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Lord Maclennan of Rogart: My Lords, this debate shows how most of us are reflecting on our experience of regulation and deregulation. It is not surprising that in the temper of the times, the focus has been on the necessity to deregulate rather than to regulate. My executive experience, gained in ministerial posts almost 30 years ago, was rather of the necessity for regulation. I am as conscious of its necessity as I am of the mood of the times. The noble Lord, Lord Whitty, was candid enough to reflect on his recent experience of that kind, but with the passage of the years it seems that there have been rather different approaches to regulation which have given rise to some of the difficulties that this Bill attempts to confront.
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Perhaps the most significant piece of regulation for the protection of consumer interests with which I was engaged was the Consumer Credit Act 1974, which was controversial in a sense, although the controversy was at the margin. The proposal that there was a need for such legislation flowed from a series of careful studies undertaken in a number of different forums. Reports came from distinguished non-party people, from the European Union and so forth. All of that preceded the enactment of the Bill with the result that there was broad agreement on what needed to be done. I think it is fair to say that it lasted well and very few people suggested that much deregulation was required as a result of the Act.

One of the challenges we face today is that of governments reacting to particular problems too quickly, without sufficient deliberation, and not looking at the matter which requires regulation in the wider context; indeed, looking at it in an unsystematic way with the result that incoherence develops and burdens become unacceptable. If we are to tackle the problem of over-regulation, I believe that at least as much attention needs to be given to the case for regulation prior to bringing forward the legislation that will enact it.

A second reason for this speedy reaction to a problem seems to be the instinctive desire of governments to demonstrate through some change in the law that they have the measure of it. I do not think that that is a partisan point. Too often these matters are treated in a partisan sense by the government of the day, without sitting down and addressing them in a round table atmosphere so as to gain consent for a proposed solution before the matter is even introduced to Parliament. That, for me, was the very powerful message of the speech made by the noble Lord, Lord Sainsbury of Preston Candover, with respect to deregulation. But it is also a message with respect to regulation, and the application of tests, compliance costs and risk assessments would certainly go a long way towards reducing this contentious problem to size.

Another general consideration which it is appropriate to raise at Second Reading—we shall in the later stages of the Bill have the opportunity to consider the impact of its detailed proposals—is how on earth this measure ever came before Parliament at all. It is the most astonishing piece of legislation, even in its revised form as brought before this House. In introducing it, the noble Lord, Lord Bassam, said that the Bill before us was not what noble Lords may have heard about. I think that is to suggest that noble Lords pay perhaps rather less attention than we do to legislation coming before Parliament. But the trouble is that we cannot simply draw a line under what was considered in another place as though it had no bearing on what we are considering now. This reflects very clearly the thrust of the Minister's concerns and, since the original Bill was introduced, there has been a step by step withdrawal from the more extreme positions that have been espoused.
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We are far from having a measure which, by agreement across the Chamber, can be consented to. Frankly, there is no division of opinion around the House about the desirability of deregulation where procedures are burdensome and unnecessary or incoherent, but the ways and means of achieving it are immensely important if our democratic procedures are not to be dangerously undermined.

It was bizarre that the Bill was not recognised to have any constitutional import when clearly it had the effect of cutting down the scrutiny that Parliament would give to legislation. In days of yore, such matters were considered on the Floor of another place and its Members took their time. Far from having that treatment, the Bill had eight days in Committee of guillotined debate as though it was just any sort of routine measure. That also strikes me as hard to justify.

I put it to the Minister, humbly and with a certain degree of force, that when the powers of Parliament are being tackled in this way, even as an indirect consequence of the Government's intentions—however well intentioned they may be and however well intentioned they may think the legislation is—they would do well to consult not only the business interests affected outside but the parliamentary interests inside this House and another place prior to bringing forward legislation. I have on many occasions in this House advocated a cross-party approach to constitutional legislation, for that is what will result in it lasting.

The provisions of the Bill as it stands seem very far from perfect. In addressing their detail we will be greatly assisted by the reports that have been received from the two committees which have given the matter detailed consideration. I notice in particular that the Delegated Powers and Regulatory Reform Committee, in its 20th report, has suggested that the veto arrangements should be looked at with particular care—indeed, it has suggested that, as they stand, they should be deleted—partly because if the veto is exercised by a committee, it is only a provisional veto and can be rejected by either House, as I read the Bill.

That is not the only problem with the veto provision as it stands. If, far from exercising their veto, the committees were not to choose to exercise their veto, that would have the contrary effect of precluding other Members of the House from participating fully in a debate in which it is quite possible that there would be an important minority opinion to be expressed. That seems to me to be almost as serious as the power exercised to preclude the procedures which are advocated to accelerate debate. I hope that issue, too, will be looked at with care because Members of Parliament in another place, when they are elected, are not understood by their constituents to have absolutely no power over a matter because a committee of the House has been given delegated responsibility to decide it.

The last point I wish to address at this stage relates to the work of the Law Commission. I sat at the feet of Lord Gardiner as a young man in Parliament and I am
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greatly impressed by the work of the Law Commission. I have drawn attention over the years to the difficulty that there has been in enacting its recommendations, but I think it is quite spurious to suggest that because it has deliberated long and carefully and its recommendations are normally highly sensible and defensible, they can be categorised as technical and uncontroversial. There have been examples—some of which were mentioned in debates in another place—where the Government have wished to intervene and modify, or even act entirely contrary to, the recommendations of the Law Commission. It seems to me that we, in this democratic institution of Parliament, should not delegate our democratic responsibilities to an appointed body such as the Law Commission. However wise such a body may be, the rights of minorities to raise points that may have occurred only to minorities is crucial to the effectiveness of our system. I hope therefore that the proposal in Clause 3 will be struck from the Bill.

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Lord Haskins: My Lords, regulation has become one of the great economic topics of our day. In some ways we should be grateful that this is the case, rather than having to fret about more serious matters such as high unemployment, high inflation and high public sector deficits, although I suspect that the economic clouds which are building up at the present time may put regulation in better proportion. Nevertheless, if Sir Digby Jones, the outgoing director of the CBI, is to be believed, British business is about to be overwhelmed by an avalanche of red tape.

When I was chairman of the Government's Better Regulation Task Force, I was required to review the whole regulatory environment and I came to a number of conclusions. Yes, in a modern, affluent democracy there is a high level of regulation to protect consumers, workers and investors from being harmed or exploited. This has its roots in the great dynamic economy of Victorian England. In modern times, environmental regulation has, in my view correctly, been growing rapidly. Few would argue about the benefits of the clean air legislation of the 1950s which transformed the air of our great cities. A great American judge, Wendell Holmes, once remarked that taxation is the price we pay for civilisation. He might as well have said the same about regulation.

However, when I last looked at this matter a few years ago, Britain was in fact the least regulated of all the major OECD countries, including the United States. One reason why international financiers rush to do business in London and why this city may well overtake New York as the global centre for international finance in the foreseeable future is the light, flexible, but also effective regulatory environment. So Sir Digby Jones's conventional wisdom that British international competitiveness is at risk because of over-regulation does not, in my view, hold water. Maybe the real answer to our low productivity lies with his own members, who continue to invest less in technology and training than their major competitors elsewhere.
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Interestingly, my experience of most new regulation in recent years have been demands coming mainly from the middle classes, whether it be the risk-averse consumers whose fears are cleverly exploited by the Daily Mail or the environmental doomsters whose anxieties are championed by the Guardian.

I should like to compete with the noble Lord, Lord Sainsbury of Preston Candover, in going down memory lane and throwing in a few regulatory reminiscences of my own. I am delighted to hear about the Government's and the EU's continued commitment to the principles of good regulation—proportionality, transparency, accountability, consistency and targeting. I sometimes wake up shouting those words in the night. They were in fact devised by me in a deckchair one summer's afternoon in Yorkshire, in a desperate attempt to find a way through this regulatory nightmare. Little did I believe that a matrix decided for my own benefit should achieve such widespread acceptance.

The third problem is that we are not very good at getting rid of redundant regulations which might or might not have served a purpose when they were first introduced but which are clearly irrelevant today. The journalist Simon Jenkins provided me with one such gem. In the 19th century, a regulation was introduced which required that in public places—hotels, pubs, and so on—there should be two doors between lavatories and the rest of the building. At the time that was justified in order to reduce the risk of cholera. A century and a half later, this regulation still flourishes, even though the risk it sought to mitigate has long since gone.

The problem is that to get rid of most of this nonsense—and there is plenty of it—it has been necessary to use time-consuming primary legislation. This is anathema to government departments and Ministers, whose greatest ambition in life is to introduce new legislation rather than getting rid of old legislation. The competition between departments to get Bills into the Queen's Speech is another reason for the legislative morass which exists today. A modern parliamentary law-maker in full flood is the embodiment of self-satisfied egocentricity, but not, I believe, closely concerned with the realities of daily life.

The Regulatory Reform Act 2001 was introduced to facilitate the elimination of redundant regulation, but it lacked the necessary teeth to tackle the problem. In its original shape, the present Bill was much too draconian, passing far too much power to the Executive, especially dangerous when the latter, on occasions, show scant respect for parliamentary democracy. But Parliament should be much more concerned with the Government's zeal for new regulation and should breathe a not-very-convincing sigh of relief when they propose to deregulate.

It seems to me that Britain has three areas of concern about regulation. First, we have, especially in recent years, created far too much new legislation which, in turn, requires new regulations. The Government have, I gather, enacted no fewer than 42 new Bills related to
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crime with, at best, questionable effect. There has been a plethora of new legislation related to health and education. It seems that Ministers and senior civil servants see new regulations as the solution to every problem. Pity the enforcers, trying to keep up with the latest torrent of regulations; they are as confused and bewildered as those at the receiving end of the regulations. I have no doubt that many of the problems endemic in the Home Office and the health service today are caused by all this regulatory complexity. It is time that the Government stopped introducing new legislation and concentrated instead on improving the effective delivery of existing regulations, including, as the Bill should address, the elimination of bad or redundant regulation.

Secondly, our senior civil servants believe that falling foul of a judicial review, which exposes shortcomings in their wonderful legislative skills, is the most humiliating experience known to man. As a result, they go to extreme lengths to close every conceivable loophole when drafting legislation. I remember, when helping to get the Bill to introduce the minimum wage going, that in order to thwart me, a senior civil servant in the DTI triumphantly brought up the example of a Stoke-on-Trent pensioner who was working half-time doing a newspaper round and would not be protected by the Bill as it stood. To his dismay, we overrode him, and as far as I know, things are all right in Stoke-on-Trent.

Sadly, many Members of both Houses of Parliament delight in such obscure, hypothetical possibilities and, as a result, add unnecessary complications to our laws. Britain suffers particularly from this gold-plating disease, when it affects the translation of EU directives into British law. Many of the regulatory problems attributed to the EU are of our own making. Just look at the mess in the Rural Payments Agency.

I believe that the amended Bill introduces sufficient checks and balances to meet these democratic concerns, and I hope that, if passed, it will make a significant contribution to a more effective regulatory environment. I am also pleased that the Government are implementing Philip Hampton's recommendations, and I welcome their intention to place on a statutory footing a code of practice for regulators. Changing the way in which regulators approach the way they regulate will have a huge impact on the ground, especially for small and medium enterprises, where the effects of regulation are most felt. I do, however, share the concerns of the noble and learned Lord, Lord Lloyd of Berwick, about Clause 1(3)(d), which leaves the Government with draconian powers.

The Bill does not address the much more serious problem of internal public sector regulation, created by the control freaks in a fruitless attempt to run everything from Whitehall. The most serious victims of red tape in this country are the hapless head teachers, GPs, prison governors, immigration officers, Rural Payments Agency staff, local authorities and regional quangos. These poor people are overwhelmed by demands from central government. A vast amount
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of time is being wasted as they seek to satisfy the expectations of those who create a multitude of targets and initiatives at the centre.

A lethal mixture of ministerial self-indulgence and Civil Service risk-aversion has created this state of affairs, and this will continue as long as Britain clings to the most over-centralised, top-down form of government in the democratic world. That is the real challenge for radical reforms, but I fear that it will not be taken up.

5.48 pm

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