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I think that I am right in saying, if your Lordships will excuse the most appalling pun, that I started this hare running some 14 and a half years ago, on 10 November 1992, when I berated my noble friend Lord Ferrers, then my late and much missed friend Lord Mackay of Ardbrechnish, and finally Lord Annaly. On 21 July 1994, I finally extracted from Lord Annaly the following statement:

There was one very important sentence after that which I will come to in a minute.

I was told, back in the early 1990s, that game licences for those who shoot game—I am concentrating entirely on that—were only just positive in net terms. Some 98 per cent of the cost of a licence was spent on getting the revenue in. I disputed that but, be that as it may, 12p out of £6 did not seem an awfully good return on the money.

There is a point that I think is very important, which my noble friend Lady Byford raised, but in a slightly different context. The final sentence of the quote from Hansard read:

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I fully understand why it no longer applies in Scotland, because this is a devolved matter. However, there is a very real problem—at least, I think there is, and I hope that the Minister can put me straight on this. Let me use myself as an example and suppose that I was asked to shoot in Scotland on a Saturday but was unable to leave your Lordships' House, or wherever else I happened to be, until the Friday afternoon. As the law in Scotland stands, I would require a game licence, but I cannot get one in England and by the time I get to Scotland, the post office is closed. At that stage, I am about to shoot illegally in Scotland. I imagine—again, the Minister may put me straight on this—that it is not permitted for my host to buy a game licence for me since this is a personal licence with my name on it. I simply do not understand how one could get out of this jam other than Her Majesty's Government persuading the Scottish Parliament as strongly as possible that it should follow the example of this quite excellent order.

Lord Rooker: I hope I can answer the noble Lord’s final point by saying that during the course of this year, of which half is left, the Scottish Executive will be reviewing the situation regarding game licences in Scotland. I hope that they will arrive at a sensible conclusion, as I am sure that they will seek to do, as we do not want any cross-border issues like this. I suspect that the position is exactly the same in that it is not cost-effective to issue game licences. The legislation would be the original legislation. The money would be chickenfeed—it is an excessive piece of bureaucracy and an archaic piece of law.

The consultation for the order included the question of Sundays, which proved incredibly controversial. This is not to say that it was good or bad, but it was so controversial that it would not be suitable for a regulatory reform order. The reason the House has approved the regulatory reform order process for changing primary legislation is because, generally speaking, it would not be done on a controversial issue, for which primary legislation would be required. In the consultation, support for two of the three issues to get on with it was over 90 per cent, while support for the other one was in the 70s.

The noble Baroness referred to poaching. That part of the law is not being changed; taking game illegally is still illegal. I hope that Scotland will review matters. On the sale of game birds, the burden of proof will be on the prosecuting authority. I understand from my background notes that the policing of the legislation will be done by the police. The prosecuting authority, whether it is the local authority or other such body, will need to prove whether the birds were taken illegally. That is in response to the point of the noble Lord, Lord Redesdale.

I hope that we can reach a satisfactory outcome regarding the Scottish situation. A similar range of legislation applies there, and a review will be under way during the course of this year. I think I have answered all the questions, but if not, I will try again.

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Baroness Byford: Did the Minister say that it is or is not possible to shoot on a Sunday?

Lord Rooker: No, it is not possible to shoot on a Sunday, although there are some quirks in relation to this. During my year at the Northern Ireland Office, some of the situations there were explained to me. It is quite surprising what you can and cannot do on a Sunday. Some things can be shot but I do not remember the classifications and I am not going to guess them. As I said, the issue was raised in the consultation and there was feedback, both for and against, but it was too controversial for an order of this nature. Therefore, if there were a procedure on this, it would probably have to be done by primary legislation.

Lord Geddes: For the record, I noted in the statement made by Defra on 18 May that not only were Sundays not included in the draft order but nor indeed was Christmas Day. Is that still the case?

Lord Rooker: I would imagine that it is. This order covers three areas, which I delineated at the beginning, where there is a massive consensus for change and where a regulatory reform order would be the way to get it through in view of the lack of parliamentary time. There was a time when newspapers were not published on Christmas Day, but I think that that has long since gone, so things are changing. However, we have not legislated for any change in respect of Christmas Day or Sundays. The only changes that we are legislating for are the three set out in the order.

On Question, Motion agreed to.

Regulatory Reform (Financial Services and Markets Act 2000) Order 2007

4.07 pm

Lord Davies of Oldham rose to move, That the Grand Committee do report to the House that it has considered the Regulatory Reform (Financial Services and Markets Act 2000) Order 2007.

The noble Lord said: The Government believe that proportionate and risk-based regulation is key to encouraging an innovative and flourishing financial services sector in the UK. The role of the Financial Services Authority is important in this regard. The Government recognise that the FSA, and business, would benefit from the reduction or removal of certain burdens to support such a regulatory approach. As a result, we propose a number of amendments to the Financial Services and Markets Act 2000 that will also enable the FSA to operate more efficiently.

The Treasury consulted extensively on the proposals—twice, in fact. Indeed, some of the proposals originate from a stakeholder consultation into the effectiveness of the Financial Services and Markets Act 2000 two years after its enactment. Those consulted on the draft order included key

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stakeholders within the FSA’s jurisdiction, as well as consumer bodies and trade associations. The first consultation exercises consulted on a broader range of proposals than contained in this order. Three measures proved somewhat controversial and were not pursued as a result of concerns expressed by stakeholders. That aside, there was broad support for the proposals put forward in the second consultation.

There are a number of measures in the order but I shall try to run through them as briefly as possible. Article 3 would make it easier for partnerships to continue trading and remain authorised by the FSA following a change in membership. Such an amendment would benefit small businesses in particular.

Article 4 would remove the requirement on the FSA to consult EEA regulators in certain, limited circumstances. The current arrangement over-implements various EC directives, and the proposed amendment would remove this element of gold-plating.

The amendments outlined in Articles 5 to 8 would simplify a number of procedural requirements that the FSA is obliged to fulfil, even when an issuer himself seeks to discontinue or suspend the listing of a security. This includes the FSA giving reasons for its decision, and the right of the issuer to make representations and to refer the matter to the tribunal. Clearly, these procedures are entirely appropriate when the discontinuance or suspension has been initiated by the FSA and the issuer is resisting such action. However, when the discontinuance or suspension is initiated at the request of the issuer, these procedural requirements appear to serve no useful purpose.

The reforms impose some new procedural burdens on the FSA in order to protect the rights and freedoms of the issuer in cases where the FSA decides not to grant a request to de-list or suspend the listing. These include a right for the issuer to apply to the Financial Services and Markets Tribunal if the FSA rejects its application. The additional burdens are judged by the Government to be proportionate and fairly balanced, and I emphasise that when the order was considered by the Committee in the other place, due agreement was given to this point.

Article 9 would simplify the procedures that the FSA has to undergo when cancelling a sponsor’s permission. This will take effect only in cases when the cancellation is at the request of the sponsor. The amendment will deny access to the tribunal to those who make an application to cancel their permission to act as a sponsor. However, I emphasise that the cancellation will be by consent. As such, the Government do not consider that anyone will be prevented from exercising any rights or freedoms that he could reasonably expect to exercise.

At present, the FSA is able only to waive or modify a certain number of its rules for people and firms it authorises. The amendments contained in Articles 10 to 12 would enable the FSA to waive or modify its rules for unauthorised persons as well if, for example, it believes the rules concerned are unduly

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burdensome. This amendment requires the FSA to satisfy itself on a number of issues before using this power.

The final two amendments relate to the provision of FSA guidance. Article 13 would reduce some of the requirements placed on the FSA when consulting on its own guidance. Article 14 would enable the board to delegate the task of issuing guidance to a committee or sub-committee of the board.

The Government believe that these measures, taken together, will enable the FSA to take a better targeted, more streamlined and risk-based approach to its work. Firms will benefit indirectly from this more flexible approach and directly through the changes in the scope of FSA waivers and modifications.

The Delegated Powers and Regulatory Reform Committee has considered the proposals and regards them as making proper use of the powers under the Regulatory Reform Act 2001. I thank the members of the committee for their opinion and for their work in scrutinising the draft order. The committee in the other place also considered that the proposals were within the vires of the 2001 Act and has given its assent to the order. As the order was unanimously approved in the other place, I have hopes in commending it to the Committee today. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Regulatory Reform (Financial Services and Markets Act 2000) Order 2007. 11th report from the Regulatory Reform Committee.—(Lord Davies of Oldham.)

Baroness Noakes: I thank the Minister for introducing the order. As he said, it was considered by the Delegated Powers and Regulatory Reform Committee in another place and by the same committee in your Lordships' House and, as he implied, it passed with flying colours. It might seem that there is therefore little to add, but I never like to pass up an opportunity to talk about deregulation with the Minister.

The order contains a number of eliminations or reductions in regulatory burdens. As the Minister knows, my party believes in reducing regulatory burdens and we do not object to the order—indeed, we support it. However, it is worth pointing out that only two of the eight measures in the order actually reduce regulatory burdens on businesses; most of the rest relieve regulatory burdens on the FSA. I am not saying that that is a bad thing but it is not what my party yearns for when we talk about reducing regulatory burdens. Reducing the burden on bureaucrats is fine but it does not have a real impact on what we should be trying to do—reducing the impact of regulatory burdens on businesses.

I have a couple of points of detail for the Minister. I was surprised that during the consultation there was no pushback against the proposal to amend Section 157, which would reduce the requirements on the FSA to consult on guidance. I have always seen consultation as a fundamental part of good regulation. It is part of the better-regulation guidelines. Having removed the requirement on the

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FSA, there is the possibility that some guidance will be issued without full consultation. Are the Government satisfied that the FSA has processes in place to ensure that it consults when appropriate, and do they have processes in place to keep an eye on what the FSA will be doing with its new freedom to avoid consultation?

The other surprising aspect of the lack of pushback from the stakeholders, whom I freely admit were consulted, was the issue of guidance being delegated to committees. That is proposed in the amendment to paragraph 5 of Schedule 1. I am sure that much guidance is routine and therefore capable of being delegated. However, the Minister has already referred to the possibility of gold-plating, an issue we often discuss when considering regulatory burdens. People do not usually set out to gold-plate; it is something that enthusiasts tend to do. Having appointed what will doubtless be enthusiasts and anoraks to the committees and sub-committees that will approve the guidance, how will the Government, with the FSA, ensure that those well-meaning individuals do not end up creating new gold-plating after taking the opportunity of this regulatory reform order to reduce some from the past?

Finally, how many pages of the legendary five-foot rule book are being eliminated by the order? I suspect that it will make no dent in the rule book. When does the Minister expect the FSA to deliver a significant reduction in its rule book? We know that the FSA has for some time been talking a good story on reducing the size of the rule book and moving to principles-based regulation but it is my understanding that the regulation rule book would, if printed out, still come to nearly my height.

Lord Newby: I thank the Minister for his detailed explanation of the order and congratulate him on still being in his post. I think that this is the first time that the three of us have had the delight of debating since the new Prime Minister came into position and the reshuffle took place. We are delighted that the noble Lord remains in the Treasury brief.

This is by any standards a fairly minor measure; its individual components are acceptable to us and we support it. My question follows on from the noble Baroness’s last comments. Can we envisage further measures to reduce regulatory requirements in the financial services sector or are those who have been toiling in the vineyard to produce this measure hanging up their boots for another season, so that we should not expect anything else? The noble Lord said that a number of further proposals originally contained in the measure have been dropped, two of which relate to consultation. Have they been dropped for good or is there an intention to bring them back? The fact that the controversial matters related to consultation underlines the difficulty of deregulation. The easiest thing to suggest stopping is consultation. It is very easy to say, “Oh, let’s not bother consulting on all that again”. Of all the regulatory burdens, the burden placed on companies to be consulted is probably the one that they worry about least. So my question is narrow: will the three elements of the

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original proposals which have been dropped come back or have they been dropped for good? Subject to that, we support the regulations.

Lord Davies of Oldham: I am grateful to Members of the Committee for their contributions. I did not doubt that the noble Baroness, Lady Noakes, would take the full opportunity that this modest measure offers to talk further about reducing the burdens of regulation. I thank the noble Lord, Lord Newby, for his kind words. It is an absolute delight for us to be engaged in our usual places with regard to this order and, I imagine, on more substantial matters in the months to come. As the Committee will recognise, I canvassed vigorously for our relationship to remain as it has been over the past year or 18 months. I shall be working hard at the next election to make sure that our arrangements remain exactly the same.

The noble Baroness asked about one or two issues. The FSA is still obliged to consult, but, attached to that, a cost-benefit analysis on the matter is removed from the consultation, which makes the issue that much more intensive. We are seeking to reduce the levels of consultation. I bear in mind what the noble Lord, Lord Newby, said on consultation. Of course, the Government will keep under review the working of the FSA with regard to consultation. The noble Lord said that businesses worry least about that element of regulation. I am not sure that that is altogether true. We have all heard complaints from time to time about the excessive amount of material that descends on companies to which they are expected to make some response. But I hear what he says and I assure him that we dropped the proposals because it was clear at that time that what was being identified did not meet the response of the stakeholders. That is why we have taken that position. The noble Lord will recognise that this measure is a product of the very exemplar that he is enjoining me and the Government to follow with regard to necessary consultation.

The noble Baroness was perhaps a little less generous than is her wont on occasions. She is right that the main proposals reduce the procedural obligations on the FSA. I think that, wearing another hat and on other occasions, she is often quite enthusiastic that the problems of bureaucracy should be reduced. Therefore, she should welcome this measure, which seeks to streamline the work of the FSA and make it more the owners and stakeholders with whom it has relationships.

Some of the proposals will benefit firms directly and indirectly. They will remove administrative inconvenience and the time taken to apply for reauthorisation if a partnership or unincorporated association is dissolved. They will also benefit from the FSA being able to produce guidance in a somewhat more flexible manner. I recognise what the noble Lord, Lord Newby, is hinting at, but the trouble with flexibility is that it may not meet everyone’s requirements. It is helpful that we seek to build on good practice and see the FSA relating to its stakeholders effectively. The proof of this pudding will be in the eating.

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There are also cost savings. The Government anticipate that the total administrative saving for firms is likely to be between £7.5 million and £9.3 million. The total administrative saving for the FSA, which the noble Lord contended would be the chief beneficiary from these proposals, is perhaps less: we can see savings of between £50,000 and £115,000 for the FSA. So there are direct benefits for firms and the FSA on which we can put figures.

The noble Baroness always questions me about reductions in the rule book and in the weight of legislation. I am never able to respond to her as accurately as I would like because they are very difficult questions, such as how many pages we have effectively reduced the book by. We are making a dent in the rule book with this issue. We are concerned to reduce the rule book. The work we are doing to reduce the book with regard to money laundering is evidence of the Government’s intention. However, the noble Baroness makes an entirely proper point, and I always sound a little less forthright than I would wish because I am never able to answer her. One day I will be able to count not the pages but perhaps the lines that we have withdrawn on some very small measure—I imagine it will be a microscopic measure, if I am ever given that opportunity. I look forward to that day hugely.

On Question, Motion agreed to.

Official Secrets Act 1989 (Prescription) (Amendment) Order 2007

4.27 pm

Lord Evans of Temple Guiting rose to move, That the Grand Committee do report to the House that it has considered the Official Secrets Act 1989 (Prescription) (Amendment) Order 2007.

The noble Lord said: This order is made under the Official Secrets Act 1989. Under that Act, it is an offence for a Crown servant or government contractor to make a damaging disclosure of any information within particular categories which is or has been in his possession by virtue of his position, unless he has lawful authority to do so. People who are not Crown servants can be treated as such for the purposes of the Act by being designated in an order. The order before us does that for the members and employees of two separate organisations: the Nuclear Decommissioning Authority and the Independent Police Complaints Commission. I will deal with each of them in turn.

First, I shall deal with the Nuclear Decommissioning Authority. One of the categories of information protected by the Official Secrets Act is that relating to defence and security, including information about nuclear technology and nuclear materials. The boards and employees of existing companies with access to such information—British Nuclear Fuels and the UK Atomic Energy Authority—are already designated under the Act.

The Nuclear Decommissioning Authority is an executive non-departmental public body set up on 1

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April 2005. It is responsible for the decommissioning and clean-up of the UK’s civil nuclear legacy and has responsibility for nuclear sites previously operated by British Nuclear Fuels and the UK Atomic Energy Authority. It owns the plants and facilities of British Nuclear Fuels and manages clean-up operations at the UK Atomic Energy Authority’s sites.

British Nuclear Fuels and the UK Atomic Energy Authority have been restructured so that they now operate their facilities, both for clean-up and continuing commercial operations, under contract to the Nuclear Decommissioning Authority, rather than as principals. Employees of the Nuclear Decommissioning Authority therefore have access to the same information as those of British Nuclear Fuels and the UK Atomic Energy Authority. So it follows that members and employees of the Nuclear Decommissioning Authority and employees and board members of any future subsidiary should also be treated as Crown servants for the purposes of the Act. The draft order will achieve this by designating them as such. This is a necessary extension of existing designations, which will ensure the continued protection of information relating to defence and security.

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