Select Committee on Regulatory Reform Third Report

5  Preconditions and tests

25.  Section 3(2) of the LRRA requires the Minister to be satisfied that the draft Order meets certain preconditions. These are that:

  • the policy objective could not be better secured by non-legislative means;
  • the effects of the proposed changes to the law are proportionate to the policy objective;
  • the proposed changes strike a fair balance between public and private interests;
  • the proposed change to the law does not deprive anyone of a necessary protection;
  • it will not prevent anyone from continuing to exercise a right or freedom that they might reasonably expect to continue to be allowed to do;
  • it is not of "constitutional significance".

We believe that the draft Order meets all these preconditions.

26.  However, we will comment briefly on the point about removing a necessary protection. As previously explained,[22] the Government considers that investment decisions carry with them an element of risk in the same vein as business enterprises and should not be subject to extra protection. It was never the Department's intention to regulate buy-to-let lending secured on the property where the owner or relative intends to occupy less than 40 per cent of the property. The Explanatory Document remarks:

"The purpose of the proposals is to ensure that the original policy intention is achieved. In doing so no necessary protections are being removed".[23]

We support this view.

27.  We are also required to consider the draft Order against certain tests set out in Standing Order 141(3). These largely restate the preconditions above, but add a requirement for us to consider whether the idea appears to be an inappropriate use of delegated legislation, whether the consultation has been adequate (which we will discuss subsequently), whether the draft order fails any of the tests applied to other types of delegated legislation by the Joint Committee on Statutory Instruments (broadly, these amount to: whether the draft Order imposes a charge on public revenue; whether it seeks to avoid challenge in the courts; whether it purports to have retrospective effect; whether there was unjustifiable delay in the laying of it before Parliament; whether there is doubt about vires or makes unusual or unexpected use of powers; whether there is need for elucidation; and whether it suffers from defective drafting). We must also assess whether the draft Order appears to be incompatible with European Community law. We conclude that the draft Order does not contravene any of the relevant tests.

22   Para9.  Back

23   ED, p28, para34. Back

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