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|Regulatory Reform Bill [H.L.]|
These notes refer to the Regulatory Reform Bill [H.L.]
Regulatory Reform Bill [H.L.]
1. These explanatory notes relate to the Regulatory Reform Bill [H.L.]. They have been prepared by the Cabinet Office in order to assist the reader of the Bill and to help inform debate on it. They do not form part of the Bill and have not been endorsed by Parliament.
2. The notes need to be read in conjunction with the Bill. They are not, and are not meant to be, a comprehensive description of the Bill. So where a clause or part of a clause does not seem to require any explanation or comment, none is given.
3. The main provision of the Regulatory Reform Bill [H.L.] is intended to remove some of the barriers to wider application of the deregulation order-making power under sections 1-4 of the Deregulation and Contracting Out Act 1994 (the DCOA). The new order-making power is intended to be wide enough, but no wider than necessary, to deal with regulatory reform measures which the Government wishes to achieve. In parallel with the widening of the power, the Bill adds to the tests and safeguards governing its use. This policy was the subject of a public consultation document published by the Cabinet Office on 2 March 1999. Both the Lords Delegated Powers and Deregulation Committee and the Commons Deregulation Committee reported on the proposals in their 14th and First Special Reports of the 1998-99 Session respectively (HL 55 and HC 324). The Government's formal responses to the two Committees' reports were also published in the Lords Committee's 28th Report of the 1998-99 Session (HL 111) and the Commons' Committee's First Special Report of the 1999-00 Session (HC 177).
4. The Bill also makes provision to replace section 5 of the DCOA, which is concerned with enforcement of regulations, replacing a little-used procedure with a reserve power for Ministers to set out a code of good practice in enforcement. The Cabinet Office published a consultation paper on this policy on 28 September 1999. The Lords Delegated Powers and Deregulation Committee commented briefly on the proposal in its 28th Report of 1998-99 (HL 111).
5. Both Committees scrutinised the draft Bill following its publication in a Command Paper (Cm 4713) in April 2000. Evidence was taken from Cabinet Officers Ministers, Lord Falconer of Thoroton and Graham Stringer. The Lords Committee reported on the draft Bill in its 15th and 24th Reports of the 1999-2000 session (HL 61 and 86), and the Commons Committee in its Second and Third Special Reports of the 1999-2000 Session (HC 488 and 705). No change has been made to the Bill since its publication in draft.
The existing deregulation order-making power
6. Sections 1-4 of the DCOA provide a mechanism to change primary legislation for the purpose of removing or reducing burdens on business and others. The order-making power in section 1 allows a Minister to amend or repeal any pre-1994 legislation which imposes a burden affecting any person in the carrying on of any trade, business or profession or otherwise, provided doing so would not remove any necessary protection. The Minister may impose a new, less onerous regulatory regime if he wishes. The order-making power is constrained by the subsequent three sections. Section 2 limits the maximum penalties which can be imposed if a deregulation order creates a new criminal offence, and prevents orders from creating new powers to enter, search or seize property by force or to compel people to give evidence. Section 3 ensures that interested parties have an opportunity to comment on any proposed order, that their comments are considered by the Minister and that Parliament is aware of their views when the proposed order is laid for Parliamentary consideration. Section 4 sets out the procedure for Parliamentary consideration of the proposed order. It provides for a period of 60 days for consideration before the draft order can be laid.
7. The deregulation order-making power under the DCOA has been used 46 times to date, to remove burdens from business and individuals which might not otherwise have received Parliamentary time. Orders have included, for example, removing the need for 3-yearly re-authorisation of deductions of union subscriptions from salary; permitting bookings at registry offices up to 12 months in advance instead of three; and relaxing the restrictions on opening hours of licensed premises over Millennium Eve. A full list of orders made under the power is at Annex A.
8. Deregulation orders are subject to thorough public consultation followed by detailed two-stage scrutiny by the Deregulation Committee in the House of Commons and the Delegated Powers and Deregulation Committee in the House of Lords. The special Parliamentary procedure which deregulation orders undergo (sometimes called the "super-affirmative" procedure, a term first coined by the House of Commons Procedure Committee in its 1995 Report on Delegated Legislation (HC 152)) affords a greater degree of Parliamentary scrutiny than that which ordinary affirmative resolution orders receive. First, the Minister lays his deregulation proposal before Parliament "in the form of" a draft order. Following the 60 day period of Parliamentary consideration, during which time the proposal is referred automatically and simultaneously to the Parliamentary Deregulation Committees in both Houses, the Committees make their first report to their respective Houses. If the reports are favourable, the next stage is for the Minister formally to lay a draft order in each House, along with an explanation of any changes made compared to the earlier proposal. If the Minister is minded to accept any changes that are proposed to the draft order by the Committees or others between this stage and the final vote on the order, he must formally take up the draft order he has laid and replace it with another which incorporates the changes. The ability to make changes (minor or otherwise) to the draft order while it is being scrutinised and in response to the scrutiny is a key feature of the order-making power, which is not available to statutory instruments dealt with in the usual way. Ministers in charge of past deregulation orders have on several occasions taken the opportunity to change their draft order in line with recommendations from the Committees. On no occasion has a Minister ignored an adverse report from either Committee; the proposed order has always been re-cast or withdrawn accordingly. The Government intends to continue this practice in its use of regulatory reform orders, and Lord Falconer of Thoroton re-affirmed this intention in his evidence to the Delegated Powers and Deregulation Committee as cited in its 15th Report (HL 61 of the 1999-2000 session).
9. The final procedural stages for Parliamentary scrutiny of draft deregulation orders are set out in Standing Orders (reproduced at Annex B). The Commons Committee produces a report on the draft order within 15 days. The Lords Committee has no set time period but usually reports within the same time period. Both Houses then vote on the relevant Committee report on the draft order (this constitutes the "super-affirmative" aspect of the Parliamentary consideration). The procedure leading up to the final vote on the order differs in the two Houses. In the Commons, the way in which the draft order is dealt with depends on how the Committee reported. If Committee members voted unanimously to approve the draft order, the Motion to approve it is put to the House forthwith. If they voted to approve the draft order following a division of the Committee, there is a debate on the Committee's report lasting a maximum of one and a half hours, after which the Motion to approve the draft order is put. If the Committee recommended that the order not be made, and the Minister still wished to pursue the order, he is faced with two options: either he may take up the draft order and replace it with an amended draft, or he may table a Motion to disagree with the Committee report. The latter has never occurred in practice. If it were to happen, the debate on the Minister's Motion, which would be amendable, would last a maximum of 3 hours. If the House supported the Minister's Motion, a Motion to approve the draft order would be put forthwith. The final stage in the procedure is the vote to approve the order itself.
10. In the Lords, following the publication of the Committee's second report, the Minister tables a Motion that the House should approve the draft order. There is also the opportunity for a debate, if any peer wishes it, on an accompanying motion at the same time as the motion to approve a draft order. The companion motion is moved first and can be amended and voted on. There is a Government undertaking that, in the event of a motion hostile to a draft deregulation order being agreed to by the House, the motion for the draft order would not be moved (House of Lords Hansard, 20 October 1994, col. 352). In this respect, the Delegated Powers and Deregulation Committee in its 15th Report (HL 61, 1999-2000) drew "attention to the Government undertaking that, in the event of a motion hostile to a draft deregulation order being agreed to by the House of Lords, the motion for the draft order would not be moved. In oral evidence Lord Falconer accepted that if a motion hostile to a draft order were agreed to the Government would have to start the order-making process again from scratch (Q.64). This is clearly the strongest ultimate safeguard".
Aspects of the proposed new order-making power
11. The current order-making power is limited in its scope. It has mostly been used for small items. The Regulatory Reform Bill seeks to extend the power so that it can be used more widely. The power is intended to be sufficiently wide, but no wider than necessary, to achieve regulatory reform.
12. There are a number of differences between the proposed new order-making power and the power under the DCOA. Orders under the new power, which are expected to be called regulatory reform orders, will be capable of:
13. The test of maintaining necessary protection is carried over from the DCOA and supplemented by an additional test that no order should prevent anyone from exercising an existing right or freedom which they might reasonably expect to continue to exercise (the "reasonable expectations" test). Two further stringent tests (proportionality and fair balance) apply if an order would increase or impose a burden. The requirements for extensive public consultation and thorough scrutiny by two Parliamentary Committees will remain, but Ministers bringing forward regulatory reform orders will be required to present more explanatory information to Parliament than they did with deregulation orders, to reflect the wider powers and additional safeguards.
14. More generally, the Government intends to apply a Code of Practice to all its consultation exercises under which, as a general rule, a norm of 12 weeks should be allowed for consultation (where the period is less than twelve weeks, the document should state Ministers' reasons for the restriction, and what special measures - for example, advance notice of at least the broad issues covered - have been taken to ensure that consultation is nevertheless as effective as possible). The Code has been issued in draft by the Cabinet Office and is available at http://www.cabinet-office.gov.uk/servicefirst/2000/consult/code/content.htm.
The existing enforcement provisions
15. Section 5 of the DCOA was designed to provide protection for businesses against what was described in debate as "over-zealous or unreasonable application of regulations" (House of Lords Hansard 11 October 1994, col.832). Officers in central and local government enforce a number of regulatory requirements, for example, the requirements on public houses to limit their opening hours, to provide facilities such as lavatories for customers and staff, to have arrangements in place to ensure safe storage and preparation of food and not to sell alcohol to children. Section 5 allows Ministers by order to apply the enforcement procedures set out in Schedule 1 of the DCOA to named pieces of legislation. This gives Ministers powers to:
16. Section 5 has been applied directly only once, in the Deregulation (Improvement of Enforcement Procedures) (Food Safety Act 1990) Order 1996, (SI no. 1996/1683) 1.
1 The approach has also been applied indirectly by being written into Section 86 of the Housing Grants, Reconstruction and Regeneration Act 1996 and Section 377A of the Housing Act 1985 (inserted by the Housing Act 1996). Statutory guidance under the Health and Safety at Work etc Act 1974 issued in February 1996 also included the Section 5 procedure but this was replaced on 1 April 1998 by new guidance based on the Enforcement Concordat.
17. In December 1996, the then Conservative Government consulted on proposals to apply section 5 in the field of trading standards, care services and environmental health. The consultation exercise showed that local authority enforcers felt the "minded to" provisions were bureaucratic and could be manipulated by illegitimate businesses. Businesses were not entirely convinced either, and sometimes confused the "minded to" notice with formal enforcement action. However, there was a consensus about the value of discussing regulatory issues with business, explaining their rights and making a clear distinction between statutory requirements and good practice.
The new policy on enforcement
The Enforcement Concordat
18. Following the 1997 election, the Government reviewed the results of the consultation exercise. It decided not to pursue the section 5 procedures but to adopt a new approach based on co-operation between enforcers and those subject to enforcement. Representatives of business, the voluntary sector, the enforcement community and consumer groups were closely involved in the development of the Enforcement Concordat. The Concordat is a non-statutory code that describes for businesses and others what they can expect from enforcement officers. Central and local enforcement bodies commit themselves voluntarily to its principles and procedures. The full text of the Concordat is at Annex C.
19. The principles can be summarised as follows:
20. The Concordat also sets out procedures, including that:
21. The Concordat has similar objectives to the section 5 powers but excludes those elements of section 5 with which enforcers and businesses had difficulty. Enforcers signing up to the Concordat do so voluntarily, and are encouraged to monitor their progress against it. Under section 5, procedures were imposed by Ministers.
22. Announcing the launch of the new policy on 4 March 1998 (House of Commons Hansard, columns 692-94), the Parliamentary Secretary for the Cabinet Office said that where "minded to" procedures had been applied in primary legislation, these would be amended as the opportunity arose. The one order made under section 5 (see paragraph 16 above) would cease to have effect in England and Wales if the Bill were to receive Royal Assent.
23. In its 15th report (HL 61, 1999-2000), the House of Lords Delegated Powers and Deregulation Committee commented on these provisions saying that "In October 1999 the Committee considered the proposal for a delegated legislative power contained in the new consultation document and saw no objection to it. We agreed with the premise that the way in which regulations are enforced is as important as the regulations themselves, and commented as follows
"Clearly the voluntary approach would only be effective in achieving consistency in enforcement practice if the overwhelming majority of enforcement agencies implement the Concordat within a reasonable timeframe. We note that in the first 18 months of the Concordat's existence only a quarter of local authorities signed up to it, which is presumably why the Government is seeking the powers. No doubt Parliament, in examining any bill or draft bill, will want to be told the current figures for local authority subscription to the Concordat and, if the percentage is still low, to examine possible reasons for this."
Our view on this provision remains unchanged."
24. By November 2000, the Concordat had been adopted by about 75% of all local authorities in England, Scotland and Wales (including all County Councils in England) and by the vast majority of central government enforcement agencies. In the light of take-up of the Concordat, the Government is seeking only a reserve power.
Provisions in the Bill
25. The Bill would repeal section 5 of the DCOA and replace it with a power for Ministers to set out a code of good enforcement practice. This would provide a safeguard if problems were encountered with the voluntary approach. The policy, including the "light-touch" nature of the reserve power, was developed with input from a consultation exercise involving both enforcers and those subject to enforcement.
26. The proposal is designed to provide assurance to business, the voluntary sector and others that the Government would be able to bring pressure to bear on enforcers that failed to apply best practice along the lines of the Concordat. A code made under this power would not be directly binding on enforcers. But businesses found by a court or tribunal to be in breach of a statutory requirement would be able to ask for the enforcer's failure to follow the code to be taken into account in determining the appropriate penalties, award of costs or other action.
27. The power is intended to counter unjustifiably inflexible or over-zealous enforcement. The provisions of the Bill allow a code to be tailored to address the particular enforcement problem that had emerged. Before making an Order the Government would consult publicly on why and how the power should be used. This would explain the underlying circumstances, the enforcement bodies or activities that would be affected and the proposed content of the code. In accordance with the requirements of Good Policy Making: A Guide to Regulatory Impact Assessment 2, published by the Cabinet Office, the consultation document would be accompanied by a thorough regulatory impact assessment, setting out the expected benefits to business as well as the impact on enforcers.
28. The clauses of the Bill may be conveniently divided into four main groups:
COMMENTARY ON CLAUSES
Clause 1: Power by order to make provision reforming law which imposes burdens
29. Subsection (1) includes the main order-making power, and sets out the context within which it can be exercised. The governing purpose in this subsection constrains the power in a number of respects. It will be helpful to deal with each of these in turn.
"..by order make provision for the purpose of reforming legislation.."
30. This means that orders can only be directed at the reform of existing legislation. They cannot make entirely new provision; there has to be some Act or Acts of Parliament already in existence. So an order could not be used, for example, to remove burdens imposed solely by the common law.
31. As drafted, the Bill does not contain an express provision relating to common law, and it is not the intention to use the order-making power to seek to change, for example, the principles of contract law or of tort law. Under it, common law elements can only be dealt with within the context of reform of legislation. The anchor of the reform must be a piece or pieces of burdensome primary legislation (or a previous deregulation order or regulatory reform order), rather than common law. Legislation, whether primary or secondary, frequently affects the common law in this way. Legislation also frequently refers to common law concepts, such as contracts, and makes provision about them. To the extent that there has previously been no statutory provision on a matter, what is done will inevitably displace the common law to that extent. Particularly by virtue of the fact that the Bill would enable limits to be removed from statutory powers, orders made under it are more likely to impinge on the common law than those made under the Deregulation and Contracting Out Act 1994. This is very different from what is occasionally done, namely for a statute to make express provision amending a common law rule (often only capable of being described by reference to a particular case). The Bill would not enable the Minister to make free-standing provision of this kind, even though it may be related to something which is covered by statute. Similar considerations apply in relation to Scots Private Law to the extent to which it is not in any case devolved.
32. The reference in this clause to reform opens up the order-making power so that it can apply to a whole regulatory regime, addressing a number of different pieces of legislation if necessary. For example, the power could be used to simplify and rationalise the legislation governing fire safety, which is enshrined in approximately 120 Acts of Parliament and a similar number of statutory instruments. Where a burdensome situation results from a variety of overlapping regimes, perhaps spread over primary legislation and secondary legislation (including different sets of regulations), the order could replace the entire range. The result would be the repeal of the legislation and new provision in what might be known as, for example, the Regulatory Reform (Fire Safety) Order. The confusion created by the variety of different provisions could be removed.
33. The term "reform" is given its natural meaning. Section 3(1) of the Law Commissions Act 1965 describes the systematic development and reform of the law as including "the codification of..law, the elimination of anomalies, the repeal of obsolete and unnecessary enactments, the reduction of the number of separate enactments and generally the simplification and modernisation of the law". In the Bill the term "reform" is intended to have a similar meaning (other than in relation to codification) to that which it has in the Law Commissions Act. The key difference is that the concept in the Law Commissions Act is intended to cover the whole of the law while the Bill is concerned only with burdensome statute law (as detailed below).
"..make provision for the purpose of reforming legislation which has the effect of imposing burdens.."
34. The concept of "burden" is dealt with below at clause 2. Beyond that, the effect of this part of the clause is to preclude any order which is not predicated on the reform of burdensome legislation. So, for example, before the enactment of the Limited Liabilities Partnership Act 2000, an order could not have been used to create a completely new legal entity, for example for incorporation of limited liability partnerships. But an order could be used, for example, to remove the duplicatory accounting requirements whereby NHS bodies must submit accounts of charitable funds to the Charity Commission under charity law and also to the National Audit Office under health legislation.
|© Parliamentary copyright 2000||Prepared: 8 December 2000|