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Lord Lipsey: I thought I was to have the rare pleasure of participating in a debate in which I could say I agreed with every single word said by noble

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Lords--until the noble Lord, Lord Jenkin, said that nothing would come of the Royal Commission report. My noble comrade-in-arms on that commission and myself are entirely optimistic that the sensible and carefully weighted recommendations of the minority will be accepted by the Government.

I am grateful for the strong support offered by all sides and for the many different angles from which it has come. It represents a formidable case. From the tone of the Minister's remarks--especially the tone on which he finished--it is clear that he recognises that a formidable case has been made. In view of the assurances that he has given, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 100 not moved.]

Clause 20 agreed to.

Schedule 2 [Regulated Activities]:

[Amendments Nos. 101 and 102 not moved.]

Lord Kingsland moved Amendment No. 103:

    Page 226, line 30, at end insert--

(" .--(1) The Treasury must publish a draft of any order proposed to be made under section 20(1) in the way appearing to them to be best calculated to bring it to the attention of the public.
(2) The draft must be accompanied by--
(a) an explanation of the purpose of the proposed order; and
(b) notice that representations about the proposals may be made to the Treasury within a specified time.
(3) Before making the proposed order, the Treasury must publish an account in general terms of--
(a) the representations made to them in accordance with sub-paragraph (2)(b); and
(b) their response to them.
(4) If the order made by the Treasury differs from the draft published under sub-paragraph (1) in a way which is, in the opinion of the Treasury, significant, the Treasury must (in addition to complying with sub-paragraph (3)) publish details of the difference.
(5) Sub-paragraphs (1) to (4) do not apply if the Treasury consider that the delay involved in complying with them would be prejudicial to the interests of consumers.").

The noble Lord said: In moving this amendment, I should also like to speak to Amendment No. 137 which is listed in the same group.

Clause 20 provides that,

    "An activity is a regulated activity for the purposes of this Act if it is an activity of a specified kind which is carried on by way of business and ... relates to an investment of a specified kind; or ... in the case of an activity of a kind which is also specified for the purposes of this paragraph, is carried on in relation to property of any kind".

Part I of Schedule 2 describes in general terms the types of activities which are likely to be considered to be regulated activities; and Part II of the schedule sets out, in general terms, the types of investments which will be considered to be investment of a specified kind. Part III of Schedule 2 gives details of the order-making power of the Treasury under Clause 20 to specify regulated activities and investments.

Throughout the Bill, the powers of the authority to make rules, codes and so on are subject to a requirement to carry out a public consultation on

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drafts of the rules and codes. Included, as part of the consultation procedure, is a requirement for the authority to publish an account in general terms of the representations made to it, as part of the consultation exercise, and the authority's response to those representations.

No such requirement to carry out a public consultation applies to the Treasury's order-making powers. In practice, the Treasury usually does carry out a consultation exercise. However, there is no obligation to do so; and there is no requirement on the Treasury to give an account of the representations made to it or its response to those representations.

This amendment--and indeed Amendment No. 137 in a different context--introduces to Schedule 2 the requirement to carry out a consultation exercise. The exercise is not as onerous as would apply to the authority in relation to its rule-making powers because the authority is also required to carry out a cost-benefit analysis in relation to proposed rules. No requirement to carry out a cost-benefit analysis has been included in this amendment. I beg to move.

Lord Newby: This is a slightly broader variant of our Amendment No. 279, which deals simply with a requirement on the FSA to consult the practitioner panel and the consumer panel. The amendment takes the provision, in a more elegant form of drafting, beyond that, and gives scope for wider consultation. I have every sympathy with the mover of the amendment. I hope that not only will the Minister be sympathetic, but that he may also be able to say yes in this case.

Lord McIntosh of Haringey: These amendments seek to impose on the Treasury requirements to consult on draft regulations and to make statements about the comments it has received during the consultation. Clearly, the noble Lord, Lord Kingsland, has looked at the consultation requirements that are imposed on the authority when it exercises its delegated legislative functions and he has clearly looked on them with favour, because he seeks to reproduce them here--

Lord Kingsland: Oh.

Lord McIntosh of Haringey: I wondered whether I should get away with that.

We need to remember that the consultation arrangements imposed on the authority are there because they form part of what we sometimes refer to as the accountability package; that is to say, the Bill imposes a number of obligations on the authority to ensure that, in carrying out its functions, it does so in a way that is compatible with its general duties under Clause 1 of the Bill and to ensure that it is properly accountable. The need for the accountability package reflects the legal status of the authority--a company on which a range of statutory powers and functions are conferred by the Bill.

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The same arrangements are not necessary in the case of the Treasury because the Treasury is answerable to Parliament for its actions. That is why I am here. Indeed, when it comes to the exercise by the Treasury of its powers to make delegated legislation, those powers are exercisable by statutory instrument subject to the different procedures set out in Clause 404. Any orders and regulations under the Bill, excluding commencement orders, will either be subject to annulment by either House of Parliament or subject to approval by both Houses. The procedure that applies in particular cases will depend on the nature of the statutory instrument and the power in the Bill under which it is to be made.

That leads me to two points. First, orders under Clause 20, which are the subject of Amendment No. 103, are already to be subject to an affirmative procedure when orders are first made under the power or, where such orders have the effect of bringing new types of activity within the scope of regulation, under the Bill. The second amendment, Amendment No. 137, relates to the power to make exemption orders under Clause 36. In its memorandum to the Delegated Powers and Deregulation Committee, the Treasury drew attention to the fact that it was reconsidering the procedure which should be applied to the exercise of that power. The Bill currently applies a negative procedure resolution. The committee recommended that the power should be subject to an affirmative procedure. The noble Lord, Lord Kingsland, may be aware that the Government have already indicated that they have accepted the committee's recommendation and will be bringing forward an amendment to achieve that result. My point therefore is that the two powers in question will be subject to an affirmative resolution procedure. The House will be able to debate the orders at the time they are made.

My second point--this will be apparent from what I have already said--is that the arrangements we have proposed have been approved by the Delegated Powers and Deregulation Committee. It is the case that government departments are increasingly consulted on secondary legislation and, indeed, primary legislation, such as this Bill, before it is introduced into Parliament. The whole history of the Bill is extensive--one might almost say exhaustive--consultation. The Treasury's commitment to consulting on draft legislation has already been proven by this Bill. It has also consulted, as the noble Lord, Lord Kingsland, recognised, on a number of draft regulations and orders to be made under the Bill, including a draft of the orders under Clauses 20 and 36. Where it is practicable or helpful to do so, the Treasury will continue to consult on its draft legislation.

In concluding my response, I should make one final point. The amendment seeks to impose an obligation on the Treasury in the specific case of orders under Clauses 20 and 36. That is unprecedented. I am aware of only one other piece of legislation that requires consultation by a government department before an

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order is made; namely, the Deregulation and Contracting Out Act 1994. But the kind of things that may be provided for in an order under that Act are very different. By their nature, orders under that Act do not define the detail of basic propositions that are set out on the face of an Act, which is the case with the powers that we are currently debating. A deregulation order under the 1994 Act can do away with vast swathes of legislation without being subject to parliamentary controls. That is certainly not the case with orders under Clauses 20 and 36. I hope that the noble Lord will not press the amendments.

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