Supplementary memorandum from the Cabinet
Office
THE OPERATION OF THE REGULATORY REFORM ACT
2001
Further to Douglas Alexander's letter to you
of 22 July, I am writing to introduce myself as the new Minister
for the Cabinet Office and to provide further information on our
experience to date of the workings of the Regulatory Reform Act
(RRA) and its associated procedures.
As of July 2004, the Cabinet Office had laid
some 26 Regulatory Reform Orders (RROs) for scrutiny. This experience,
gleaned from Departments, has raised a number of issues. These
are set out in more detail below.
Annex A gives a description of some of the procedural
issues which Departments have raised concerns about. I would welcome
the Committee's view on these issues, including the scope for
changing some of the existing procedural requirements.
Annex B sets out some examples of issues that
Departments have raised with us on the workings of the
Act itself. I retain an open mind on these. As Douglas Alexander
explained in his letter of 19 December 2003, I believe it is still
too early to undertake a fundamental review of the Act. We will
need more evidence and examples before such a review can be carried
out. However, I would appreciate any initial reactions the Committee
may have to the issues that have been raised by Departments to
date.
I welcome the opportunity to meet with your
Committee and to discuss these issues more fully at the evidence
session planned for the autumn. The thoughts of you and your members
will help us consider how we might increase the effectiveness
and use of the RRA in the future. Your views on all of the points
raised would be appreciated, as would any additional comments
you have on RRO procedures, the workings of the Act, or the steps
being taken to raise the profile of RROs.
I am copying this letter to the Prime Minister,
Regulatory Reform Ministers, Lord Dahrendorf (to allow the Delegated
Powers and Regulatory Reform Committee to comment) and Sir Andrew
Turnbull.
Ruth Kelly
Annex A
SUGGESTED IMPROVEMENTS TO RRO PROCEDURES
As a result of the review sessions my officials
have held with Departments who have delivered RROs, a number of
suggestions have been made for improving the procedures associated
with RROs. These suggestions are listed below, and I would appreciate
your views, where appropriate, on whether these changes could
be implemented. Although some of the measures listed do not appear
very onerous, cumulatively they can create significant additional
work for Departments.
PRESENTATIONS
In accord with your Committee, the Government
had made it a requirement for all RROs that Departments give a
short presentation to the Committee, shortly after the proposal
has been laid for scrutiny. I recognise that these presentations
are extremely useful in relation to the larger or more complicated
proposals, for both the Committee and Departments. On the other
hand, preparing these presentations has increased the workload
for all Departments.
I am pleased to note that your officials are
relaxing this requirement, so that presentations are not compulsory
for minor RRO proposals. My officials will advise RRO teams that
they will be informed as to whether a presentation is necessary
at the time the papers are laid, and that they will usually be
asked to present unless the proposal is small.
R/AS
At present, we insist that all RROs are accompanied
by a Regulatory Impact Assessment (RIA), regardless of whom the
proposals affect and what the estimated costs, savings and benefits
are. This does not reflect current Government practice, whereby
only those proposals which have an impact on business, charities
or voluntary bodies, or those with a significant impact on the
public services, are accompanied by an RIA.
We would propose to remove the automatic requirement
to produce an RIA, and advise Departments to check each proposal
individually to assess whether one is necessary. Whilst an RIA
would still be required for the majority of RROs, the workload
would be lightened on some proposals. I should emphasise that
Departments will still be required to produce a thorough analysis
of savings, costs and benefits even if a full RIA is not produced,
as part of the justification for their reforms.
CONSULTATION DOCUMENTS
We currently provide Departments with a template
to use when preparing consultation documents. This template provides
much standard text on the requirements of the RRA and scrutiny
procedures, as well as a lengthy annex, prepared by Committee
staff, detailing the Committees' involvement. Some Departments
have said that the size of their consultation document can be
disproportionate to the size of their proposals, and consultees
may be deterred from commenting on such a lengthy document.
We intend to streamline and restructure this
document to ensure future consultation documents are less bulky
and easier to read. We would be grateful if Committee staff would
give us views on a draft template once it is ready.
PAPER COPIES
OF DOCUMENTS
When laying a proposal for scrutiny, Departments
have to copy a large amount of papers, which are sent to the Committees,
as well as the Votes Office in the Commons and the Printed Papers
Office in the Lords. Copying and sending these documents can be
time consuming and laborious. My officials have contacted these
offices and asked them to review the numbers they need, and the
Lords Office has agreed to reduce their requirements quite considerably,
lessening the burden on Departments.
Annex B
ISSUES RAISED ON THE WORKINGS OF THE RRA
As of July 2004, 26 RROs have been laid for
parliamentary scrutiny. Through the wash-up sessions with Departments,
we have identified a number of issues relating to the workings
of the RRA. These include:
— The "two-year rule", which
prevents the amendment of legislation less than two years old
— The lack of an express power to subdelegate
in the RRA
— The requirement that the reduction,
removal or imposition of burdens must affect a person in the carrying-on
of an activity
— The prohibition on removal or reduction
of burdens which only affect a Minister or Government Department
— The requirement that an RRO must
remove or reduce burdens
— The definition of "burden",
which currently prevents the removal or reduction of purely administrative
burdens
— The absence of a power to correct
errors and omissions
— The time scale for first-stage scrutiny.
THE TWO-YEAR
RULE
The effect of section 1(2)(a) and (4) of the
RRA is that RROs cannot amend legislation less than two years
old, or provisions of legislation which have been substantively
amended in the previous two years. The rule was incorporated into
the RRA to discourage over-frequent legislative amendments. While
fully recognising the principle behind this "rule",
it has created difficulties with a number of proposals. For example:
— The Gaming Machines RRO was originally
expected to save the industry £9.5 million per annum. Part
of the provisions had to be dropped shortly before scrutiny as
a previous prize up-rating order (used to increase the amount
that machines can pay out) had amended the same provisions, and
this reduced the estimated savings to £1.85 million per annum.
Up-rating orders are occasionally necessary, and the small amendment
that this order made resulted in a substantial part of the RRO
being dropped.
— The NHS Charities RRO proposal has
recently finished its initial scrutiny stage. It was only when
the draft order was being prepared for final scrutiny that it
was spotted that one of the main provisions it seeks to amend
had been amended by a Treasury order made in October 2003. Part
of the proposals had to be dropped and further consultation undertaken,
causing significant delays.
LACK OF
A POWER
TO SUBDELEGATE
The lack of an express power to subdelegate
is probably the most common barrier to using an RRO to deliver
large-scale reforms. As Bills of an equivalent size often include
some sort of rule-making power, Departments often choose to use
primary legislation as opposed to an RRO to deliver their reforms.
Recent examples of reforms which could not be delivered by RRO
because of the lack of such a power (among other concerns) include
proposals which currently form the Law Commission's draft Housing
Bill and Defra proposals to reform the law on inshore fisheries
enforcement.
REFERENCE TO
ACTIVITY
Our understanding is that an RRO can only be
used to remove, reduce or create burdens which affect an activity,
meaning a coherent, ongoing series of actions. This means
that an RRO cannot be used to assist persons burdened in a passive
capacity (eg by reference to their status as recipient of a benefit),
or in the carrying-out of a one-off action.
Departments feel that this reference can cause
delays, and in some cases (such as a proposed reform of the law
relating to personal insolvency) prevent proposals altogether.
REMOVING BURDENS
ON MINISTERS
OR GOVERNMENT
DEPARTMENTS
At present, the RRA cannot be used to remove
or reduce burdens which fall solely on Ministers or Government
Departments (see the tailpiece to section 2(1) of the Act). Often,
though not always, it is possible to identify third parties who
would also benefit from the removal or reduction of the burden.
However, with the current push to reduce bureaucracy and improve
delivery in the public sector, it is expected that there
will be increased focus on reducing or removing burdens on Departments
themselves. This restriction on RROs benefiting Departments may
block the use of the RRA to deliver such reforms, so that other
methods of delivery will have to be utilised.
REQUIREMENT THAT
AN RRO MUST
REMOVE OR
REDUCE BURDENS
One of the tasks faced by Departments when developing
an RRO proposal is identifying a clear removal or reduction of
burdens, as required by section 1(3) RRA. Departments have questioned
whether this requirement (which is essentially that every RRO
should have a deregulatory element) is appropriate in the context
of a power which is aimed at the reform and improvement of legislation
in the wider sense. Whilst this has rarely been an obstacle to
RRO proposals, the point is an interesting one and I would welcome
your views.
THE DEFINITION
OF BURDENS
The RRA defines burdens as including restrictions,
requirements, sanctions and limits on statutory powers. Our understanding
is that the burdens referred to must be of a legal nature, ie
there must be a specific legal impediment. Many Departments
develop proposals which are intended to remove or reduce administrative
burdens and provide substantial benefits. They then have to adapt
the proposals in order to show that they remove or reduce legal
burdens. Quite often the administrative burdens are caused by
the overall effect of the legislation in question, not by a specific
provision, and the issue therefore arises as to whether the definition
of burden should not include burdens of an administrative nature.
THE CORRECTION
OF ERRORS
AND OMISSIONS
The RRA currently provides powers to remove
inconsistencies and anomalies, in addition to the powers to remove,
reduce, re-enact or create burdens (section 1(1)(d)). This is
a narrow power, aimed essentially at removing inconsistencies
between legislative provisions and dealing with minor irregularities,
for example, where legislation fails adequately to make the provision
originally intended. It does not however permit the rectification
of simple errors and omissions.
Departments sometimes wish to deal with errors
and omissions as part of a wider reform of legislation. For example,
DCA originally wanted to correct certain minor errors and omissions
as part of its proposals to reform legislation relating to third
party rights against insurers. It would be more efficient to try
and tag these corrections onto the RRO proposal rather than use
another route to amend the same legislation, but the RRA does
not provide the scope to do so. Your views would be welcome on
whether such a power to deal with errors and omissions would sit
easily alongside the current provisions of the Act.
TIME SCALE
FOR FIRST-STAGE
SCRUTINY
At present all RROs undergo the same level of
first-stage scrutiny, that is, 60 days. This remains constant
no matter what size the proposal. RROs can vary considerably in
size and complexity. For example, the Museum of London RRO proposal
made a two-line amendment to one Act, whereas the Fire Safety
RRO proposal is a 64-page order, repealing and amending a broad
range of legislation as well as making substantial free-standing
provisions.
Now that larger proposals are coming through
the system, it may be impractical in all cases for the Committee
to complete and publish reports within the allocated 60 days.
This has proved to be the case with the Patents and the Fire Safety
RRO proposals, where the reports were published after more than
70 days.
Departments have raised the issues as to whether
there may be a case for making the scrutiny arrangements more
proportionate to the size of the reform in question. Larger proposals
could be allocated a longer period, and minor proposals a shorter
period. Again, the Committee's views on this proposal would be
welcome.
13 September 2004
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