official) Office, whom we do not see, did not support it; but
it does strengthen their position in not coming to the Committee,
in that they do not feel we are addressing enough the issues that
perhaps matter to people. I am probably rehearsing what has happened
before but it is a concern. I was speaking at a dinner last week
and, as they do, somebody said, "3,444 regulations come down
the line", and in my speech I said, "I could of course
go through all those regulations and read them out to you but
I'll say something more interesting". I think there are an
awful lot of people out there who are looking to something more
transparent happening. We all know what the Prime Minister has
on the agenda that we should see, and that there are various initiatives.
I know we have talked about this before, but as a Committee we
cannot seem to initiate things and, equally, the Minister has
just said that MPs are some of the best people to try to put things
forward. I think on these benches (and, if you like, from those
who are not present) there is this feeling we really would like
to get stuck into certain things and not just be tinkering around
the edges. That is all I can really say about that and am probably
just reinforcing what other people have said. It is very difficult
being on the Committee where you are waiting for things to happen
down the line which do not appear, or when they do you slightly
lose interest. "This is not really what I went on the Committee
for". I am prepared to support this concept, difficult as
it may be to get things kick-started and get parliamentarians
engaged in trying to cut back on regulation but you have to start
somewhere. We did think a number of people on this Committee were
going to step up here and be able to be more proactive, which
is a contradiction of what the Committee is supposed to have been
doing.
Ruth Kelly: We have not yet seen
a major item taken through this Committee. I think when the Fire
Safety Bill comes through there will be a real tangible concrete
output of this Committee which will serve as a useful model of
what can be achieved. There are other proposals, such as Civil
Registration—and I know there is an issue which we have
to address. I have a firm view if that were taken through this
Committee it would show again a really sizeable piece of legislation
which could be updated and reformed by this Committee. What we
really need is concrete examples in practice we can point to as
a model of what this Committee should achieve. The RRO process
is very highly valued. It was in the Queen's Speech last year,
for example—which is a sign of the weight that the Prime
Minister puts on it—and also in his CBI speech, which the
Chairman referred to earlier. It is also my view that there are
really quite significant areas to the sort of legislation that
can be put through this Committee at the moment. If there was
a feeling that some of those barriers should be removed, or that
we could address them in some way, then we would get more of this
sort of big bold legislation coming through the Committee sufficient
to keep everybody very occupied with real tangible outputs which
we can point to as real achievements.
Q7 Chairman: Finally, obviously we see
it as a second track legislation that is available to Government
Departments. Has the Government made any study of what other countries
do, because certainly some countries like Canada and Australia
do what Mr Cotter says and have a very much proactive role and
the committee can push for things to be done, rather than have
to react to proposals that come before them?
Mr Virley: We do monitor what
other countries are up to on their regulatory reform agenda. We
certainly pay a great deal of attention to what is happening in
both European countries as well as Australia and in the USA. Of
course, all their own arrangements reflect their particular constitutional
set-up. The OECD do regard some of our regulatory practice as
being at the forefront of regulatory reform, but I think there
is more we can do in the areas you have suggested in terms of
promoting the use of the Act and getting more initiatives from
Members of Parliament.
Q8 Brian White: If you take Canada or
Australia they are both Westminster-style and you are not even
addressing some of the issues they are looking at.
Mr Virley: For example, on promoting
the issue with Members of Parliament we did run an MP seminar
earlier this year and I believe about 60 Members of Parliament
did come along to that, which was one effort we have been making
to try and raise the profile of this Act with Members of Parliament.
Ruth Kelly: Some of this is about
the culture of the Civil Service and whether there is as much
kudos attached to delivering regulatory reform, particularly through
an RRO, for example, or deregulation, as there is for passing
a Bill or an Act and identifying a piece of legislation. That
is a problem which is endemic in the British Civil Service but
probably not as bad as it is in some other countries. One thing
we have got to do is change the culture of the Civil Service,
which we are trying to do through the reform of the Civil Service
programme and through introducing the idea of looking at RROs
directly into the training courses of civil servants.
Brian White: I will not ask you why you
are putting a barrier to that in this draft Civil Service Bill.
We will come to that subject another time.
Q9 Mr Brown: Good morning, Minister.
You say that the lack of a rule-making power is probably the most
common barrier to Departments using the regulatory reform procedure
to deliver large scale reforms. Would not the introduction of
such a power widen significantly the scope for amending primary
legislation by subordinate legislation? It might lead to less
specific provision in an RRO itself leaving a good deal of the
law to be specified later by ordinary Statutory Instrument. Do
you not think such a change might be regarded as being constitutionally
significant, rather than merely tidying up some minor aspects
of the present power?
Ruth Kelly: This is probably one
of the most significant barriers to the whole use of the RRO procedure
at the moment and prevents large-scale proposals being brought
forward to a significant degree. Most large-scale proposals, or
a lot of them, need within them a power to sub-delegate. There
have been examples, as far as I am aware, of proposals which have
not gone down this route expressly because of a lack of this power—for
example, the draft Housing Bill which was prepared by the Law
Commission, which would have reformed the law on residential tenancies,
and some Defra proposals as well on inshore fisheries—enforcement
did not go through the RRO procedures because of the lack of a
power to sub-delegate. I think it is probably a symptom of the
fact that they are large Bills rather than they are particularly
controversial, constitutionally significant and that they need
this extra power. You are right, it is the sort of novel idea
that the RRO process could be used to embody this power; and it
might be the case that if were reformed in that way then an additional
safeguard would be needed in some form. For example, it might
be necessary to incorporate an affirmative procedure process for
debating any subsequent use of that power. I think there is a
case for really looking at this very closely.
Q10 Mr Brown: In your letter of 13 September
you state that Departments feel that the need to identify an activity
which is affected by existing burdens can prevent proposals being
made. Can you give us an idea of how frequently this is the case?
If the requirement were removed would that not expand significantly
the scope of the power to impose new burdens? Do you think that,
if the reference to activity were removed, some amendment should
be made simultaneously to the limit the scope of the power to
impose new burdens?
Ruth Kelly: This is the fact that
an RRO can only perform legislation which has the effect of imposing
burdens affecting persons in the carrying on of an activity, as
far as I understand it. It is that reference to the "activity"
which has proved a hurdle in some cases, to the use of the RRO
procedure because the term "activity" (as far as I understand
it) has a legal significance which means that it cannot refer
to people in a passive capacity—for instance, recipients
of a benefit or so forth. One example where that proved to be
a barrier that I can cite is a proposed reform to the law relating
to personal insolvency, where it was not considered that insolvent
persons performed an activity. There does not seem to be much
rationale behind the fact of having it referred to as an activity
rather than defined in some other way. That is one area where
I think it could be useful to clarify.
Q11 Mr Brown: You have given an indication
this morning that Departments have questioned whether the deregulatory
focus of the Regulatory Reform Act is appropriate in the context
of a power which is aimed at the reform and improvement in legislation.
How does the wish to move the Regulatory Reform Act away from
the deregulatory focus sit with the Prime Minister's announcement
that he wishes to amend the Regulatory Reform Act to push deregulation?
Ruth Kelly: The Prime Minister
not only wants to see the removal of burdens but he also wants
to see regulatory reform. It is that better regulation agenda
that this Government is committed to first and foremost. As the
Chairman pointed to in his opening comments, the RRO process replaced
a previous process which focused solely on deregulation; but this
has a different underlying rationale, which is to streamline and
reform regulatory processes but in a way that brings benefits.
I do not see that that previous focus has to be maintained in
the same form.
Q12 Mr Brown: That obviously brings me
on to certain anxieties, in some respects at least. Do you agree
that the aim of the regulatory reform power is "the reform
and improvement of legislation"? Would the adoption of the
various suggestions in your letter of 13 September be tantamount
to creating a general power to amend the law by ministerial order?
If not, what limitations would there be on such a power?
Ruth Kelly: Power to do what?
Q13 Mr Brown: What it is doing is creating
a general power to amend the law by ministerial orders.
Ruth Kelly: There are a number
of safeguards in the operation of the Bill and there is no proposal,
as it were, to weaken those safeguards which are to do with necessary
protections, rights, freedoms and benefits to the public and so
forth. I think those protections are completely appropriate.
Q14 Mr Brown: The gist is that there
is this additional power in the hands of ministers which they
have not had until now?
Ruth Kelly: We are looking at
this with an open mind and welcome your views on how it should
operate in practice but, clearly, we need appropriate safeguards
as to the operation of this process and that is the sort of thing
we will keep foremost in our minds when examining the issue.
Q15 Mr Brown: Am I correct in saying
that you believe there should be a general power to amend the
law by subordinate legislation?
Ruth Kelly: I think there is a
case for looking at whether there should be the power to sub-delegate,
which I think is what you are referring to. If this power were
taken then I think there is also a case for saying, "Should
there be counterbalancing safeguards?" One counterbalancing
safeguard might be the use of the affirmative procedure where
a debate would take place if that power were used, for example.
Q16 Brian White: If any subordinate legislation
from an RRO had to come through this Committee would that be acceptable
to you, rather than just using the JCSI normal process?
Ruth Kelly: I think this is I
something I have a totally open mind on actually. If the power
were conceded then I think there is a case, as I said, for looking
at counterbalancing safeguards. I have suggested one but there
may be others, and we will certainly listen to the Committee's
views on how that should operate.
Q17 Chairman: This is certainly an issue
which could be looked at in the review?
Ruth Kelly: Yes.
Q18 Chairman: In your letter of 13 September
you state that Section 2(1) of the Regulatory Reform Act may prevent
Departments from using the process to reduce Government bureaucracy.
Are you able to identify any areas where the Government may like
to be able to remove burdens on Ministers of Departments by way
of Regulatory Reform Order?
Ruth Kelly: Yes, it is slightly
unclear as to why it is the case that we should not be able to
remove burdens on Ministers or Departments. That in itself strikes
me as probably quite a good thing if thereby you can devote more
time and energy into improving frontline services and so forth
as we are a Government committed through the Gershon Review. I
obviously will listen to what the Committee has to say about this,
although I think the removal of a burden on a Minister or a Department
in itself might be a good thing, provided the costs and benefits
were properly examined and the proper scrutiny took place and
so forth. If it were the view of the Committee that it is a reasonable
objective to try and remove the burdens on Ministers and Departments
then it might be possible to introduce an additional safeguard
that the RRO also remove a burden on some third party, so that
its value on a third party would also be very visible and transparent.
My personal view is that sometimes removing burdens on Ministers
and Department is no bad thing.
Q19 Chairman: You suggest that there
might be a new power to correct errors and omissions. There is
already provision for the removal of inconsistencies and anomalies
and the making of incidental and supplemental provision. Why do
you think errors and omissions might be necessary? Do we have
a lot of poor quality legislation that needs to be changed fairly
speedily?
Ruth Kelly: I do not think that
is the case. Inconsistencies and anomalies at the moment while
not defined precisely are interpreted, I believe, in a rather
narrow way. There is no reason why errors and omissions could
not similarly be interpreted in a pretty narrow way. I would envisage
the power to correct errors and omissions only being used in any
event if Parliament were satisfied that the safeguards had been
properly maintained and the proper procedures had been followed,
and no necessary protections were removed. I do not see it as
a huge opening up of the RRO process. I just see it as trying
to widen slightly what is a very narrow interpretation at the
moment of inconsistency and anomaly.
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