4th February 1998
By the Select Committee
appointed to report whether the provisions of any bill inappropriately
delegate legislative power, or whether they subject the exercise
of legislative power to an inappropriate degree of parliamentary
scrutiny; to report on documents laid before Parliament under
section 3(3) of the Deregulation and Contracting Out Act 1994
and on draft orders laid under section 1(4) of that Act; and to
perform, in respect of such documents and orders, the functions
performed in respect of other instruments by the Joint Committee
on Statutory Instruments.
PROTECTION BILL [HL]
1. The principal
purpose of this Bill is to implement the EC Data Protection Directive
and to add further protection to that provided by the Data Protection
Act 1984, which the Bill repeals. It extends data protection controls
to cover certain manual, as well as computerised, personal data;
attaches conditions to processing, including additional ones for
sensitive data; strengthens individuals' rights, in particular
the rights to be told about processing, to obtain copies of data
and to secure judicial remedies; and replaces registration with
2. In examining
the Bill the Committee first considered - as it does with all
bills containing delegated powers - whether the grant of secondary
power was appropriate.
With the potential exception of clause 28(4), to which we return
later, in each instance we concluded that it was. We then followed
our usual practice of considering the delegated powers one by
3. Clause 60
states the procedure for the making of orders, regulations and
rules under the Bill. The Home Office memorandum explains that
the Directive permits Member States a considerable amount of discretion
and in the context of, for example, the new notification system,
the Bill takes full advantage of this discretion, leaving the
detail of the scheme to be set out in notification regulations.
The memorandum, which is exceptionally helpful, provides a commentary
on all the delegated powers contained in the Bill and this report
deals only with those which raised particular issues which the
Committee considered in detail. There are six delegated powers
subject to affirmative procedure, instruments under four powers
have to be laid before Parliament after being made, the commencement
power is not subject to Parliamentary control and the remaining
powers are subject to negative procedure.
4. There are
affirmative powers in clauses 9(2)(b), 21(1), 28(4), 29 and 37
and paragraph 9 of Schedule 3. In each case the memorandum justifies
affirmative procedure by reference to the significance of the
power having regard to the impact its exercise could have on those
affected. In some instances there is a corresponding power in
the 1984 Act which is subject to affirmative procedure.
5. The Home
Office memorandum states clearly that the affirmative resolution
procedure has been chosen where orders would, or might, restrict
the rights of data subjects (see especially paragraphs 17, 18,
19 and 21 of the memorandum). The Committee agrees with this judgment
about the appropriate Parliamentary control. As the Home Office
also states in its memorandum (paragraph 30), the first data protection
principle, and one of the fundamental concepts of any data protection
regime, is the requirement for personal data to be processed fairly
and lawfully. The Committee considers that the affirmative procedure
is necessary in each of these instances to protect the rights
of the data subject, particularly since the restriction of those
rights is contrary to the normal intention of the bill.
6. The order-making
power in clause 28(4) is one of the most controversial elements
of the bill. It gives the Secretary of State an apparently unlimited
power to exempt personal data of a specified description from
the data subject's right of access to personal data (section 7)
and from the requirement to process personal data fairly and lawfully
(set out in paragraph 1 of Schedule I to the Bill).
7. As the Minister
acknowledged during the Second Reading debate on this bill, there
is a particularly difficult balance to be struck with this power,
about which the Data Protection Registrar has expressed her concern.
The exemption in clause 28(1) is limited to the contexts of crime
and taxation, but is expressed in very wide terms as applying
"in any case" in which the application of the provisions
in question would be likely to prejudice any of the matters specified.
The need for the power in section 28(4) to create additional exemptions
is not immediately apparent, and indeed the Minister told the
House that the Government had "made no firm decisions about
It is not easy to see what clause 28(4) adds which is not covered
by clause 28(1). The obvious differences are the contrasts between
"in any case" and "personal data of a specified
description" and between "likely to prejudice any of
the matters mentioned in this subsection" and "required
for any of the purposes mentioned in subsection (1)". The
Committee was grateful for the explanation in the explanatory
memorandum that "it is understood that it may be necessary
in some circumstances, in view of the importance of the purposes
set out in clause 28(1), to disapply those provisions otherwise
than on a case by case basis".
8. The Committee
understands the case for giving the Secretary of State power to
grant some limited exemptions to section 7 and the non-disclosure
provisions in respect of descriptions of data in order to avoid
the commission of crime and to assist in its detection. That point
was made by the Solicitor General during the Second Reading debate,
and underlies clause 28(1). Of far greater concern is the wide-ranging
power under clause 28(4) to grant exemptions from the requirement
to process personal data fairly and lawfully (the first data protection
principle). This principle goes to the heart of the Bill, and
the Committee views with the greatest concern the scope of this
provision. If the power remains in the Bill as it is currently
drafted, there will be no limits to the inroads which could be
made into the fundamental requirement that personal data be processed
fairly and lawfully - a power which in the Committee's view it
would be impossible to justify. The House will no doubt wish to
consider these issues with the greatest care during the Bill's
subsequent passage and may wish to amend the Bill to remove the
general power to grant exemptions from the first data protection
9. Clause 13
places a limitation on processing by giving a right to the data
subject not to be subject to certain decisions "based solely"
on automated processing. Power is, however, given to the Secretary
of State by clause 13(5) to disapply by order the limitation contained
in clause 13(1) in other specified circumstances. The memorandum
states that "the exercise of this power will of course be
circumscribed by the Directive's stipulations as to safeguards."
It justifies the application of the negative resolution procedure
on the grounds that "the general prohibition on automated
decision-taking is itself somewhat in the nature of a procedural
safeguard for data subjects."
10. In the
Committee's view, it would be possible for this power to operate
substantively rather than procedurally. Furthermore, automated
processing is increasing rapidly, and is likely to continue to
do so as developments in computer technology continue to push
areas of the law into hitherto uncharted territory. The Committee
has earlier welcomed the Government's use of the affirmative resolution
procedure for orders which would restrict the rights of data subjects.
Taking all these considerations into account, the House may consider
that the Bill should be amended to make the power in clause 13(5)
subject to the affirmative resolution procedure.
15(2) defines "notification regulations" as regulations
made under Part III of the Bill other than regulations about fees.
Part III is concerned with the notification to the Data Protection
Commissioner (at present the Data Protection Registrar) of particulars
of data controllers. These regulations are subject to negative
procedure. The memorandum points out that the power under section
4(8) of the 1984 Act to vary registration particulars is subject
to affirmative procedure and justifies the lower level of Parliamentary
scrutiny of notification regulations by reference to the difference
in character between the old regime and the proposed new regime,
in particular the fact that notification particulars will no longer
trigger direct controls on processing. The Committee does not
see section 4(8) as a relevant precedent. That power is close
to being a Henry VIII power as it allows the Secretary of State
to "vary the particulars to be included in the register"
when section 4(3) sets out a list of particulars which are to
go in the register. But given the close supervisory role of the
Data Protection Commissioner in this area, the Committee sees
no reason to suggest that affirmative procedure would be more
appropriate for notification regulations.
12. There are
powers to prescribe the fees or the maximum fees that can be charged
under the Bill. These powers are in clauses 7, 17(5) and 18(4)
and (7). The power under clause 7 extends also to prescribing
the maximum fee that can be charged under the Access to Health
Records Act 1990 and the Access to Health Records (Northern Ireland)
Order 1993 (see the amendments in Schedule 10, page 56, of the
Bill). These powers are not subject to Parliamentary control but
instruments have to be laid before Parliament after they have
been made. The Committee is satisfied that these arrangements
13. The House
will wish to consider carefully the need for the order-making
power in clause 28(4). It may also wish to consider the case for
amending the bill to make the power relating to automatic decision-taking
in clause 13(5) subject to the affirmative resolution procedure.
There is nothing else in the Bill to which the House's attention
need be drawn.
BANK OF ENGLAND BILL
14. This Bill
makes major changes to the constitution and functions of the Bank
The Bill confers on the Treasury power to make orders (clauses
17(4) and (5), 19, 23(2), 33(1) and 45 (commencement) and Schedules
2 (paras 1(2) and 2(2), 5 and 8) and 4 (paras 1(5) and 3(7)).
Parliament is given "affirmative" control over orders
under clause 17(4) or (5) or 19 or paragraph 1(2) or 5 of Schedule
2. Parliament has no control over commencement orders or orders
under paragraph 3 (7) of Schedule 4. The Financial Services Authority's
power to prescribe banking supervision fees is discussed below
as are the powers delegated to the Treasury which raise issues
of interest to the Committee.
Henry VIII powers
17(5) allows the Treasury to amend clause 17(3) which specifies
the institutions which the Bank can compel to provide information.
This power is no doubt needed to meet changing circumstances and
the Committee considers that the affirmative procedure provided
should give appropriate control. Clause 17(6) requires prior consultation.
33(5)(b)(i) allows an order under clause 33(1) to amend or repeal
an enactment in any Act, wherever passed (there is a similar power
to amend statutory instruments). Clause 33 is concerned with the
closure of the National Savings Stock Register to gilts. While
the clause establishes the policy, it is left to the Treasury
to give effect to it by order. An order under the clause is subject
to negative procedure in the Commons only. In the Committee's
view the narrow compass of the clause and the fact that the important
decisions will have been taken by Parliament in passing the clause
make negative procedure appropriate even for the Henry VIII power.
As the clause is concerned with Government borrowing arrangements
it is appropriate that the control should be given to the Commons
1(2) of Schedule 2 allows the Treasury to amend paragraph 1(1)
which specifies the "eligible institutions" which have
to maintain cash deposits with the Bank. Again the affirmative
procedure provided appears to give appropriate control.
8 of Schedule 2 allows the Treasury to amend or replace paragraph
7 which specified the benchmark rate of interest which determines
how much an eligible institution has to pay the Bank under paragraph
6(3). This power is subject to negative procedure. The Committee
considers that negative procedure is appropriate for this Henry
3(2) of Schedule 7 allows the Treasury by order to amend the Table
set out in paragraph 3(1). That Table lists the authorities to
which the Bank can disclose information notwithstanding the general
prohibition in paragraph 1(3). Information can only be disclosed
to such an authority to assist it with the discharge of such of
its functions as are specified in the Table. The power to amend
the Table is potentially wide, and the appropriate degree of parliamentary
control depends on the uses to which it will be put. The House
may wish to consider whether it is not of such significance as
to justify amending the Bill to provide for the affirmative resolution
procedure, rather than the negative procedure currently proposed
in the Bill.
Other affirmative powers
17 gives the Bank power to obtain information. The institutions
subject to this power are specified in subsection (3) (see the
note on clause 17(5) above) and subsection (4) gives the Treasury
power by order to determine what financial affairs of such an
institution are subject to inquiry under the clause. The power
is subject to affirmative procedure because of its importance
and apparent width.
19 gives the Treasury reserve powers to make orders giving the
Bank directions with respect to monetary policy. This power includes
making consequential modifications of the provisions of Part II
of the Bill relating to the Monetary Policy Committee (see clause
13). An order under this clause has to be laid after being made
and ceases to have effect after 28 sitting days unless approved
by both Houses. This is the common "emergency procedure"
and seems appropriate here - the power can only be used in "extreme
economic circumstances" (subsection (1)). An order suspends
the operation of Clause 11 (which states the monetary policy objectives
of the Bank).
5 of Schedule 2 allows the Treasury to specify for the purpose
of paragraph 4 (calculation of deposits required from eligible
institutions) "value bands and the ratios applicable to them".
Presumably the importance of these to the City makes affirmative
21 transfers certain functions (mainly regulatory) of the Bank
to the Financial Services Authority. Schedule 4 contains the supplementary
provisions about the transfer of staff, property, rights and liabilities.
Paragraph 1(5) gives the Treasury power by order to make transitional
provisions. This power is subject to negative procedure and does
not call for comment. Paragraph 3 requires the Bank to make a
scheme for the transfer to the Authority of "such of the
Bank's property, rights and liabilities as appear to the Bank
appropriate to be so transferred in consequence of the transfer
of functions ....." A scheme requires the consent of the
authority (paragraph 3(3) and the approval of the Treasury (paragraph
3(2)). Approval is given by order (paragraph 3(7)) and the Treasury
may modify the scheme (paragraph 3(4)) or make a scheme (in the
circumstances set out in paragraph 3(6)). An approval order is
a statutory instrument but is not subject to Parliamentary control.
This seems appropriate for the subject matter.
Banking supervision fees
6 allows the Financial Services Authority to charge fees in connection
with its supervisory functions. It is left to the Authority to
fix the amount of the fees and when they are to be paid. This
the Authority is to do by regulations. Paragraph 2 requires the
Authority to consult before making regulations, paragraph 3 states
that the regulations are to be made by an instrument in writing
and paragraphs 4 and 5 deal with the publication and proof of
regulations. The fixing of fees is the exercise of a delegated
legislative power but the instrument containing the fees regulations
is not to be a statutory instrument. The Committee considers this
acceptable as the fees are to be such as will cover the Authority's
costs (paragraph 1(3)) and those who will have to pay are to be
consulted. If the Authority abused its power to make fees regulations,
it would be subject to judicial review.
25. There is
nothing else in the Bill to which the House's attention need be
EUROPEAN COMMUNITIES (AMENDMENT) BILL
26. There are
no delegated legislative powers in this Bill.
1 Directive 95/46/EC of the European Parliament and the Council on the protection of individuals with regard to the processing of personal data and on the free movement of such data. Member States must have legislation giving effect to this Directive in place by 24 October 1998. Back
2 This includes expressing a view on whether the power is so important that it should only be one granted by primary legislation. See paragraph 13 of the Committee's Special Report for last session (HL Paper 72, session 1996-97). Back
3 Explanatory memorandum, paragraph 7. Back
4 HL Deb., 2 February 1998, col. 441. Back
5 HL Deb., 2 February 1998, col. 477. Back
6 Paragraph 6. Back
7 Explanatory memorandum, paragraph 17. Back
8 The Chairman of the Committee, Lord Alexander of Weedon QC, having declared an interest in the subject matter of this Bill as Chairman of National Westminster Bank PLC, took no part in the Committee's deliberations on the Bill. In his absence for the relevant part of the Committee's meeting on 4 February, the Lord Dean of Harptree took the Chair.
The Committee considered that it would be for the convenience of the House if it were to report before the second reading of this Bill. In such circumstances, we would expect to report on the Bill for a second time if the second reading debate raises issues which the Committee would have wished to take into account. Back