Lorely
Burt: I find part 4 somewhat confusing. It was not
originally part of the Bill, and seems to have been tagged on at the
end without any consultation—indeed, after the consultation
period. I wonder if that is reflected in some of the potential for
duplication we have seen. Although I accept that it is vital that not
one unnecessary burden is imposed on business, I am almost tempted to
wonder why this part is necessary. What is it saying that is not
implied or embedded elsewhere in the Bill? Is the
duty not to impose unnecessary regulatory burdens so good and so
important that—a bit like “New York, New
York”—it has to be said
twice? In
relation to the comments of the hon. Member for Hertford and Stortford
about mechanisms and how the system would work, other than what exists,
what would this part of the Bill impose on LBROs or others to fulfil
the requirement not to impose unnecessary regulatory burdens? The
Government have set the target of a 25 per cent. reduction
in unnecessary burdens by 2012, but they have achieved only 6 per cent.
so far, so I am sure that additional help would be extremely welcome.
However, what do these provisions bring to the
Bill?
Mr.
McFadden: The hon. Member for Hertford and Stortford asked
about a few matters on which I hope to give him some satisfaction. He
asked about business input into the level of burdens or whether burdens
can be removed. As the hon. Member for Solihull said, the Government
have a specific target to meet.
I shall come
to the burdens barometer of the British Chambers of Commerce in a
moment, but to rewind on the Government’s position, several
years ago, we set about the task of measuring the administrative burden
on UK business and setting a target to reduce it. The job description
for regulators has become part of the job description for Whitehall
Departments. Each year, simplification plans are produced. The hon.
Lady referred to them and I confirm that so far we are on track to meet
them, although I cannot predict the future with certainty—no one
can. However, the plans involve a serious exercise that has focused
minds in Whitehall. We talked a moment ago about regulatory budgets.
The duty is not a regulatory budget, but it is related in the sense
that it asks Departments to think about the overall impact of what they
do and the stock that is focused on, and to find ways of simplifying
and easing matters for
business. The
hon. Member for Hertford and Stortford asked about business input. I
refer him and other hon. Members to the website,
www.betterregulation.gov.uk. If he or a business feel that a particular
regulation has become outdated or unnecessary, they can ask for it to
be looked at to see if it can be removed. That action would not be
giving the business a promise that the regulation would disappear like
a puff of smoke, but it would force the Department to consider the
matter. There is certainly capacity in the overall regulatory set-up
for business voices to be
heard.
Mr.
Prisk: There may indeed be existing channels, but there is
no requirement related to the clause by which the regulators shall
specifically talk to or involve the business community. Can the
Minister confirm
that?
Mr.
McFadden: At the end, the clause confirms that the
regulator will carry out that judgment. We have covered a couple of
times in our debates on the Bill the matter of whether it can be
entirely down to the regulated to make that judgment. I am sure that,
as part of the annual process that we are setting out in the clause,
any sensible regulator will discuss the regulatory burdens with those
on whom those burdens are imposed. If a business feels that a regulator
is interpreting policies in a way that imposes unnecessary burdens, it
is entitled to
raise the matter with the regulator. An annual review will help to
promote that kind of dialogue between regulators and business. However,
I do not see a need to write that into the legislation: I think the
review will result in
that. However,
I want to take the hon. Gentleman up on the British Chambers of
Commerce survey, which has been cited a lot in our debates. We have not
had too much party divide during our deliberations on the Bill, but the
Government would see some of the things that have been cited as burdens
in the BCC list not as burdens but as marks of a civilised society and
an economy with proper rules. Instances in the list refer to disabled
access to public transport, but I do not see that as a burden on
business.
Judy
Mallaber: Does my hon. Friend agree that the problem with
the barometer is that it mixes up a burden with a legitimate policy
objective that can be discussed and argued about? It does not confine
itself to genuinely administrative areas, such as when one of the
objectives is not being implemented in the most sensible way to avoid a
burden on business. For example, an objective could require someone to
fill out three forms, when one or none would do. That is what the
barometer should be identifying, as is the case with a number of the
European countries that the Regulatory Reform Committee visited within
the last couple of
weeks.
Mr.
McFadden: My hon. Friend is absolutely right. There is a
completely legitimate discussion to be had, and a legitimate case to be
made, about the administrative burdens of the total sum of regulation.
However, given the way that the Government have set up their review,
that would be a separate discussion from policy outcomes. My hon.
Friend’s description of the BCC list is absolutely right,
because it mixes up the two things. We can probably all have an
argument about one person’s burden being another person’s
legitimate policy outcome, but in my view that is the weakness in the
BCC list.
What do we
mean when we talk about unnecessary burdens? They are burdens that are
disproportionate to the regulator’s policy objective; in other
words, they go further than is necessary to achieve the objective. They
are targeted at situations where action is not required to achieve that
objective, or are imposed in circumstances in which it would be
possible to achieve the outcome in a less burdensome
way. We
are not trying to set up a duty that interferes with the operational
independence of the regulators; we are talking about the way in which
they carry out those functions. That is why part 4 is a useful part of
the Bill.
Mr.
McFadden: I was about to sit down, but I am happy to give
way.
Mr.
Prisk: I shall intervene only briefly, and I will not
stretch your patience, Mr. Chope, with an in-depth
exposition of the British Chambers of Commerce barometer, except to
say—in response to the Minister’s comment—that
where a cost is incurred on, for example, the pay roll of a business,
it is legitimate for that to be noted as a cost, however legitimate the
policy may be.
My question to
the Minister goes to the heart of the debate. If it is not explicit in
the clause, will he join me in urging business that where they identify
unnecessary burdens, with this new duty in place, they should make
their concerns directly known to the regulators involved, so that there
can be a genuine partnership in the process? Does he share that view?
Will he join me in making that encouragement to the business
community?
Mr.
McFadden: Let me put it in my own way. First, there are
existing avenues, as I have discussed, as well as a serious Government
process to reduce administrative burdens, in which business has a
completely legitimate voice. Secondly, the duty in clause 72 for an
annual review of unnecessary burdens will entail regulators discussing
those burdens with business.
Question
put and agreed to.
Clause 72
ordered to stand part of the
Bill.
Clause
73Functions
to which section 72
applies Question
proposed, That the clause stand part of the
Bill.
1.45
pm
Mr.
McFadden: If clause 72 is about regulators’ job
description, clause 73 is about their functions and the particular
regulators to which the duty will apply. It has been said by some that
a ministerial order made under powers conferred in clause 73 could
interfere with regulators’ independence. As I just said, this is
not about regulators’ independence; it is about how their
functions are carried out. Some regulators requested that they be named
in the Bill. They are named in subsection (2), paragraphs (a) to (e):
the Gas and Electricity Markets Authority, the Office of Fair Trading,
the Office of Rail Regulation, the Postal Services Commission and the
Water Services Regulation Authority. Subsection (2) applies the duty to
those
regulators. We
have included the power in the Bill rather than simply applying the
duty to all regulators to allow flexibility in both the extent and the
timing of the duty’s applications. The power to apply the duty
in a territorial sense is set out in subsections (3), (4) and (5).
Subsection (6) requires the Minister to consult the regulator and other
appropriate bodies before seeking to apply the duty, subsection (7)
allows the order to make consequential amendments and subsections (8)
to (11) specify other procedural requirements. The Committee might want
to note that an order applying the duty is subject to the affirmative
procedure. The clause concerns the functions that we have discussed,
which are set out in subsection (1), and the regulators to
whom the new duty will
apply. Question
put and agreed to.
Clause 73
ordered to stand part of the
Bill. Clauses
74 to 76 ordered to stand part of the
Bill.
Clause
77
Short
title
Mr.
McFadden: I beg to move amendment No. 48, in
clause 77, page 37, line 30, leave
out subsection (2).
The amendment
will remove the privilege amendment made in another place. It is a
technical change, but an important one. As hon. Members are aware, the
financial powers of the other place are restricted by the rights and
privileges of the House and by the Parliament Acts. As the Bill
originated in the other place and contains financial powers, a
privilege amendment was added to it before its introduction in this
House to ensure that the House’s financial privileges were not
infringed.
This
technical amendment is therefore necessary to remove the privilege
amendment, which provided that nothing in the Bill should impose or
vary any charge on the people or public funds. It is as much about
parliamentary rules as it is about the Bill itself, but it is
nevertheless necessary.
Mr.
Prisk: Let no one say that we do not learn something in
these Committees—I confess to a possible moment of excitement
when we saw a Government amendment suddenly lurch forward at the last
minute. We were on clause 48 and on Tuesday my office went into full
excitement mode—even more than usual—but, lo and behold,
it is a technical amendment and does not afford us the opportunity to
scrutinise the Minister at great length. It is entirely sensible and
so, with a slight hint of disappointment, I will not oppose
it.
Amendment
agreed to.
Clause 77,
as amended, ordered to stand part of the Bill.
New
Clause
2Limitation ‘This
Act and any order made under it shall by virtue of this section cease
to have effect on 1st January 2014.’.—[Mr.
Prisk.] Brought
up, and read the First
time.
Mr.
Prisk: I beg to move, That the clause be read a Second
time.
Having
concluded the clauses, we come to the new clauses. New clause 2 is very
important because, as you will have seen, Mr. Chope, it is a
sunset clause. As we have discussed, the scope of the Bill is quite
significant—technical, yes, but significant none the less. It
creates an entirely new local regulatory system and an entirely new
non-departmental public body, albeit there is a company in shadow at
present. It provides extensive powers of sanction and enforcement,
involving not one single regulator but 27; and not one piece of
legislation but over 140 different laws. The Bill permits the Secretary
of State to make, by order, important changes to both the current and
the proposed system of local regulation. That means, I hope, that in
all local authority areas we, as Members of this House, will see the
potential for improvement in the regulatory environment. However, those
changes will affect all our constituents.
In the other
place, my noble Friends were able to secure some important concessions,
not least that of a three-year review under clause 17 that covers only
the LBRO. Given that the LBRO is not, as we have debated, directly
accountable to this House, it was right to seek that review. However,
clause 17 and the review contained therein does not apply to the whole
Bill and that is why
it is important to insert the means to debate whether this legislation
should persist after a five-year period. New clause 2
offers a number of important advantages to us as a House. It enables us
to assess the whole Act and look at how it has worked in practice. The
Minister has understandably looked at the different parts of the Bill
in detailed consideration during our deliberations today. However, we
can all see that the sanctions regime, the operation of primary
authorities and the LBRO’s new and interesting range of powers
will not only work in themselves, but will work together. It is
difficult to know what the end result will be—it is untried and
untested and we cannot be certain about it. The LBRO is not a
long-established, familiar organisation that we can judge on its
performance, powers and role.
The new
clause would allow us to look in particular at the range of sanctions
and their impact, especially on small businesses. It would help to
focus—this is an important benefit, which the Minister referred
to earlier—all the regulators’ minds on their performance
not only in the coming year but over the next five years. They would
know that we reserve and have the power to scrutinise the legislation
in full. The insertion of a sunset clause is not a cheap excuse for
getting rid of a piece of legislation without due thought. It would
enable the House to ensure that the law of the land is working. The
legislation provides significant changes for our
constituents.
Rightly, the
Government have said that they want to get serious about regulation and
reducing the regulatory burden, which I welcome. The new clause
provides an opportunity for them to turn that promise into
practice.
Lorely
Burt: I welcome the prospect of a sunset clause. Earlier
in the proceedings, I got a bit excited when I interpreted the
three-year review of the LBRO as a sunset clause. On new clause 3, I
would suggest that six and a half years is too long a period, but I
would welcome a sunset clause proposal. Based on costs of £4.5
million per annum, we would have spent £29 million
before the clause would be invoked. That is too much and too long a
prospect. A three-year sunset clause would be extremely welcome, and I
would also welcome the Minister’s views on how we might go about
imposing such a clause not only on this Bill, but on other Government
Bills.
Mr.
McFadden: Let me begin by saying that sunset clauses are
perfectly legitimate issues to raise. They are not always inappropriate
by any means, and they have been added to a number of Bills, so, on a
basic level, it is legitimate to consider them. However, in relation to
a Bill such as this, such a clause is unwise, and I shall set out my
reasons for so
thinking. The
Bill intends to change the regulatory environment to deal with two
significant problems, as we have said. The first problem is an
inconsistency in the manner in which regulations are applied around the
country, which is essentially dealt with in parts 1 and 2. The second
problem is the inflexibility in the penalty regime, which is dealt with
in part
3. Business
appreciates clarity and certainty, and the Bill intends to give those
things. I fear that the insertion of a sunset clause such as new clause
2 would do precisely the opposite. Businesses and other regulated
organisations need confidence and certainty when making decisions that
the regime that is being implemented will be there for some time. To
begin from the premise that the Bill will lapse in the period set out
in the clause would damage the Bill, not only at the end of the period,
but through its period of
operation. For
example, uncertainty about the continued existence of LBRO would make
it difficult for it to carry authority and trust. Businesses would
think twice about entering into primary authority relationships. We
have debated how important those are in ensuring consistency and
clarity for businesses a lot in the past few days. If businesses
thought that the legal basis for the relationship would be abolished
after five years, they would think twice about investing time, and
indeed money, in them—there is a cost recovery provision. Would
they know that the advice that they had received would hold good in
future? That could be a problem. Local authorities would also have a
reduced incentive to comply with the guidance of a body that Parliament
has said has a time-limited life.
On part 3,
for example, when we think about the penalties that we have discussed
in some depth, as we approached the sunset point regulators might stop
issuing sanctions because their capacity to do so was coming to an end,
and they would rely again on the one-club policy of criminal
prosecution that the Bill tries to get away from. Regulators would have
little incentive to take up these powers, in the knowledge that they
would be withdrawn after a period of time.
2
pm A
review clause is different. It states that we will look at how the
system is operating, but it does not say that it will come to an end,
as a sunset clause does. Regulators adopting the powers in 2010 would
find themselves in the position of having to submit to a review clause
after three years, an exercise with doubtful effects in view of the
fact that if the new clause became part of the Bill, Parliament would
have legislated for the whole regime to go out of existence two years
later anyway. For a number of reasons, that is
unwise. A
similar clause was debated in the other place too. I am not against
review; it is a perfectly sensible thing to do and it is built into the
Bill, but that is different from the automatic ending entailed in a
sunset clause.
We have had a
lot of representations on this issue. If I may detain the Committee
with a few of the quotes on the issue, it may give an idea of the
strength of feeling about consistency and clarity. The Federation of
Small Businesses
said: “The
FSB...has invested a great deal of time and effort in pushing for
the establishment of the LBRO. It would be sad to see a sunset clause
applied to the LBRO as this would severely impact on its ability to
function in the interest of 4.5 million small
businesses.” Going
from small business to a larger national chain, Boots
said, “the
LBRO benefits of the Bill will be lost with the result that industry
will be left still dealing with the inconsistencies that Government
promised would be addressed by this new approach to regulatory
coordination.” Sainsbury’s
said: “The
introduction of the sunset clause will, we believe, make the role of
the LBRO more difficult and potentially prejudice its ability to bring
about the change which is required.”
There are other comments
here and I could go on, but I shall not quote all of them. Finally, the
CBI
said: “Sunset
clauses in principle are a good tool to ensure that regulations are fit
for purpose and deliver their objectives. But we feel that the specific
addition of a sunset clause would not materially add value in the case
of the RES Bill... such an amendment could reduce the
LBRO’s ability to implement its goal of improving the quality of
local authority
enforcement.” So
I think we can see a broad opposition to the new clause, both among
organisations representing small business and some well-known big
businesses. For those reasons, I hope that the hon. Gentleman will not
press the new clause.
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