Select Committee on Regulatory Reform Minutes of Evidence


Examination of Witnesses (Questions 1-19)

MR JIM MURPHY MP, MS KATE JENNINGS, MR ANTHONY ZACHARZEWSKI AND MR PAUL HUGHES

13 DECEMBER 2005

  Q1 Chairman: Good morning, Mr Murphy. Welcome to our Committee. Could I first of all ask you to introduce briefly your team and then we will start.

  Mr Murphy: Chairman, on my right is Kate Jennings, who is policy lead on the Regulatory Reform Act and the manager of the proposed Bill on better regulation. On my far left is Anthony Zacharzewski, Head of the Private Sector Inspection Team and policy lead on the Hampton Review, and Paul Hughes from the DCA, who is policy lead on the Law Commission elements in the Bill.

  Q2  Chairman: Thank you very much. You have mentioned the Bill and we keep hearing about the Bill. Is it due to be published . . . is the word "soon" or is there a date now?

  Mr Murphy: The phraseology of government, as you know, Chairman, is "shortly". Things fall into two categories: "we have no plans to" or "shortly" and this one is "shortly". As we speak this morning, I do not think there is a concluded date for the introduction of the Bill. The Prime Minister talked at the CBI, I think the week before last, in terms of early in the New Year, so I think the assumption would be that that would be the latest of the introduction of any Bill.

  Q3  Chairman: We might presume, therefore, it could be a little earlier. The review of the Act, it was originally promised, would be in place in 2004, I think. What do you say to those who would argue that the Government's case for changing the processes is based on little more than anecdotal evidence gathered from departments, some of which have little or perhaps no direct experience of the process?

  Mr Murphy: I think the Government's case for the review is based on the evidence post 2001, and the limited effectiveness of the Regulatory Reform Act 2001 and its ability to deliver important regulatory reform but not everything that was anticipated at the time. There are various reasons for that, some of which I am sure we will explore in discussion. I do not share the sense that it is based on anecdotal experience of departments with no personal or direct involvement in this agenda. The fact is that the Act of 2001 was too narrowly defined in the sense of burdens. It made a very technical definition of burdens and it did not allow uncontroversial Law Commission proposals to be introduced. It really was not flexible enough, largely based on the fact that there was this tight definition of burdens. So I do not think it is based on anecdotal experience at all; it is based on having a genuine, ambitious better regulation agenda which sometimes collides with a rather narrowly drawn legal definition of burdens. I think that is one of the main lessons from experience, Chairman.

  Q4  Chairman: By proposing to widen the scope of the procedure, the Cabinet Office is suggesting constitutionally significant changes to the way that primary legislation can be amended. Aside from people within Government, who outside is demanding that further discretionary powers be given to amend legislation by Order?

  Mr Murphy: In terms of the consultation, there is a very strong welcome for most if not all of the proposals within this agenda. The CBI, the Institute of Directors, the Law Commission, the Law Society of Scotland, I think, would be amongst the organisations who would say . . . I am not suggesting that we should do exactly as they suggest, of course, but, in terms of their analysis, most if not all of those organisations would say that the current system does not deliver the type of better regulation, the proportionate, targeted, risk-based regulation that they wish to see.

  Q5  Chairman: Have any of the consultees suggested the opposite?

  Mr Murphy: I think there are some in the world of academia who have suggested the opposite: that we are going too quickly; that the current situation does not allow proper parliamentary scrutiny. [1]That would be my assessment of anyone suggesting that we have gone too far on this agenda. In terms of the consultation, as we talk to businesses and we talk to others it has almost been one-way traffic in the respect of saying: we need to make the parliamentary scrutiny effective but we also need a delivery mechanism to match the policy and the rhetoric in terms of delivering on what we have pledged to do in terms of better regulation.

  Q6 Chairman: Finally, before I invite other colleagues to come in: it is a very complicated consultation process, and you have described some of the responses, what work has the Cabinet Office done on a proper cost-benefit analysis of the process that is being proposed, or indeed, of the process that is in place now? Some of the orders that came before my predecessor committee had figures associated with them, but what sort of work is going on genuinely to demonstrate to Parliament and the public at large that this is a worthwhile procedure in terms of efficiencies and gains?

  Mr Murphy: In terms of any analysis of previous estimates, it is a fair point to say that not enough work has been done either by the Cabinet Office or by other departments in terms of retrospectively validating the proposed savings and efficiencies from RROs and the impact assessments. If I were to be brutally frank, I think that is a weakness in the system. Impact assessments in advance suggest likely savings and likely efficiencies and there is not a retrospective challenge as to whether that impact assessment has been accurate in its proposed savings plan. I think that is a piece of work on which Cabinet Office and departments across government have to do a good deal more work. I think that is one of the lessons from this process that should be learned. I should have mentioned that some of the trades union organisations have raised reservations that if we go too far too quickly and strip away some of the important protections that they rightly have campaigned for through the years, they would, of course, go into the column of being very concerned. But we seek to reassure them that none of the better regulation agenda at all is about stripping away protections for the environment, safeguards for workers, for customers, for families; it is about retaining those core safeguards but seeing if we can do things a good deal better in terms of removing duplication and making it more targeted. I think we have a job of work to do there with the trade union movement but I am confident that it will be done because we are not in any way challenging some of the safeguards that they have fought to retain.

  Q7  Dr Naysmith: Good morning, Minister. It is a pleasure to have you before us. May I call you Jim?

  Mr Murphy: Please.

  Q8  Dr Naysmith: You said in answer to Andrew's first question, presumably when talking about the results of the review, that people have been complaining that the 2001 Act defined things too narrowly and that you received feedback that it was not flexible enough. I am sure at some stage you have discussed this with the individual departments—they must have contributed to the review as well as academics. I think I am the only one left from your committee, but we used to get the impression that some departments were much more enthusiastic about the current process than others, and one or two of them used it and used it well and were very pleased with it. Is that reflected in the responses you received from Government departments?

  Mr Murphy: First of all, congratulations.

  Q9  Dr Naysmith: Surviving it!

  Mr Murphy: I will ask Kate about the departmental responses, but in respect of the previous Act there was a sense, as I mentioned, that it was too narrowly drawn legally in terms of the definition and did not allow—and we may explore this, of course—what we perceived to be an equal and more proportionate parliamentary scrutiny of non-controversial issues. That strikes an awful phrase but, in terms of an easier way of describing it, the sense was that we would need a quicker way to implement non-controversial proposals while guaranteeing parliamentary scrutiny. In terms of the departmental responses, I will pass to Kate.

  Ms Jennings: In terms of the detailed question on the conduct of the review, we basically read all the committee reports from both committees and we conducted review sessions with all the officials who had been involved in delivering all of the RRO proposals that have come forward, and, indeed, the officials who have looked at taking the proposals forward and have not been able to deliver them for whatever reason. It was the unanimous view of all those officials that the current process was technical in terms of the analysis of burdens and there was an over-bureaucratic process. I think you are right when you say that certainly some officials in some departments were more proactive about using the powers that they had, but, in terms of the flexibility of power and the ability to deliver what people wanted to deliver efficiently and effectively in a proportionate way, I think there was a unanimous feeling that we had not got what we needed.

  Q10  Dr Naysmith: It was my impression that some departments who were enthusiastic about using it got good results and some departments who were not, not surprisingly, got them sent back regularly. I would have thought the ones who were enthusiastic about using it are reasonably happy with the current procedure.

  Mr Murphy: As you would expect, the standard answer would be that I cannot speak for other departments, but the fact is that across government, if I were to summarise government's collective opinion rather than offer a comment about any individual department, there have been 27 RROs delivered and there was a much greater ambition that the 2001 Act would deliver more—as you know, there was a draft published list of what was expected to be delivered—and that has not happened. So collectively there is a sense that the 2001 Act is not the right tool to get the job done and that is what we are concentrating on now. As we go through the Bill process, we will continue to have dialogue with other Government ministers. We had conversations with a group of Government ministers yesterday about this agenda and we will continue to do that. If that is genuinely what you have had back, that is something we should look at as we go through the parliamentary process of the Bill when it is published.

  Q11  Chairman: That leads us very neatly on to our next series of questions. With the Bill that is to be published shortly—

  Mr Murphy: Shortly!

  Chairman: —it will need to be the subject of some parliamentary scrutiny.

  Q12  Gordon Banks: Thank you, Chairman. Jim, if I walk out of here at half-past ten, it is not because I am totally disgusted with your evidence but because I have a standing committee to go to.

  Mr Murphy: What happens if you leave before half-past ten?

  Q13  Gordon Banks: Then I really am disgusted with your evidence! We expect the Bill to increase the scope for ministers to repeal and amend primary legislation. Given the constitutional significance of ministers being able to repeal or amend primary legislation by Order, why is the Bill not subject to full pre-legislative scrutiny? How can this be justified given that the Regulatory Reform Bill 2001 was?

  Mr Murphy: One of the things I have got together myself is in terms of the timeline of the Bill. The Chancellor in the Budget earlier in the year committed us really to a pretty ambitious plan of delivery on better regulation. We then had the election—which delivered an outcome—and then the Regulatory Reform Bill was announced in the Gracious Address on 17 May. We are in a position that basically we are keen to deliver this Bill in the first session. The judgment—and I accept that it is a judgment and others may take a different judgment—was that to deliver it in the first session would require us to progress in the way that we have done. Departments are currently putting together the simplification plans in time for the next year's pre-Budget report. If we were put in a situation where we did not have a Bill in the first session, much of the ambitious simplification proposals that are coming out of departments would not have a tool to enable their delivery. Based on the analysis of the 2001 Act, there would not have been an effective legislative tool to deliver those simplification proposals. That is a reason why we were keen to get the Bill, not only because we had said we would do it but in a practical sense that was the reason why we wanted to have that tool in place. Also, we are in a dialogue with business. There does not seem to be a lack of analysis of the nature of the problem. Business has a view, shared by many in Government, that the analysis is there and what is needed is a tool and some action to overcome the weaknesses in the current system and implement that analysis. Looking at the Dutch model of admin-reduction, risk-based regulation, all that saved—and colleagues will know this around the table anyway—1% of GDP, and we want to get on and start those savings next year. We want to start having a more proportionate system of regulation in the UK as of next year, 2006, if this Bill is passed, and also we want to be able, in terms of the pre-Budget report next year, to have a piece of legislation that can deliver the ambitious simplification proposals that the departments are currently working on. I accept it is a judgment, and those were the arguments that we sided with that took us to the decision about the need for pre-legislative scrutiny. Of course, in terms of the review of the Act, the Better Regulation Taskforce has done an important piece of work in terms of analysis of the terrain at the moment. To sum it up, I think there is a vast amount of analysis, there has been a huge amount of consultation with stakeholders and others, and really at some point we just had to get on and deliver the agenda, and the decision was to deliver the agenda in time for next year's simplification plans.

  Q14  Gordon Banks: It is obviously very important to get this right now so that we are not looking at it again in four years time. You obviously do not think that pre-legislative scrutiny can give something to that agenda.

  Mr Murphy: Being flippant for a moment, pre-legislative scrutiny did not give us the agenda four years ago, five years ago. We tried it with pre-legislative scrutiny and we did not get the tools we need, so maybe by not having it we will.

  Q15  Gordon Banks: We have more proposals, a different agenda coming from yourselves now.

  Mr Murphy: In four or five years time, for whoever is sitting in your place and whoever is sitting in mine, a failure would be if they were to sit here and say, "That 2006 Act"—as we hope—"did not really deliver the tools that we needed for the job." As the Bill progresses through its various stages and as the committee reflects on the Bill and analyses the Bill, if there are specifics that individual members of the Committee or the Committee have that they would like to suggest, as the Minister I am happy to listen to any specifics in terms of concerns about details within the Bill. But, you are right, we cannot come back to this a third time. I think stakeholders, business and others will rightly lose the sense that the Government can deliver on this better regulation agenda. You will know this from your own background, Gordon, as a businessperson. Business basically says: "We've heard some of this before. We've heard this sort of, `We're going to regulate more sensibly, we're going to have a lighter touch'." There is a degree of cynicism out there, so we have to get it right this time and we are happy to do that in partnership with yourselves if the Bill goes through its various stages.

  Q16  Gordon Banks: Is there still the intention to include the provisions from the Hampton proposals in the Bill?

  Mr Murphy: Which ones?

  Q17  Gordon Banks: Less is More.

  Mr Murphy: I cannot comment on the content of the Bill that will be published shortly. If you were to look at the consultation and summary of the consultation responses that would give you a good pointer to what might be in the shortly to be published Bill. In the main that is really the terrain that we are in. In terms of the Bill, it is entirely about giving government, the Department and its departments, the tools to deliver on this better regulation agenda, which has moved up the political hierarchy. It has become much more high profile for various reasons and this Bill is intended to make sure the Government can deliver on that agenda.

  Q18  Chairman: If the Government is so anxious about it, what is the delay?

  Mr Murphy: What delay is that?

  Q19  Chairman: In publishing the Bill.

  Mr Murphy: I do not think there is a delay. We are committed to publishing by early in the New Year and we are still this side of Christmas.


1   See Ev 15

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