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15 May 2006 : Column 787

15 May 2006 : Column 788

15 May 2006 : Column 789

Amendment proposed to the proposed new clause: (a), in line 2, after ‘he’, insert ‘reasonably’.— [Mr. Heath.]

Question put, That the amendment be made:—


The House divided: Ayes 194, Noes 255.
Division No. 232]
[8.41 pm



AYES


Afriyie, Adam
Ainsworth, Mr. Peter
Alexander, Danny
Amess, Mr. David
Atkinson, Mr. Peter
Baker, Norman
Baldry, Tony
Barker, Gregory
Baron, Mr. John
Barrett, John
Beith, rh Mr. Alan
Bellingham, Mr. Henry
Benyon, Mr. Richard
Bercow, John
Beresford, Sir Paul
Binley, Mr. Brian
Blunt, Mr. Crispin
Bone, Mr. Peter
Boswell, Mr. Tim
Brady, Mr. Graham
Brake, Tom
Brazier, Mr. Julian
Brokenshire, James
Browne, Mr. Jeremy
Browning, Angela
Burns, Mr. Simon
Burrowes, Mr. David
Burstow, Mr. Paul
Burt, Alistair
Burt, Lorely
Cable, Dr. Vincent
Campbell, rh Sir Menzies
Carswell, Mr. Douglas
Cash, Mr. William
Chope, Mr. Christopher
Clarke, rh Mr. Kenneth
Clegg, Mr. Nick
Clifton-Brown, Mr. Geoffrey
Corbyn, Jeremy
Cormack, Sir Patrick
Crabb, Mr. Stephen
Davey, Mr. Edward
Davies, David T.C. (Monmouth)
Davies, Philip
Davis, rh David (Haltemprice and Howden)
Djanogly, Mr. Jonathan
Duncan, Mr. Alan
Duncan Smith, rh Mr. Iain
Dunne, Mr. Philip
Ellwood, Mr. Tobias
Evennett, Mr. David
Fabricant, Michael
Fallon, Mr. Michael
Farron, Tim
Featherstone, Lynne
Fisher, Mark
Francois, Mr. Mark
Fraser, Mr. Christopher
Gale, Mr. Roger
Garnier, Mr. Edward
Gauke, Mr. David
George, Andrew
Gibb, Mr. Nick
Gidley, Sandra
Gillan, Mrs. Cheryl
Goldsworthy, Julia
Goodman, Mr. Paul
Goodwill, Mr. Robert
Gove, Michael
Green, Damian
Greening, Justine
Grieve, Mr. Dominic
Hammond, Stephen
Hands, Mr. Greg
Harper, Mr. Mark
Harris, Dr. Evan
Harvey, Nick
Heald, Mr. Oliver

Heath, Mr. David
Heathcoat-Amory, rh Mr. David
Hemming, John
Hoban, Mr. Mark
Hoey, Kate
Hollobone, Mr. Philip
Holmes, Paul
Hopkins, Kelvin
Horwood, Martin
Howarth, David
Howarth, Mr. Gerald
Hughes, Simon
Huhne, Chris
Hunt, Mr. Jeremy
Hunter, Mark
Jack, rh Mr. Michael
Jackson, Mr. Stewart
Jenkin, Mr. Bernard
Jones, Mr. David
Jones, Lynne
Kawczynski, Daniel
Kennedy, rh Mr. Charles
Kirkbride, Miss Julie
Knight, rh Mr. Greg
Kramer, Susan
Lait, Mrs. Jacqui
Lamb, Norman
Lansley, Mr. Andrew
Laws, Mr. David
Leech, Mr. John
Letwin, rh Mr. Oliver
Lewis, Dr. Julian
Loughton, Tim
Luff, Peter
Mackay, rh Mr. Andrew
Maclean, rh David
MacNeil, Mr. Angus
Malins, Mr. Humfrey
Maples, Mr. John
May, rh Mrs. Theresa
McDonnell, John
McLoughlin, rh Mr. Patrick
Miller, Mrs. Maria
Milton, Anne
Moore, Mr. Michael
Moss, Mr. Malcolm
Mulholland, Greg
Mundell, David
Murrison, Dr. Andrew
Newmark, Mr. Brooks
O'Brien, Mr. Stephen
Oaten, Mr. Mark
Öpik, Lembit
Paterson, Mr. Owen
Pelling, Mr. Andrew
Penning, Mike
Penrose, John
Pickles, Mr. Eric
Price, Adam
Prisk, Mr. Mark
Pugh, John
Randall, Mr. John
Redwood, rh Mr. John
Reid, Mr. Alan
Rennie, Willie
Rifkind, rh Sir Malcolm
Robathan, Mr. Andrew
Robertson, Hugh
Rogerson, Mr. Dan
Rowen, Paul
Ruffley, Mr. David
Sanders, Mr. Adrian
Scott, Mr. Lee
Selous, Andrew
Shapps, Grant
Shepherd, Mr. Richard
Simpson, Alan
Smith, Sir Robert
Spelman, Mrs. Caroline
Spicer, Sir Michael
Spink, Bob
Spring, Mr. Richard
Steen, Mr. Anthony
Stunell, Andrew
Swayne, Mr. Desmond
Swinson, Jo
Swire, Mr. Hugo
Syms, Mr. Robert
Taylor, Mr. Ian
Taylor, Matthew
Taylor, Dr. Richard
Teather, Sarah
Thurso, John
Tredinnick, David
Turner, Mr. Andrew
Tyrie, Mr. Andrew
Vara, Mr. Shailesh
Viggers, Peter
Walker, Mr. Charles
Wallace, Mr. Ben
Walter, Mr. Robert
Watkinson, Angela
Webb, Steve
Weir, Mr. Mike
Whittingdale, Mr. John
Wiggin, Bill
Williams, Hywel
Williams, Mark
Williams, Stephen
Willott, Jenny
Wilshire, Mr. David
Wilson, Mr. Rob
Winterton, Ann
Wishart, Pete
Wright, Jeremy
Young, rh Sir George
Tellers for the Ayes:

Bob Russell and
Mr. Roger Williams
NOES


Abbott, Ms Diane
Ainger, Nick
Ainsworth, rh Mr. Bob
Alexander, rh Mr. Douglas
Allen, Mr. Graham
Anderson, Mr. David
Anderson, Janet
Armstrong, rh Hilary
Atkins, Charlotte
Austin, Mr. Ian
Bailey, Mr. Adrian
Baird, Vera
Balls, Ed
Banks, Gordon
Barron, rh Mr. Kevin
Begg, Miss Anne

Bell, Sir Stuart
Benton, Mr. Joe
Berry, Roger
Betts, Mr. Clive
Blears, rh Hazel
Blizzard, Mr. Bob
Blunkett, rh Mr. David
Bradshaw, Mr. Ben
Brown, rh Mr. Gordon
Brown, Lyn
Brown, rh Mr. Nicholas
Brown, Mr. Russell
Browne, rh Des
Buck, Ms Karen
Burgon, Colin
Burnham, Andy
Butler, Ms Dawn
Byers, rh Mr. Stephen
Caborn, rh Mr. Richard
Campbell, Mr. Alan
Campbell, Mr. Ronnie
Chapman, Ben
Clapham, Mr. Michael
Clark, Ms Katy
Clark, Paul
Clarke, rh Mr. Tom
Clelland, Mr. David
Clwyd, rh Ann
Coaker, Mr. Vernon
Coffey, Ann
Cohen, Harry
Connarty, Michael
Cooper, Rosie
Cooper, Yvette
Creagh, Mary
Cruddas, Jon
Cummings, John
Cunningham, Mr. Jim
Cunningham, Tony
Curtis-Thomas, Mrs. Claire
Darling, rh Mr. Alistair
Davidson, Mr. Ian
Dean, Mrs. Janet
Denham, rh Mr. John
Devine, Mr. Jim
Dhanda, Mr. Parmjit
Dismore, Mr. Andrew
Dobbin, Jim
Donohoe, Mr. Brian H.
Doran, Mr. Frank
Dowd, Jim
Eagle, Angela
Efford, Clive
Ellman, Mrs. Louise
Engel, Natascha
Ennis, Jeff
Farrelly, Paul
Fitzpatrick, Jim
Flello, Mr. Robert
Flint, Caroline
Flynn, Paul
Foster, Mr. Michael (Worcester)
Foster, Michael Jabez (Hastings and Rye)
Francis, Dr. Hywel
Gardiner, Barry
George, rh Mr. Bruce
Gerrard, Mr. Neil
Gibson, Dr. Ian
Godsiff, Mr. Roger
Goodman, Helen
Griffith, Nia
Griffiths, Nigel
Grogan, Mr. John
Hall, Mr. Mike
Hall, Patrick
Harman, rh Ms Harriet
Harris, Mr. Tom
Healey, John
Henderson, Mr. Doug
Hendrick, Mr. Mark
Hepburn, Mr. Stephen
Heppell, Mr. John
Hesford, Stephen
Heyes, David
Hill, rh Keith
Hillier, Meg
Hodgson, Mrs. Sharon
Hope, Phil
Howarth, rh Mr. George
Hughes, rh Beverley
Humble, Mrs. Joan
Hutton, rh Mr. John
Iddon, Dr. Brian
Illsley, Mr. Eric
Ingram, rh Mr. Adam
Irranca-Davies, Huw
Jackson, Glenda
James, Mrs. Siân C.
Johnson, rh Alan
Johnson, Ms Diana R.
Jones, Helen
Jones, Mr. Martyn
Jowell, rh Tessa
Joyce, Mr. Eric
Kaufman, rh Sir Gerald
Keeble, Ms Sally
Keeley, Barbara
Keen, Alan
Keen, Ann
Kelly, rh Ruth
Kemp, Mr. Fraser
Kennedy, rh Jane
Khabra, Mr. Piara S.
Khan, Mr. Sadiq
Kidney, Mr. David
Knight, Jim
Kumar, Dr. Ashok
Ladyman, Dr. Stephen
Lammy, Mr. David
Lazarowicz, Mark
Lepper, David
Levitt, Tom
Lewis, Mr. Ivan
Linton, Martin
Lloyd, Tony
Love, Mr. Andrew
Lucas, Ian
MacDougall, Mr. John
MacShane, rh Mr. Denis
Mactaggart, Fiona
Mahmood, Mr. Khalid
Malik, Mr. Shahid
Mallaber, Judy
Mann, John
Marris, Rob
Marsden, Mr. Gordon
McAvoy, rh Mr. Thomas
McCarthy, Kerry
McCartney, rh Mr. Ian
McDonagh, Siobhain
McFadden, Mr. Pat
McGovern, Mr. Jim

McGuire, Mrs. Anne
McIsaac, Shona
McKechin, Ann
McKenna, Rosemary
McNulty, Mr. Tony
Merron, Gillian
Michael, rh Alun
Miliband, rh David
Miliband, Edward
Miller, Andrew
Moffat, Anne
Moffatt, Laura
Mole, Chris
Moon, Mrs. Madeleine
Moran, Margaret
Morden, Jessica
Morley, Mr. Elliot
Mountford, Kali
Mudie, Mr. George
Mullin, Mr. Chris
Munn, Meg
Murphy, Mr. Denis
Murphy, Mr. Jim
Murphy, rh Mr. Paul
Naysmith, Dr. Doug
Norris, Dan
O'Brien, Mr. Mike
Owen, Albert
Palmer, Dr. Nick
Pearson, Ian
Plaskitt, Mr. James
Pound, Stephen
Prentice, Bridget
Prentice, Mr. Gordon
Prescott, rh Mr. John
Prosser, Gwyn
Purchase, Mr. Ken
Purnell, James
Raynsford, rh Mr. Nick
Reed, Mr. Andy
Reed, Mr. Jamie
Reid, rh John
Riordan, Mrs. Linda
Robertson, John
Robinson, Mr. Geoffrey
Rooney, Mr. Terry
Roy, Mr. Frank
Ruddock, Joan
Russell, Christine
Ryan, Joan
Sarwar, Mr. Mohammad
Seabeck, Alison
Shaw, Jonathan
Sheridan, Jim
Simon, Mr. Siôn
Skinner, Mr. Dennis
Slaughter, Mr. Andrew
Smith, rh Mr. Andrew
Smith, Ms Angela C. (Sheffield, Hillsborough)
Smith, Angela E. (Basildon)
Smith, rh Jacqui
Snelgrove, Anne
Soulsby, Sir Peter
Southworth, Helen
Starkey, Dr. Phyllis
Stewart, Ian
Stoate, Dr. Howard
Strang, rh Dr. Gavin
Straw, rh Mr. Jack
Stringer, Graham
Sutcliffe, Mr. Gerry
Taylor, Ms Dari
Taylor, David
Thornberry, Emily
Timms, Mr. Stephen
Tipping, Paddy
Touhig, Mr. Don
Trickett, Jon
Truswell, Mr. Paul
Twigg, Derek
Vaz, Keith
Waltho, Lynda
Ward, Claire
Wareing, Mr. Robert N.
Watson, Mr. Tom
Watts, Mr. Dave
Whitehead, Dr. Alan
Wicks, Malcolm
Williams, rh Mr. Alan
Winnick, Mr. David
Winterton, Ms Rosie
Wood, Mike
Woodward, Mr. Shaun
Woolas, Mr. Phil
Wright, Mr. Anthony
Wright, David
Wright, Mr. Iain
Tellers for the Noes:

Liz Blackman and
Steve McCabe
Question accordingly negatived.
15 May 2006 : Column 790

15 May 2006 : Column 791

15 May 2006 : Column 792

Clause added to the Bill.

New Clause 20


POWER TO PROMOTE REGULATORY PRINCIPLES

‘(1) A Minister of the Crown may by order under this section make any provision which he considers would serve the purpose in subsection (2).

(2) That purpose is securing that regulatory functions are exercised so as to comply with the principles in subsection (3).

(3) Those principles are that—

(a) regulatory activities should be carried out in a way which is transparent, accountable, proportionate and consistent;


15 May 2006 : Column 793

(b) regulatory activities should be targeted only at cases in which action is needed.

(4) Subject to this Part, the provision that may be made under subsection (1) for the purpose in subsection (2) includes—

(a) provision modifying the way in which a regulatory function is exercised by any person,

(b) provision amending the constitution of a body exercising regulatory functions which is established by or under an enactment,

(c) provision transferring, or providing for the transfer or delegation of, the regulatory functions conferred on any person,

(d) provision creating a new body to which, or a new office to the holder of which, functions are transferred under paragraph (c),

(e) provision abolishing a body or office established by or under an enactment,

and provision made by amending or repealing any enactment.

(5) An order under this section may contain such consequential, supplementary, incidental or transitional provision (including provision made by amending or repealing any enactment or other provision) as the Minister making it considers appropriate.

(6) An order under this section may bind the Crown.

(7) An order under this section must be made in accordance with this Part.'. — [Mr. McFadden.]

Brought up, and read the First time.

Mr. McFadden: I beg to move, That the clause be read a Second time.

New clause 20, together with new clause 19, will amend the order-making power in part 1 to focus on better regulation objectives. New clause 20 will provide a power for a Minister, by order, to make provision that he considers will ensure that regulatory functions are exercised so as to comply with the Better Regulation Task Force’s five principles of good regulation, which state that regulatory activities must be carried on in a way that is transparent, accountable, proportionate, consistent and should be targeted only at cases in which action is needed.

Mr. Heald: The Minister may find it helpful if I indicate that we are supportive of new clause 20, and do not feel that he need outline such a sensible measure at huge length.

Mr. McFadden: Having sat through what we have sat through this afternoon, I quite appreciate what the hon. Gentleman is saying.

Making regulatory functions more consistent with those principles is in line with the recommendations in Philip Hampton’s 2005 report that regulators should conduct their business in ways that are risk-based. The Hampton report proposed that the principle of risk assessment should be entrenched in regulators so that the burden of enforcement falls on the highest risk businesses and least on those with the best record of compliance.

Although the Hampton report found that there is much good practice in UK regulation, the proposed order-making power in new clause 20 could be used to effect real further improvement. For example, the report found that fewer than half of the regulators in the Hampton review used risk assessment to reduce enforcement activity on high performing businesses. By
15 May 2006 : Column 794
being able to make provision modifying the way in which regulatory functions are exercised, the Government could begin to propose improvements that would ensure that more inspection is proportionate to risk and consistent. That would have a real effect on those regulated, because the burden of inspection would be reduced on the vast majority of the regulated and would be focused on the cases in which there was a real problem. New clause 20 would allow a Minister by order to modify the way in which a regulatory function is exercised, to secure that regulatory functions are carried out in accordance with the five principles.

Rob Marris: Would new clause 20 enable a Minister of the Crown, with the safeguards that we hope will be in the Bill, to get rid of some of the many quangos?

Mr. McFadden: Certainly the merger of regulators is an element of the Bill and is possible under the Bill.

One example may be that a regulator could have regard to the views of a body that represented consumers in that area—such as the Gas and Electricity Consumer Council—so that the regulator’s activities are carried out in a way that is more accountable to consumers.

New clause 20 would also allow a Minister by order to amend the constitution of a body exercising regulatory functions under an enactment if doing so would make it more transparent and accountable. An example could be amending the statute governing a regulator to provide that it has a board structure, with perhaps a proportion of the board being comprised of non-executive directors, to improve accountability and transparency. It would also be possible by order to transfer the regulatory functions of one regulator to another. That power could be used where two regulators exercise oversight of related areas. For instance, where two regulators are operating in closely related areas, to make their work more transparent to the regulated and more proportionate to risk, it may be appropriate to transfer the functions of two regulators to a single regulator.

Mr. Heath: Will the Minister explain to me, because I am not absolutely clear about this point, how new clause 20 relates to clause 23, which excludes some regulators from provisions? I mention that only because he mentioned gas and electricity consumer groups and, of course, the Gas and Electricity Markets Authority is one of those specifically excluded from the principles underlying the Bill.

Mr. McFadden: If the hon. Gentleman will allow me, I will come back to that at the end of my remarks.

New clause 20 would also permit the creation of a new body to carry out the functions of existing regulators if the Minister considered that that would be for the purpose of securing that regulatory functions were exercised so as to comply with the five principles.

Finally, if as a consequence of the creation of a new body or the transferral of a function, another regulatory body becomes obsolete, it may be necessary to abolish it. That, too, would be possible under the order-making power of new clause 20, if the Minister considers that it will ensure that regulatory functions
15 May 2006 : Column 795
are exercised so as to comply with the five principles of good regulation. It is important that I make it clear at this point that, under new clause 20, an order may propose changes to a body carrying out regulatory functions only if those functions continue to be exercised. Any modification by order of the functions themselves would have to be dealt with under new clause 19, or by way of primary legislation. I assure hon. Members that it is not in any way our intention to erode the independence from Government of those regulators set up by statute. Our aim with this new clause is to have an order-making power that can be used to ensure that all regulators conduct their business in a way that is consistent with the five better regulation principles.

An order made under new clause 20 will of course be subject to the same checks and balances as any other. Such an order must meet the preconditions in clause 3, and a Minister must consult widely on any proposed order.

9 pm

A full explanatory document will be submitted to relevant parliamentary Committees. The Government have also given an undertaking that they will not do anything highly controversial using an order and that an order will not be forced through despite opposition from the relevant parliamentary Committees. As we will discuss tomorrow, the Government have placed on a statutory footing a veto for relevant Committees of either House. That will provide further assurance for those concerned that an order will proceed only if the informed view of the House and another place is satisfied that its outcome is desirable.

Let me turn to the question asked by the hon. Member for Somerton and Frome (Mr. Heath). Clause 23 excludes certain economic regulators from being specified by order for the purposes of clauses 20 and 21, which relate to the principles and the code. Those regulators are not excluded from new clause 20. I hope that that clarifies the situation, and I ask hon. Members to accept the new clause.

Mr. Heald: We welcome new clause 20, which, as the Minister said, is designed to promote the regulatory principles that derive from the Hampton review and the five principles of better regulation. There is clearly a role for merging regulators, and there is a proposal to merge 35 national regulators into seven. However, if changes to the role of a major regulator might impact on the public or have a great effect on business, it should be possible for full parliamentary scrutiny to take place. When the former Minister addressed that matter in Committee, I understood that he gave an assurance that that would happen. However, subject to that point, we welcome the new clause as a step in the right direction.

Mr. Heath: I hope that I can also be relatively brief because I support new clause 20. I had intended to be even briefer, but after hearing the Minister’s reply to my intervention, I am struggling to reconcile what the new clause says with the provisions of clauses 20 and 21. The Minister must correct me if I have misunderstood him, but he told us that although clause 23 excludes
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certain regulators from the provisions of clauses 20 and 21, those regulators are not excluded from the provisions of new clause 20.

We said in Committee that it was an anomaly that the specified regulators were excluded from clause 20, which says:


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