House of Lords - Explanatory Note
Legislative and Regulatory Reform Bill - continued          House of Lords

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Clause 15 - Draft order and explanatory document laid before Parliament

59.     This clause sets out the requirement for a Minister to lay before Parliament a draft of the order he wishes to make, along with an explanatory document. The explanatory document for all orders must cover the matters listed in subsection (2). These include an explanation as to why the Minister considers that the preconditions in clause 4 are satisfied, and information about the consultation he has undertaken.

60.     Where the Minister makes an order under clause 1, subsection (2)(d) requires him (so far as it is appropriate) to provide an assessment of the extent to which the provision made by the order would remove or reduce any burden or burdens. The requirement to make and give such an assessment is intended to be proportionate to the nature of the order being made. In some cases the effect of the order will be worthwhile but minor and will not merit a very detailed assessment, in which case a brief statement will be included in the explanatory document to the order. Where appropriate it is expected that, in practical terms, the assessment required by (2)(d) may be included in a Regulatory Impact Assessment.

61.     Subsection (2)(e) requires the Minister to identify and give reasons for any powers to legislate conferred by the order, and which procedural requirements will have to be complied with when the power to legislate is exercised.

62.     Subsection (3) specifies further detail which must be contained in the explanatory document when the order being made is implementing Law Commission recommendations under the power in clause 3. These are identifying the recommendations being implemented, the manner in which the order intends to implement the recommendations and details of and reasons for any differences between the recommendations and the Minister's proposals.

63.     Subsections (4), (5) and (6) set out provisions concerning the disclosure of representations made in response to consultation under clause 14. Where a person makes representations in response to consultation and asks the Minister not to disclose those representations, the Minister must not disclose where such disclosure would constitute an actionable breach of confidence by any person. The Minister need not disclose information contained in representations relating to another person if it appears to him that such disclosure could adversely affect the interests of that other person and he has been unable to obtain the consent of that person. It should be noted that subsection (6) provides that these provisions do not affect any disclosure that is requested by, and made to, a Parliamentary committee charged with reporting on draft orders.

Clause 16 - Determination of Parliamentary procedure

64.     This clause sets out the procedure for determining which of the three alternative types of parliamentary procedure will apply to an order.

65.     Subsections (1) and (2) require that the explanatory document laid by the Minister must contain his recommendation as to which Parliamentary procedure should apply and his reasons for this recommendation. This will depend on his view of the complexity of the order and the level of scrutiny it should be subject to.

65.     Subsections (3) to (5) provide that the Minister's recommendation for a procedure shall apply unless either House of Parliament requires that a more onerous procedure shall apply.

66.     Subsection (6) sets out the two different ways in which a House is taken to have required a particular procedure. A House may either require a procedure by making a resolution, or a committee of that House, which is responsible for reporting on orders made under clause 1, 2 or 3 may recommend a procedure, which takes effect where such recommendation is not subsequently rejected by a resolution of the House. Both the recommendation of the committee and any resolution of the House rejecting it must be made within the 30-day period (defined in subsection (7)) in order to determine the procedure which will apply to the order.

67.     So, if the Minister recommends the negative resolution procedure, this will apply unless either House requires the affirmative resolution or super-affirmative resolution procedure, in which case that higher level of procedure will apply instead. Similarly, if the Minister recommends the affirmative resolution procedure, that will apply unless, within 30 days, either House requires the super-affirmative procedure (in which case that will apply instead). If the Minister recommends the super-affirmative procedure from the start, that is the procedure which will apply.

68.     In effect, either House is able to require which level of procedure they consider appropriate, although it should be noted that the committees can require a higher, but not a lower, level of procedure. Parliamentary scrutiny of RROs is currently undertaken by the House of Commons Regulatory Reform Committee and the House of Lords Delegated Powers and Regulatory Reform Committee.

Clause 17 - Negative resolution procedure

69.     This clause sets out the procedure which will apply where an order is to be made under the negative resolution procedure. The Minister may make an order in the terms of the draft he laid (allowing for non-material changes) unless, within 40 days of the draft order being laid, either House of Parliament passes a resolution that the order may not be made.

70.     However, subsection (4) provides that a committee of either House charged with reporting on the order can, at any time after the expiry of the 30-day period (as defined in clause 16(7)) and before the expiry of the 40-day period (as defined in subsection (8)), require that no further proceedings be taken on the draft order by making a recommendation in those terms. A committee can make such a recommendation if it considers that the provision made by the draft order does not serve the purposes specified in clauses 1(2), 2(2), 3(2), or that the preconditions set out in clause 4 are not satisfied. Where such a recommendation is made by a committee, the Minister may not make the order unless that recommendation is overturned by a resolution of the relevant House in the same Parliamentary session.

71.     Where a recommendation made by a committee is subsequently overturned by a resolution of the relevant House, subsection (9) provides that, when calculating the 40-day period, no account is taken of the days between the committee making the recommendation and the House overturning it.

Clause 18 - Affirmative resolution procedure

72.     This clause sets out the procedure which will apply where an order is to be made under the affirmative resolution procedure. The Minister may make an order in the terms of the draft (allowing for non-material drafting changes) only if, after 40 days of the order being laid before Parliament, the draft order has been approved by a resolution of each House of Parliament.

73.     However, subsection (3) provides that a committee of either House charged with reporting on the order can, at any time after the expiry of the 30-day period (as defined in clause 16(7)) and before the expiry of the 40-day period (as defined in clause 17 (8)), require that no further proceedings be taken on the draft by making a recommendation in those terms. A committee can make such a recommendation if it considers that the provision made by the draft order does not serve the purposes specified in clauses 1(2), 2(2), 3(2), or that the preconditions set out in clause 4 are not satisfied. Where such a recommendation is made by a committee, no further proceedings may be taken in relation to the order unless that recommendation is overturned by a resolution of the relevant House in the same Parliamentary session. That means that the House will not proceed to an affirmative resolution and the Minister will therefore be unable to make the order.

74.     Subsection (8) makes the same provision as clause 17(9).

Clause 19 - Super-affirmative resolution procedure

75.     This clause sets out the procedure which will apply where an order is to be made under the super-affirmative procedure.

76.     The procedure is that there is a 60-day period (as defined in subsection (14)) following the laying of the draft order by the Minister, during which time the relevant Parliamentary committees may report on the draft order, or either House may make a resolution with regard to the draft order. The Minister must have regard to any such reports and resolutions, as well as to any other representations made about the draft order. Once the 60-day period has expired, if the Minister wishes to make the order with no changes, he must lay a statement in accordance with subsection (3), and may then make an order in the terms of the draft if it is approved by a resolution of each House of Parliament.

77.     Alternatively, if the Minister wishes to make an order which is a revised version of the draft order he has laid, he must lay before Parliament a revised draft of the order and a statement in accordance with subsection (8) specifically setting out the revisions he proposes. Having done this, he may then make an order in the terms of the draft it is approved by a resolution of each House of Parliament.

78.     However, subsections (5) and (10) provide that a committee of either House charged with reporting on the order can at any time after the laying of a statement in accordance with subsection (3) or subsection (8) and before the draft order is approved by a resolution of that House, require that no further proceedings be taken on the draft by making a recommendation in those terms. A committee can make such a recommendation if it considers that the provision made by the draft order does not serve the purposes specified in clauses 1(2), 2(2), 3(2), or does not satisfy the conditions set out in clause 4. Where such a recommendation is made by a committee, no further proceedings may be taken in relation to the order unless that recommendation is overturned by a resolution of the relevant House in the same Parliamentary session. That means that the House will not proceed to an affirmative resolution and the Minister will therefore be unable to make the order.

General

Clause 21 - Combination with powers under the European Communities Act 1972

79.     This clause enables the order-making powers under clauses 1, 2 and 3 to be exercised together with the power to make an order under section 2(2) of the 1972 Act in a single instrument. This will enable a single order to implement Community law under section 2(2) of the 1972 Act and for example remove or reduce burdens resulting from pre-existing statutory provisions which are thought to be unnecessary or superseded following the implementation of the new EC regulatory requirements.

80.     By virtue of subsection (2), the procedure applicable to a combined instrument will be that set out in Part 1 of this Bill (including the consultation requirements in clause 14, the requirement to lay an explanatory document before Parliament in clause 15, and the three alternative Parliamentary procedures in clauses 17 to 19), rather than the procedural requirements of section 2(2) of the 1972 Act.

Part 2 - Regulators

Exercise of regulatory functions

Clause 23 - Principles

81.     This clause sets out principles that a person must have regard to when exercising regulatory functions (as defined in clause 34). The principles listed are the Better Regulation Commission's Principles of Good Regulation, and provide that regulatory activities must be carried out in a way which is transparent, accountable, proportionate, consistent, and should be targeted only at cases in which action is needed.

82.     The duty to have regard to these principles is subject to any other legal requirement, such as a statutory duty or a requirement of EC law, which will take priority over the principles.

83.     The regulatory functions to which the duty in the clause applies are those specified in an order made under the powers in clause 26.

Clause 24 - Code of Practice

84.     This clause enables a Minister of the Crown to issue and revise a Code of Practice relating to the exercise of regulatory functions.

85.     Under subsection (2) any person exercising a regulatory function to which the section applies must have regard to the Code when determining general policies and principles by reference to which that person will exercise those regulatory functions.

86.     However, under subsection (3), where a person exercises a regulatory function of setting standards or giving general guidance about the exercise of other regulatory functions (whether his own or someone else's regulatory functions), the duty to have regard to the Code applies directly to the exercise of that function of setting standards or giving general guidance. In that case, the duty under subsection (2) does not apply.

87.     The functions to which the section applies are those specified by order under clause 26.

88.     The duties to have regard to the Code in subsections (2) and (3) are subject to any other legal requirement affecting the exercise of the regulatory function.

Clause 25 - Code of Practice: procedure

89.     This clause sets out the procedure the Minister must follow when he proposes to issue or revise a Code of Practice.

Supplementary

Clause 26 - Functions to which sections 23 and 24 apply

90.     This clause makes provision for orders to specify the regulatory functions to which the duties in clauses 23 and 24 apply.

91.     Under subsection (2) a Minister of the Crown can specify functions, subject to subsections (3) and (5). Under subsection (4) the National Assembly for Wales can specify functions relating to Wales, subject to subsection (5).

92.     By virtue of subsection (5), an order under this clause cannot specify the regulatory functions of the Gas and Electricity Markets Authority (Ofgem), the Office of Communications (Ofcom), the Office of Rail Regulation (ORR), the Postal Services Commission (PostComm), and the Water Services Regulation Authority (Ofwat).

93.     Subsection (6) contains consultation requirements.

94.     Subsection (7) provides that different provision can be made for different purposes, which will enable an order made under this clause to specify certain regulatory functions for the purpose of clause 23 but not clause 24, and vice versa.

95.     Under subsection (9) a Minister of the Crown may not make an order unless a statutory instrument containing it is laid in draft before, and approved by resolution of, each House of Parliament. (This provision does not apply where the order is made by the Assembly.)

Part 3 - Legislation Relating to the European Communities etc

Interpretation of legislation

Clause 27 - References to Community instruments

96.     This clause makes provision about domestic legislation which refers to Community instruments - that is, to legal instruments (such as directives or regulations) which are issued by the European Economic Community, the European Coal and Steel Community or Euratom. The clause is designed to make the drafting of domestic instruments simpler. The problem that the clause addresses is that currently, when domestic legislation refers to a Community instrument which has been amended or applied by other Community instruments, it is necessary to specify all the instruments which have amended or applied it. That can make for very long references.

97.     Subsection (1) inserts a new section (20A) into the 1978 Act. The effect of the new section is that, where an Act refers to a Community instrument, the reference is to be taken, unless the contrary intention appears, as a reference to that instrument as amended, extended or applied at the date of passing of the Act. (Section 20(2) of the 1978 Act already makes similar provision for the case where one UK Act refers to another.)

98.     The new section only applies in relation to Acts passed after commencement of the new section. Subsection (2) contains a consequential amendment to section 22 of the 1978 Act.

99.     By virtue of section 23 of the 1978 Act, the new section will also apply to subordinate legislation, within the meaning of that section, made after the commencement of the new section.

100.     Subsection (3) of the clause contains an amendment to section 24 of the 1978 Act, so that section 20A applies to Northern Ireland legislation as it applies to Acts.

101.     Subsection (4) amends the Scotland Act 1998 (Transitory and Transitional Provisions) (Publication and Interpretation etc of Acts of the Scottish Parliament) Order 1999 (S.I. 1999/1379) to secure the same result for Acts of the Scottish Parliament.

Clause 28 - EEA agreement and EEA state

102.     The EEA agreement is an agreement between the European Economic Community, the European Coal and Steel Community, their Member States and the members of the European Free Trade Association (EFTA), the purpose of which is "to promote a continuous and balanced strengthening of trade and economic relations .. with a view to creating a homogeneous European Economic Area".

103.     References to an "EEA State" are made frequently in both primary and subordinate legislation necessitating inclusion of a definition on each occasion. This clause introduces standard definitions to avoid having to do this. Subsection (1) inserts definitions of "EEA agreement" and "EEA state" into the 1978 Act. These definitions will apply to all Acts passed after the Bill comes into force. By virtue of section 23 of the 1978 Act, the definitions will also apply to all subordinate legislation, within the meaning of that section, made after the Bill comes into force.

104.     Subsection (2) amends section 24 of the 1978 Act to apply the same definitions to Northern Ireland legislation, within the meaning of that section.

105.     Subsection (3) amends the Scotland Act 1998 (Transitory and Transitional Provisions) (Publication and Interpretation etc of Acts of the Scottish Parliament) Order 1999 to secure the same result for Acts of the Scottish Parliament. Subsection (4) provides that the amendment only applies to Acts of the Scottish Parliament passed (and Scottish subordinate legislation made) after commencement of the new provision.

Implementation of Community obligations etc

Clause 29 - Power to make orders, rules and schemes

106.     Section 2(2) of the 1972 Act enables the implementation of Community law which is not automatically part of UK law. The existing powers do not allow for the making of orders, rules or schemes, and this clause is designed to allow section 2(2) to be used in combination with delegated powers in other legislation which enable the making of orders, rules or schemes. Therefore clause 29 makes amendments to the 1972 Act and other enactments, so as to enable the power to make subordinate instruments under section 2(2) of the 1972 Act to be exercised not only by making regulations but also by making an order, rules or a scheme.

107.     Subsections (3) and (4) make consequential amendments to section 29 of the Government of Wales Act 1998 and Schedule 8 to the Scotland Act 1998.

108.     Subsection (5) enables a Minister to make an order or regulations to amend any enactment or subordinate instrument which refers to regulations under section 2(2) of the 1972 Act so that it also includes a reference to any order, rules or scheme made under that section.

109.     Subsection (6) enables the devolved administrations to make similar provision.

110.     The procedure for exercising this power is set out in subsections (7) and (8). The power is exercisable by statutory instrument (so far as exercisable by a Minister of the Crown, the Scottish Ministers or the Assembly) and, where exercisable by a Northern Ireland department, by statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979.

Clause 30 - Power to make ambulatory references to Community instruments

111.     Clause 30 inserts a new paragraph 1A into Schedule 2 to the 1972 Act. It enables any "subordinate legislation" (as defined by the new paragraph) which is made for a purpose mentioned in section 2(2), to provide expressly that any reference in that legislation to a Community instrument is to be construed as a reference to the Community instrument in question as amended from time to time. (The definition of "subordinate legislation" in the new paragraph 1A(2) is not restricted to instruments made under section 2(2) of the 1972 Act; it also includes instruments made under other Acts, Acts of the Scottish Parliament or Northern Ireland legislation.) Such provision can only be made where it appears to the person making the legislation that it is necessary or expedient for references to Community instruments in the legislation he is making to have that ambulatory meaning.

112.     The reason for this amendment is that it might otherwise be thought that such ambulatory references could not be made. An example of when this power might be useful is where a Community instrument contains lists or tables of technical detail which might be the subject of frequent updating or amendment. A person making legislation which refers to such an instrument could make use of this power in order to avoid the need for the legislation to have to be amended regularly in the future simply to reflect the updating of the Community instrument.

113.     It is perhaps worth noting the relationship between this provision and the provision made by clause 27. Where subordinate legislation refers to a Community instrument, the 1978 Act, as amended by clause 27, will operate as described above so that the reference is taken as a reference to the Community instrument as amended up to that date. But it does not allow for the reference to be taken as including the instrument as amended after that date. It is that for which paragraph 1A allows.

Clause 31 - Combination of powers

114.     Clause 31 makes provision to enable the power conferred by section 2(2) of the 1972 Act (power to implement Community obligations etc) to be combined with delegated powers in other legislation where the procedures in each case are different.

115.     It is generally not possible for a statutory instrument made under an enabling power in one Act to be combined with an instrument made under an enabling power in another, if the Parliamentary procedures to be followed under the two Acts differ. Sometimes it is desired to exercise the power in section 2(2) together with another power to create a single new regime. If the powers are subject to different procedures, it may not be possible to do so in a single instrument. It is this difficulty which is addressed by the clause.

116.     The Parliamentary procedures which apply to instruments made under section 2(2) of the 1972 are set out in paragraph 2 of Schedule 2 to that Act. That paragraph permits a choice of procedure: negative or affirmative.

117.     New paragraph 2A allows for instruments which are made under section 2(2) and are subject to the affirmative procedure to be combined with instruments which would otherwise be subject to the negative resolution procedure or other less onerous procedures. In each case, the provision made under the non-section 2(2) power will be subject to the affirmative resolution procedure rather than the less onerous procedures which would otherwise apply.

118.     New paragraph 2B deals with the case where the negative resolution procedure is the one to be followed for the provision to be made under section 2(2) of the 1972 Act. The statutory instrument containing the provision to be made under section 2(2) of the 1972 Act can also contain provision which would otherwise have to be laid before Parliament after being made, but would not be subject to annulment nor required to be approved; or would not be required to be laid before Parliament. In this case, the provision made under the non-section 2(2) power will be subject to the negative resolution procedure rather than the less onerous procedure which would otherwise apply.

119.     New paragraph 2C makes the modifications needed so that Scottish statutory instruments can also contain provision made under section 2(2) of the 1972 Act and under other delegated powers in other legislation even though the procedures to be followed under section 2(2) differs from the procedure required by the other legislation.

Part 4 - Supplementary and General

Supplementary

Clause 32 - Repeals and savings

120.     Subsection (1) gives effect to the repeals set out in the Schedule to the Bill.

121.     The remainder of this clause provides that, despite the repeal of the 2001 Act, some of its provisions are carried over for certain purposes. Subsections (2) and (3) provide that, if a draft regulatory reform order has been laid under section 6(1) of the 2001 Act before the date on which this Bill comes into force, sections 1 to 8 of that Act will continue to apply to that order. The order may continue to be made as an RRO under the 2001 Act, notwithstanding that Act's repeal.

122.     Subsection (4) provides that even though the 2001 Act is repealed by this Bill, any regulatory reform orders which have been made under the power in that Act (either before the date this Bill comes into force, or after that date if the order is made by virtue of subsection (2) of this clause) are not affected and continue in force. Similarly, subsection (5) provides that the repeal of the 2001 Act does not affect the continuation in force of any order which was made under the power in the Deregulation and Contracting Out Act 1994, provided that it continued in force by virtue of section 12(4) of the 2001 Act immediately before this Bill comes into force.

 
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