House of Commons - Regulatory Reform

Select Committee on Regulatory Reform First Special Report

1 Introduction

1. The Legislative and Regulatory Reform Bill [HC111] was presented to Parliament on Wednesday 11 January 2006. The Bill has three aims: to increase the pace of regulatory reform, restructure the regime for private regulators and improve the way in which EU legislation is implemented in UK law. More specifically, the Bill includes measures to:

a) Replace the existing power to make Regulatory Reform Orders (RROs) by a power to allow Ministers to amend, repeal or replace all primary legislation (subject to few reservations) for purposes of simplification, legislative reform or implementation of Law Commission proposals (including reform of the common law);

b) Remove a number of restrictions and constraints that currently exist in the Regulatory Reform Act 2001, including the block on sub-delegation of rule-making powers in an RRO; the block on orders that remove or reduce burdens on only Ministers and departments; the block on orders that amend legislation which is less than two years old, or has been amended in the previous two years; the removal of the concept of "burdens" and activities; and the block on common law reform;

c) Retain some safeguards including the requirement for public consultation in order to limit the circumstances in which the power can be used;

d) Reduce the time available for parliamentary scrutiny of the proposals from the current 60 days for all RROs to 40 days for orders classified by the Minister as warranting only negative or affirmative procedures;

e) Enable the implementation of some of the Hampton proposals to merge private sector regulators[1] and provides for regulatory activities to be required to be carried out in a way that is transparent, accountable, proportionate, consistent and targeted only where action is needed;[2] and

f) Reduce the quantity and detail of domestic legislation needed when implementing EU legislation in the UK.[3]

Part 1 of the Bill: deregulation or general power to reform legislation?

2. According to the Minister, Jim Murphy, "The new Bill aims to make it simpler and faster for us to cut the burden of regulation and embed a light touch, risk-based approach to regulation."[4] We welcome this statement. Nonetheless, although nominally about removing unnecessary regulations, Part 1 of the Bill is explicitly less focused on deregulation than the 2001 Regulatory Reform Act (RRA), which it replaces. For example, section 1(3) of the RRA requires every Regulatory Reform Order (RRO) to include the removal or reduction of a burden. Although far from being a perfect vehicle for removing excessive regulations, this requirement on the order making power has resulted in orders having a slight deregulatory focus. Indeed, departments have previously questioned the purpose of requiring RROs to have a deregulatory bias.[5] Perhaps as a way of addressing the departments' difficulties with identifying such burdens, there is nothing in the Bill that requires orders to have any deregulatory element. Ministers may of course use the wide power to propose orders that are deregulatory in their purpose, but it is important to note that in contrast with the RRA the Bill has no explicit requirement. To that extent, and contrary to some press comment, the tone of the Bill itself could represent less of a direct attack on unnecessary burdens and regulations than that provided by the RRA.

3. The Bill (Part 1) is essentially a law reform Bill that provides Ministers with: a general power to amend, repeal and replace a whole range of primary legislation; the power to change the common law and to make substantive changes to primary legislation on any grounds; and the power to include a further power to make subordinate legislation under the terms of a delegated instrument. These are all major extensions of the current order making powers provided by the RRA. Because of these increased powers, the Bill raises questions of huge constitutional importance. For example, to what extent should Ministers be able to use fast track procedures to amend primary legislation? What limits and safeguards would be appropriate and how best could the House scrutinise the individual proposals without needlessly delaying or restricting the pace of regulatory reform?

4. The Bill contains some safeguards. For example, a Minister is required to consult such organisations as appear to him to be representative of interests substantially affected and, in making an order, to "have regard to" such representations and any recommendations by Parliamentary Committees charged with reporting on the order and any resolution of either House.[6] The Minister must also form the view that necessary protections are to be preserved and reasonable freedoms retained. But overall, these safeguards seem dwarfed when set against the increased powers that the Bill will provide to Ministers.

5. This Bill is potentially one of the most constitutionally significant Bills that has come before the House for some time. It needs to be scrutinised with particular care.

This Special Report

6. The Committee's terms of reference, so far as relevant, call for it to report to the House on any matter arising from its consideration of Regulatory Reform Orders. It follows that its primary function, in considering the text of Part 1 of the Bill, is to build on its experience of those orders so as to estimate the implications for committee procedure in relation to the new types of draft order that the Bill envisages.

7. In the light of the constitutional significance of Part 1, we thought that it would be appropriate for us to scrutinise that Part in detail and if possible to report our views to the House in time for its Second Reading, which is expected to be held on 9 February. In fact, we had sought more time to scrutinise it and had thought that the technical nature of much of the Bill and its high constitutional significance would have suggested that it would have been an ideal candidate for pre-legislative scrutiny. However, the Government rejected our request for the Bill to be subject to pre-legislative scrutiny, notwithstanding the fact that the 2001 Act itself was subject to pre-legislative scrutiny. We publish our correspondence below[7]. When in oral evidence we asked the Parliamentary Secretary, Cabinet Office, Jim Murphy, why the Bill was not offered for pre-legislative scrutiny, he told us that pre-legislative scrutiny last time had not provided the tools needed by the Government and that they might be more likely to be provided this time by not having pre-legislative scrutiny.[8]

8. In December, and in anticipation of the Government's likely decision not to subject the Bill to pre-legislative scrutiny, we wrote to the Leader of the House requesting that the Second Reading debate not be held before mid February on the grounds that we be given sufficient time to scrutinise the Bill in detail and report our views to the House. In addition to requesting a longer period for scrutiny of the Bill, we also requested that our Committee's remit be widened on the grounds that under our current Standing Orders we are only allowed to look at proposals, draft orders and "matters arising from our consideration of proposals" for regulatory reform and that we would prefer a less restrictive remit to allow us to consider all aspects of the Bill.[9]

9. In his response (16 January), to our requests the Leader of the House told us that he could not confirm the precise date of the Second Reading but informed us that it would not be before 6 February, allowing us only 15 sitting days in which to produce a detailed and analytical report on the Bill. As regards widening our remit, the Leader of the House informed us that it would not be possible to introduce changes to our Standing Orders in the timescale necessary for consideration of the Bill.[10]

10. Given our clearly stated interest in scrutinising the Bill we were naturally concerned that the Government failed to agree to any of our requests for a suitable period for detailed parliamentary scrutiny or for revising our remit in time. Nevertheless, despite the constraints of our current remit and the shortage of time, we have produced what we consider to be a detailed analysis of the provisions of Part 1 of the Bill, in a manner that falls within our current remit. We discuss the implications of the Bill for revising our Standing Orders in more detail in the final section of this Report.

11. This Special Report sets out our initial thinking on the Bill's major provisions and identifies those areas of the Bill that in our view require special attention by the House. Although we have no wish needlessly to delay the Government's efforts to eliminate unnecessary regulations and simplify legislation, we were surprised that the parliamentary timetable for the scrutiny of this major Bill has been so compressed. We note that the hurried parliamentary timetable is in contrast with the Cabinet Office's delay in launching its review into the workings of the 2001 Act, which prompted the Bill. That review, which it originally promised would be held within three years of the Act (i.e. by April 2004), was not completed until July 2005, a delay of 15 months.

1 That is a stated policy aim. It is not expressly referred to in the Bill, but the law reform power is wide enough to embrace it. Back

2 Part 2 of the Bill. Back

3 Part 3 of the Bill Back

4 "New Bill to enable delivery of swift and efficient regulatory reform to cut red tape" - Jim Murphy, Cabinet Office News Release, 11 January 2006 Back

5 For example, see First Special Report, Regulatory Reform Committee, Operation of the Regulatory Reform Act 2001 HC(2004-05)273 paras 28-29. Back

6 The reason for using "either House" for all recommendations other than those relating to amendment is that doing so follows standard practice in dealing with secondary legislation, which is not conventionally made subject to 1949 Parliament Act procedure. In practice when scrutinising RROs, the approaches of the two Committees responsible for RROs have been either totally or virtually identical. Back

7 See Ev 14-17 Back

8 Q14 Back

9 Standing Orders 141(5) Back

10 Ev 17 Back