House of Lords - Explanatory Note
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Session 2005 - 06
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Legislative and Regulatory Reform Bill


 

These notes refer to the Legislative and Regulatory Reform Bill as brought from the House of Commons on 17th May 2006 [HL Bill 109]

LEGISLATIVE AND REGULATORY

REFORM BILL

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EXPLANATORY NOTES

INTRODUCTION

1.     These explanatory notes relate to the Legislative and Regulatory Reform Bill as brought from the House of Commons on 17th May 2006. 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.

SUMMARY AND BACKGROUND

3.     Part 1 of the Bill provides powers for a Minister of the Crown to make orders. The powers replace the power in the Regulatory Reform Act 2001 ("the 2001 Act") to make Regulatory Reform Orders ("RROs"). Part 1 sets out what the powers are, the conditions and restrictions which apply to them, and the procedure which must be followed in exercising them.

4.     The impetus for this Part comes from the Government's review of the first four years of the operation of the 2001 Act, which was completed in July 2005 1. The review was informed by detailed feedback from Government departments which have been involved in the making of RROs under the 2001 Act, and by the findings of the Better Regulation Task Force ("the Task Force") contained in its report Less is More: Reducing Burdens, Improving Outcomes, published in March 2005 2. The Task Force's report made some recommendations (at page 42) as to what the Government's review of the 2001 Act should cover.

1 Review of the Regulatory Reform Act 2001 (Cabinet Office, July 2005)

2 From 1st January 2006 the Better Regulation Commission took over the duties of the Better Regulation Task Force.

5.     The review concluded that the 2001 Act presented a number of hurdles which inhibited the use of RROs; in particular that the powers in the 2001 Act were too technical and limited, that the scope of RROs should be extended to deliver non-controversial proposals for simplification and that the whole process for delivering an RRO and subsequent scrutiny could be made more proportionate. Part 1 implements proposals developed as a result of the conclusions reached in the review.

6.     Part 2 contains provisions which are intended to promote more effective inspection and enforcement by regulators and to ensure that they exercise their functions in a way that is consistent, coherent and proportionate without compromising regulatory standards or outcomes. In order to achieve this, the Bill establishes statutory principles of good regulation, based on the Better Regulation Commission's Principles of Good Regulation, to which regulators exercising regulatory functions specified by order must have regard. These statutory principles will also inform a Code of Practice issued by the Minister which regulators must have regard to in relation to specified regulatory functions.

7.     Part 2 has its origins in the recommendations of a review entitled Reducing administrative burdens: effective inspection and enforcement, which the Government appointed Mr Philip Hampton to lead. The review's recommendations, accepted in full by the Government, were aimed at promoting effective, risk-based enforcement and were published in a report in March 2005 ("the Hampton Report").

8.     Part 3 makes provision about legislation relating to the European Communities. In the first place it amends the Interpretation Act 1978 ("the 1978 Act") to make provision about references in domestic legislation to Community instruments; and to make provision about references in domestic legislation relating to the agreement on the European Economic Area. In the second place, Part 3 makes provision about how Community obligations are implemented in domestic law, in order primarily to reduce the number of domestic instruments that need to be made. Technical provisions intended to improve the way in which Community law is implemented in domestic legislation were incorporated in the European Union Bill currently before Parliament, but since the Government has not yet set a date for the Second Reading of that Bill, these provisions are instead included in this Bill.

9.     Part 4 contains supplemental and general provision, and the Schedule to the Bill details the legislative provisions which are repealed by the Bill.

TERRITORIAL EXTENT

10.     This Bill extends to the whole of the United Kingdom, subject to the provisions of clause 36.

TERRITORIAL APPLICATION: WALES

11.     The Bill applies in relation to Wales and includes provisions that relate specifically to the powers of the National Assembly for Wales ("the Assembly").

12.     Part 1 of the Bill provides, at clause 12, that an order may not make any provision conferring a function on the Assembly, modifying or removing a function of the Assembly, or restating any provision that confers a function on the Assembly, without the agreement of the Assembly.

13.     Where the agreement of the Assembly is not required under clause 12, a Minister proposing to make an order under the powers in Part 1 must consult the Assembly in accordance with clause 14 where the proposals, insofar as they apply to Wales, relate to any matter in relation to which the Assembly exercises functions.

14.     In Part 2 of the Bill, clause 26 provides that a Minister may specify, by order, which regulatory functions (as defined in clause 34) are covered by the Principles and Code of Practice (clauses 23 and 24). However, a Minister may not specify a regulatory function that is exercisable only in or as regards Wales: instead the power is conferred on the Assembly and any such functions may be specified, by order, by the Assembly.

15.     Part 3 of the Bill contains provisions dealing with legislation relating to the European Communities. Clause 29, which makes provision to include a power in section 2 of the European Communities Act 1972 ("the 1972 Act") to make orders, rules and schemes in addition to regulations, is the only clause in that Part that has separate provision in respect of Wales. Subsection (3) of clause 29 contains an amendment to the Government of Wales Act 1998 consequential on the amendment made by subsection (1). Subsection (6) further provides that the power of a Minister of the Crown to make an order under subsection (5) to amend enactments or subordinate legislation referring to regulations made under section 2(2) of the 1972 Act to include a reference to any order, rules or scheme, shall also be exercisable by the Assembly, insofar as it relates to a matter in respect of which functions are exercisable by the Assembly. This power is to be exercisable by statutory instrument (subsection (7)).

COMMENTARY ON CLAUSES

Part 1 - Order-Making Powers

Powers

Clause 1 - Power to remove or reduce burden

16.     Clause 1 confers power on a Minister of the Crown to make provision by order which he considers would serve the purpose of removing or reducing any burden, or removing or reducing the overall burdens, to which any person is subject as a direct or indirect result of any legislation.

17.     The reference to "removing or reducing the overall burdens" is intended to allow for one statutory regime to be replaced by another one which is less burdensome overall.

18.     Subsection (3) defines 'burden' as -

  • a financial cost;

  • an administrative inconvenience;

  • an obstacle to efficiency, productivity or profitability; or

  • a sanction, criminal or otherwise, for doing or not doing anything in the course of an activity.

19.     As a result of the fourth limb of the definition, the power to remove or reduce burdens enables a Minister to remove or reduce criminal sanctions which relate to the carrying on of a particular activity (as opposed to sanctions relating to offences under the general criminal law).

20.     Subsection (4) has the effect that it will not be possible to remove or reduce burdens which only affect a Minister of the Crown or government department, except where the burden affects the Minister or department in the exercise of a regulatory function.

21.     Subsection (5) provides that financial cost and administrative inconvenience may result from the form of any legislation. Examples would include where legislation is difficult to understand, or where provisions governing an area are contained in many different pieces of legislation.

22.     'Legislation' is defined in subsection (6) and includes local as well as public general Acts, and subordinate legislation as well as primary legislation. Local Acts cover limited areas or particular bodies or institutions, such as particular charities or port authorities. The definition of 'legislation' does not include any instrument which is Northern Ireland legislation within the meaning of section 24 of the 1978 Act (such as Acts of the Parliament of Northern Ireland, or Orders in Council made under section 1(3) of the Northern Ireland (Temporary Provisions) Act 1972). It is perhaps worth noting that the definition of 'legislation' does not include Acts of the Scottish Parliament or instruments made under them.

23.     Subsection (7) provides that the provision that can be made by order under this clause includes provision which:

  • confers functions on any person, including the function of legislating;

  • modifies the functions conferred on any person by an enactment;

  • transfers the functions conferred on any person by an enactment;

  • abolishes a body or office established by or under an enactment;

  • amends or repeals any enactment.

('Enactment' does not include an enactment comprised in, or an instrument made under, an Act of the Scottish Parliament: see the 1978 Act, Schedule 1.)

24.     Subsection (8) confers power for an order made under this clause to make such consequential, supplementary, incidental or transitional provision as the Minister considers appropriate. This power includes power to make provision amending or repealing any enactment or other provision, including Northern Ireland legislation and Acts of the Scottish Parliament and Scottish statutory instruments.

Clause 2 - Power to promote regulatory principles

25.     Clause 2 provides a power for a Minister of the Crown to make provision, by order, which he considers would serve the purpose of ensuring that regulatory functions are exercised so as to comply with the Better Regulation Commission's five Principles of Good Regulation. "Regulatory function" is defined in clause 34.

These principles (subsection (3)) are that regulatory activities should be carried out in a way that is transparent, accountable, proportionate, consistent, and should be targeted only at cases in which action is needed.

26.     Subsection (4) provides that the provision that can be made by orders under clause 2 includes provision which:

  • modifies the way in which a regulatory function is exercised by any person;

  • amends the constitution of a body exercising regulatory functions which is established by or under an enactment;

  • transfers regulatory functions from one person to another;

  • creates a new body or office to which regulatory functions are transferred;

  • abolishes a body or office established by or under an enactment;

  • amends or repeals any enactment.

27.     However the provision that can be made under this clause does not include provision modifying existing regulatory functions conferred on any person by an enactment.

28.     Subsection (5) confers power for an order made under this clause to make such consequential, supplementary, incidental or transitional provision as the Minister considers appropriate. This power includes power to make provision amending or repealing any enactment or other provision, including Northern Ireland legislation and Acts of the Scottish Parliament and Scottish statutory instruments.

Clause 3 - Power to implement Law Commission recommendations

29.     Clause 3 provides a power for a Minister of the Crown to make provision, by order, which he considers would serve the purpose of implementing recommendations of the Law Commission, the Scottish Law Commission or the Northern Ireland Law Commission.

30.     The power enables a Minister to implement a set of recommendations, in full or in part. An order may implement Law Commission recommendations "with or without changes". This allows changes to, for example, reflect changes in legislation or the common law which have occurred since the recommendations were made, or to reflect the fact that some but not all of a set of interlocking recommendations are being implemented. It would also allow changes suggested by further consultation or by a Parliamentary scrutiny committee. However the scope for implementing recommendations with changes is limited by the fact that provision can be made under this clause only if the Minister considers that it is for the purpose of implementing Law Commission recommendations: if the changes were so extensive that the provision could no longer reasonably be thought to be for that purpose, then it could not be made.

31.     Subsection (4) provides that the provision that can be made by order under clause 3 includes provision which:

  • amends or abolishes any rule of law;

  • codifies rules of law;

  • confers functions on any person, including the function of legislating;

  • modifies the functions conferred on any person by an enactment;

  • transfers the functions conferred on any person by an enactment;

  • abolishes a body or office established by or under an enactment;

  • amends or repeals any enactment.

32.     It is possible to make provision by order amending or abolishing a rule of common law or codifying rules of the common law under clause 3, and not clause 1 and 2. This is necessary because the remit of the Law Commissions extend to the whole of the law of their respective jurisdictions, and not just statute law.

33.     Subsection (5) confers power for an order made under this clause to make such consequential, supplementary, incidental or transitional provision as the Minister considers appropriate. This power includes power to make provision amending or repealing any enactment or other provision, including Northern Ireland legislation and Acts of the Scottish Parliament and Scottish statutory instruments.

34.     The Law Commission and the Scottish Law Commission were set up under the Law Commissions Act 1965. The Northern Ireland Law Commission was created under section 50 of the Justice (Northern Ireland) Act 2002, which has yet to be brought into force. It is expected that it will be brought into force in 2007.

Restrictions

Clause 4 - Preconditions

35.     Clause 4 imposes conditions which must be met before an order under Part 1 may be made.

36.     Subsections (1) and (2) relate to orders under clauses 1, 2 or 3 containing provision that is not merely restating an enactment (as defined in clause 22) or codifying a rule of law.

37.     In this case there are five conditions which apply (where relevant). These are set out in subsection (2)(a) to (e).

  • The first condition is that there are no non-legislative solutions which will satisfactorily remedy the difficulty which the order is intended to address.

  • The second condition is that the effect of the provision made by the order is proportionate to its policy objective. This means that the Minister must consider that there is an appropriate relationship between the policy aim of the proposals and the means chosen to achieve them.

  • The third condition is that the provision made by the order, taken as a whole, strikes a fair balance between the public interest and the interests of the persons adversely affected by the order. So it will be possible to make an order which will have an adverse effect on the interests of one or more persons only if the Minister is satisfied that it will also have adequate beneficial effects which are in the public interest.

  • The fourth condition is that the provision made by the order does not remove any necessary protection. This condition is the same as one of the safeguards in section 3 of the 2001 Act.

  • The fifth condition is that the provision made by the order will not prevent any person from continuing to exercise any right or freedom which he might reasonably expect to continue to exercise. This condition is also the same as one of the safeguards in section 3 of the 2001 Act. It recognises that there are certain rights that it would not be appropriate to take away from people using an order, and has certain parallels with the concept of 'legitimate expectation'.

38.     The Minister is also required to set out in the explanatory document (clause 15) laid before Parliament why he considers that these conditions are met.

39.     By virtue of subsection (3) the five conditions listed in subsection (2) do not apply to provision in an order which is merely restating an enactment or codifying a rule of the common law. Under subsections (4) and (5) a Minister may only make provision of this type in an order if he is satisfied that the provision contained in the order would make the law more accessible or more easily understood (for example, by consolidating disparate pieces of legislation or restating existing provisions in accordance with modern drafting practices).

Clause 5 - Subordinate legislation

40.     The power to make orders under clauses 1 and 3 are specified in those clauses as including a power to confer the function of legislating on any person. Clause 5 places certain restrictions on orders which confer a function of legislating on a Minister of the Crown. The condition in subsection (2) is that the Minister must exercise the function of legislating which has been conferred on him by making a statutory instrument. The condition in subsection (3) is that such a statutory instrument must be subject to either the negative resolution procedure or the affirmative resolution procedure.

41.     It will be necessary for the Minister, when laying an explanatory document before Parliament in accordance with the requirements of clause 15, to explain the reasons for conferring a new function of legislating and to justify the procedure specified in relation to it. To 'legislate' is defined in clause 22.

42.     The conditions in clause 5 do not apply to an order conferring a function of legislating on someone other than a Minister, for example where the function of making bylaws is conferred on a local authority. Neither do they apply to provision in an order which is merely restating an existing enactment.

Clause 6 - Taxation

43.     This clause prohibits an order made under clause 1, 2 or 3 from imposing or increasing taxation (unless the provision made is merely restating an enactment).

Clause 7 - Criminal penalties

44.     This clause sets limits on the order-making powers in relation to criminal offences. An order cannot create a new offence with penalties exceeding those set out in subsections (1) to (3). Nor may it increase the penalty for an existing offence so as to exceed those penalties.

45.     Subsections (4) and (5) contain transitional provision pending the coming into force of relevant provisions of the Criminal Justice Act 2003. The provision made in this respect is the same as that in the 2001 Act. The restrictions in this clause do not apply where the provision made is merely restating an enactment.

Clause 8 - Forcible entry etc

46.     The restriction in clause 8(1) on making provision authorising forcible entry, search or seizure, or compelling the giving of evidence, derives from the 2001 Act (section 3(5)). Subsection (2) of the clause enables an order to contain provision which extends a pre-existing power to do any of the things set out in subsection (1), but only where the power is extended for purposes similar to those to which the power applied before the order was made. The restriction in subsection (1) does not apply to the extent that the provision made is merely restating an enactment (subsection (3)).

Clause 9 - Excepted enactments

47.     This clause provides that orders made under Part 1 cannot make provision amending or repealing Part 1 itself or any provision of the Human Rights Act 1998.

Clause 10 - Scotland

48.     The order-making powers in clauses 1, 2 and 3 do not permit the amendment of Acts of the Scottish Parliament or instruments made under them, except in circumstances where the order is making consequential, supplementary, incidental or transitional provision.

49.     However, the powers do permit amendment of Acts of the Westminster Parliament, and such Acts can make provision about devolved matters (having been passed prior to the passing of the Scotland Act 1998 or, in some cases, afterwards). Clause 10 prevents the powers being used in relation to such Acts or statutory instruments, except for consequential, supplementary, incidental or transitional purposes.

Clause 11 - Northern Ireland

50.     This clause prevents an order made under clauses 1, 2 or 3 from amending or repealing any Northern Ireland legislation (within the meaning of section 24 of the 1978 Act, such as Acts of the Northern Ireland Parliament, or Orders in Council made under section 1(3) of the Northern Ireland (Temporary Provisions) Act 1972), except under the powers to make consequential, supplementary, incidental or transitional provision.

Clause 12 - Wales

51.     Clause 12 provides that the agreement of the Assembly is required for any order that confers a function on the Assembly, or removes or modifies any function of the Assembly, or restates a provision conferring a function on the Assembly.

Procedure

Clause 13 - Procedure: introductory

52.     Clause 13 sets out procedural requirements for making orders under clauses 1, 2 or 3. In particular, it introduces three alternative parliamentary procedures for the orders - the negative resolution procedure, the affirmative resolution procedure, and the super-affirmative procedure.

Clause 14 - Consultation

53.     This clause sets out the consultation process which the Minister must follow before making an order under clause 1, 2 or 3. The persons or bodies that the Minister must consult depend on the subject matter of the proposals and who is likely to be affected by them. This includes consultation of the Law Commissions where the order proposes to implement their recommendations (under the power in clause 3). Subsection (1)(e) is a general requirement that the Minister consult persons other than those listed in paragraphs (a) to (d) if he considers it appropriate.

54.     Subsection (2) reflects the fact that the Law Commission is likely to have carried out consultation with affected persons and bodies. Where the provision made by the order is implementing Law Commission recommendations with no material changes, the Minister is not required to carry out the consultation specified in subsection (1), but instead must carry out such consultation as he considers appropriate bearing in mind the consultation carried out by the Law Commission(s). As a result, the Law Commission's own consultation in developing its recommendations may make it unnecessary for the Minister to carry out further consultation. If the order is implementing Law Commission recommendations but with material changes, the consultation requirements in subsection (1) must be complied with.

55.     Subsection (3) specifies that if the Minister varies his proposals as a result of the consultation he has undertaken, then he must carry out such further consultation on the changes he has made, as he considers appropriate. The Minister does not therefore have to repeat the whole consultation exercise; the additional consultation is only in respect of those elements of his proposal that he has changed and might involve only those consultees affected by the change.

56.     Subsections (4) and (5) are transitional provisions. They deal with consultation which has taken place before the date on which these clauses come into force.

57.     Subsection (4) is meant to allow for consultation to take place before commencement. If any consultation is undertaken before commencement, and that consultation would to any extent satisfy any of the requirements of clause 14, those requirements are, to that extent, taken to have been satisfied. It is not necessary therefore to repeat the consultation.

58.     Subsection (5) applies specifically to consultation carried out under the 2001 Act. Where proposals for an order under this Part are the same as proposals for an order under section 1 of the 2001 Act and consultation has been carried out on those proposals in accordance with the requirements of that Act, then consultation will be taken to have been satisfied for the purposes of this clause (even where the proposals have been varied following consultation under the 2001 Act and it was appropriate that no further consultation be undertaken). This means that such proposals do not need to be consulted on again.

 
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