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We are also still a little worried about the independent members, as the noble and gallant Lord, Lord Craig of Radley, said. They need some training. I cannot quite work out where they come from, but I agree with the noble Lord, Lord Astor, that we always seem in this new vision of the military to get outsiders, like the commissioner, with absolutely no idea of the military ethos or the military way of life. We had this discussion in our debate on prosecuting officers and so on. Although we do not reject this statutory instrument, a lot of hard work and quite a bit of explanation are needed to make certain that it is a good deal. It needs working on a bit more.

Baroness Taylor of Bolton: I thank everyone for their contributions, and will try to answer the points that have been made. We are talking about a new area, so it is understandable that some people will have such concerns about the impact of a new system.

The noble Lord, Lord Astor, started by suggesting that the services were not happy with the procedure that we have suggested. I emphasise that there has been a great deal of consultation on the actual processes to be adopted, and there have been significant discussions across the board. The principles and policies that we are putting forward in these statutory instruments have been endorsed by the service personnel executive group, which acts on behalf of the principal personnel officers of the three

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services, who are members of their respective service boards. I hope that that will allay some of the fears of several of your Lordships, who have expressed concern on the basis of their experience of the old system or of the Armed Forces generally. We are not simply imposing a new system on the Armed Forces without any consultation or consideration of the difficulties that might develop. We have done this carefully, taking on board any considerations that have arisen through those channels. I hope that that particular aspect will reassure the noble Lord, Lord Astor, and others who have had similar concerns.

The noble Lord, Lord Astor, also asked about the commissioner. I hope that he will welcome the appointment of Dr Atkins. She is extremely experienced, as I pointed out earlier, and was recruited through the normal Civil Service Commissioners’ recruitment code. The competition was open. Recruitment consultants trawled for people with the right kind of background, and I would have thought that work with the police complaints system was quite a good foundation for doing work of this kind. Dr Atkins’ appointment is for three years, and it is envisaged that she will work for approximately two and a half days a week. The salary, pro rata, is £105,000. She begins her appointment on 1 December, but is already taking a great deal of interest in this issue and is undergoing some of her induction and familiarisation with the Armed Forces, which again I hope will allay some of the concerns about her background. It is important—I am sure she thinks that it is important—that she visits establishments and talks to people in the three services. That is exactly what is happening at the moment.

The costs of the new system will be found within the existing departmental budget. A small secretariat is being provided, but we must remember that there have always been complaints and that, on occasion, they have taken up a great deal of resources, especially when they have gone to defence counsel and been complex and dependent on people’s time.

It is of course impossible to say at this stage what number of complaints we anticipate. During the past year, there have been 233 service complaints raised by Army personnel; in the Navy, there have been 73 complaints referred up from the commanding officer; for the RAF, there have been 220 service complaints during the past two and a half years. Because we do not have a system common to all the services, those figures are not kept in exactly the same way. It is difficult to predict the future outcome; I give those figures just so that there is a baseline and a starting point with which to compare future figures.

I was grateful to the noble Lord, Lord Addington, for his comments welcoming the new system. There will always be people who want to go further and provide more independence; I think it right that we try to get a balance so that we have a system that has the confidence of everyone. That is very much what we are about in drawing up the statutory instruments.

The noble and gallant Lord, Lord Craig, raised three questions, which I hope that I can answer. He mentioned the question of an officer having someone

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of the same rank on the panel and talked about the implications of mixed-service panels. His request was that the service of the complainant should be the one from which panel members were drawn. He was very cautious, because he said, “as far as is practicable”. That is exactly what we would say: as far as is practicable, that should be the situation.

The noble and gallant Lord went on to ask about an independent member of the panel and whether that could be a retired officer. Yes, it could, although I think that we would expect panel members to be drawn from a wide variety of backgrounds. They will get induction and training and they will bring their different backgrounds, which I hope will be helpful. He also asked whether the commissioner could refer downwards a complaint made to her. That is the case. If a complaint is made to the commissioner, she will refer it to the complainants’ commanding officer, who will in the first instance look at that complaint to see what needs to be done. It can come back up the system, but in the first instance, it would go to that starting point.

I thank the noble Viscount, Lord Slim, for his comments about the meeting. I thought that it was useful and I appreciate what he said. He also expressed the concern expressed by the noble Lord, Lord Astor, about the possibility for a troublemakers’ charter, but I hope that what I have said about the involvement of the services will be reassuring on that point. I hope that the mechanisms that we have built into the system will provide some security for the armed services that it is a system that they can use to everybody's benefit. The noble Viscount asked specifically about the training of lay members. As I mentioned, they will have to undergo training and induction. I know that he may have some reservations about independent members on the panel, but I remind him that there will always be two panel members from the armed services, so it is not a question of total independence or a total lack of experience.

I hope that those comments will reassure your Lordships that the department has considered this very carefully and has sought to strike the right balance in the new system, which we hope will benefit everyone.

On Question, Motion agreed to.

Armed Forces (Redress of Individual Grievances) Regulations 2007

The Parliamentary Under-Secretary of State, Ministry of Defence (Baroness Taylor of Bolton): I beg to move the Motion standing in my name on the Order Paper.

Moved, That the Grand Committee do report to the House that it has considered the Armed Forces (Redress of Individual Grievances) Regulations 2007. 28th Report from the Statutory Instruments Committee, Session 2006-07.—(Baroness Taylor of Bolton.)

On Question, Motion agreed to.

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Legislative and Regulatory Reform (Regulatory Functions) Order 2007

4.10 pm

Lord Bach rose to move, That the Grand Committee do report to the House that it has considered the Legislative and Regulatory Reform (Regulatory Functions) Order 2007.

The noble Lord said: The Government laid two complementary instruments—the draft Regulators’ Compliance Code and the draft Legislative and Regulatory Reform (Regulatory Functions) Order 2007—before Parliament on 15 October. I will speak to the two orders together. The purpose of these instruments is to deliver the Government’s commitment to promote effective, risk-based enforcement, which will make a real difference on the ground to those who are regulated without compromising the UK’s excellent regulatory outcomes. There has been full consultation.

The draft code is made under Section 22 of the Legislative and Regulatory Reform Act 2006, while the draft order is made under Section 24. Section 22 enables a Minister to issue a code of practice relating to the exercise of regulatory functions, and requires any person exercising a specified function to have regard to the code in exercising the function. Section 24 allows a Minister to specify by order the functions to which the code and the five principles in Section 21 apply. These principles are that regulatory activities should be carried out in a way that is transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed.

The draft code gives effect to the recommendations in the Philip Hampton report, Reducing Administrative Burdens: Effective Inspection and Enforcement, while the five principles of good regulation derive from the Better Regulation Commission’s report, Less is More. The Government accepted these recommendations and introduced the Legislative and Regulatory Reform Act to implement them. Part 2 of the Act incorporates the five regulatory principles and allows the Hampton’s enforcement principles to be implemented through a statutory code.

When the House debated the 2006 Act, Peers warmly welcomed both the Hampton principles and the principles of good regulation, and supported Part 2 of the Act. As the draft order and code derive from Part 2 of the 2006 Act, we hope that Peers, having scrutinised and debated these draft instruments, will bear in mind particularly the benefits that the regulatory and enforcement principles may bring.

We believe that a lot has been achieved in the past years by many regulators since the Government launched a radical and far-reaching agenda for better regulation. Since the Hampton report, for instance, the Environment Agency’s risk-based assessments have enabled it to identify more of those who need inspection and have led to a 20 per cent reduction in the total number of inspections. That can only be good for honest and hard-working businesses in terms of lower compliance costs, as well as allowing regulators to be more efficient and effective in their work.

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However, we need to do more. We need to promote a real and lasting change in a regulatory culture that embeds a light-touch, risk-based approach to enforcement among all regulators. This will deliver further significant benefits to business in terms of better focused inspection activity, the increased use of advice for business, reductions in form-filling requirements and more consistent penalties. These benefits will not be at the expense of regulatory outcomes. This is because a risk-based, targeted and proportionate approach to enforcement will enable regulators to direct limited regulatory resources to areas of greatest need, while reducing burdens on low-risk, honest and compliant businesses. We therefore hope that this is a win-win for regulators, for most of those whom they regulate and, indeed, for society.

I emphasise the extent and depth of consultation with all interested parties since March 2007—for over six months. As a consequence of those consultations, parts of the code we are now debating have been altered. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Legislative and Regulatory Reform (Regulatory Functions) Order 2007. 28th Report from the Statutory Instruments Committee, Session 2006-07.—(Lord Bach.)

4.15 pm

Lord Hodgson of Astley Abbotts: I am extremely grateful to the Minister for that thorough explanation of the order and the code. He will probably not be aware that, when I was doing some background reading on this, I saw that, on 2 November 2006, the House debated the then Legislative and Regulatory Reform Bill and followed it up with the then Companies Bill, to which we shall turn shortly. Those pieces of legislation were taken on the Floor of the House at the same time but were very different in that only 11 amendments were tabled on Third Reading of the first Bill, whereas 1,029 Commons amendments were tabled to the Companies Bill. I note that the Minister’s predecessor, the noble Lord, Lord Sainsbury, claimed three scalps or personal records: the most Commons amendments to a Lords Bill ever; the most Commons amendments taken in a single day; and the most amendments—more than 300—taken in a single grouping.

We on these Benches welcome this important if in part slightly technical instrument. The principle must be entirely praiseworthy. We are concerned at the increasing regulatory burden; one has only to open a newspaper on any day to see descriptions and discussion of how the regulatory burden has increased and is increasing. The impact on British life is felt in the economic sphere and is considerable and far reaching. It greatly saddens me when I read about school trips being cancelled because of problems with regulations or village halls being closed because they cannot comply with construction regulations. The weakening of the richness of educational experience and of the social fabric is a great shame. I have described it in debates as the barnacle principle: that although a single barnacle on a ship makes very little

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difference indeed, as the number of barnacles increases the ship’s speed through the sea is slowed. I am sure that, as the Minister hinted, at some point we will need a much more widespread and far-reaching debate on the nature and level of risk that society is prepared to tolerate. In the mean time, we support a measure that encourages proportionate and flexible regulation.

I turn to the specifics of the regulation in the code. First, however, I make a point which, although the Minister may consider it a drafting point, may indicate an underlying approach. The code begins with a paragraph on the purpose. Paragraph 1.1 states that,

I know that the Minister will tell me that that repeats the principle outlined in paragraph 3 of the code, on page 3, on the economic progress principle. However, it is a rather sad reflection that we say “or even encourage”. Economic activity is the lifeblood of what we are seeking to achieve in this country, and it should not really be added here as an afterthought. The provision could say “allow or encourage” or, if the Minister wanted to try for a major prize, say “allow and encourage”. That approach seems rather more appropriate.

That is enough of the trivia. The order is a fascinating read. If anyone needed to be convinced of the regulatory burden, 24 closely packed pages of authorities, bodies, statutes, UK and European regulations are a convincing answer. I believe that the News of the World once advertised itself by saying, “All human life is here”. Well, all human life is certainly in this order. I was tempted to ask the Minister to explain its application to the Pedlars Act 1871 or, even more surprisingly, to the Hypnotism Act 1952, but I shall not surrender to that temptation. However, there are two important issues of principle. Article 4 of the regulatory functions states:

That is a slightly dense use of prose, and there are two negatives, but as I understand it, it means that matters that are devolved to Scotland are not covered by the order.

Similarly, Northern Irish matters that are handled in Northern Ireland are not covered by it, and the same applies to Wales. If I am right about that—I should be delighted to be told that I am not—serious situations could develop that will undermine a good deal of what the Government are seeking to achieve by this order and this code. I illustrate that briefly by way of an example. Part 1 of the schedule on page 3 states:

Charity law is a devolved matter. A Scottish charity law has recently been passed. The Scottish charity law regulator goes by the name of OSCR—the Office of

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the Scottish Charity Regulator. The Scottish Parliament is passing detailed regulations that are burdensome and expensive to comply with. They are being enforced, appropriately, by OSCR. They are being passed by the Scottish Parliament without reference to the Charity Commission in London.

Let us consider the position of a UK-wide charity, for example the Red Cross or Cancer UK. I should make it clear to the Committee that I have not been asked by the Red Cross or Cancer UK to raise this, but I pick them as two well known charities. They have to comply with two sets of regulations where previously they complied with one. They are taking extensive and expensive legal advice on this. When people are approached by the RNLI lifeboat lady holding a tin in the street, I wonder whether they realise that at least part of the money they are giving will be devoted to obtaining advice to deal with this double layer of regulation. So, far from being deregulatory, the instrument permits an increase—two layers—in regulation.

However, that is not the whole story, because the Welsh Assembly—following the Scottish example—has already begun to consider whether it should have powers over charities that operate in Wales. The Government are on record as saying that they propose to introduce a charities law for Northern Ireland, which will presumably have its own regulator. There could therefore be four sets of regulations for national charities to comply with. I was a poor student, especially in mathematics, but I remember two concepts: one was called LCD, the lowest common denominator; and the other was called HCF, the highest common factor. My hope was that what the Government propose here would lead to the LCD, the lowest common denominator, but I fear that they will end up with the HCF, the highest common factor, in charities law, where charities have to comply with the most burdensome regulations to avoid undue administrative burden. That is not in the interests of donors, who give their money to help the charity itself. It is clearly not in the interests of charities, whose management has to spend time finding ways to deal with the matter. It is clearly not in the interests of recipients, because they want to receive charitable endeavour, not have it wasted on professional fees.

I hope that the Minister can explain how the Government propose to tackle that. I am not clear why we could not have reached agreement with the Scottish Parliament, the Welsh Assembly and the Northern Ireland Government to buy into those provisions. Surely minimising regulatory burdens cannot be just an English concern. This is a serious matter, and I look forward to hearing from the Minister about it.

The second point of principle can be summed up in that fine old country phrase, “Fine words butter no parsnips”. There are lots of fine words here, but what will the follow-up be? Most of us on this side of the House believe that regulatory impact assessments are usually fairly desultory or inadequate at the outset and are rarely, if ever, properly reviewed. The code and the order will require considerable review and

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follow-up. I remind the Minister of what was said by the Merits of Statutory Instruments Committee. It said:

as do we—

I am sure that the Minister’s officials have read the House’s report on UK economic regulators, which was published on 20 October. There is a lot of stuff in this report, but there are two or three quotations that the Minister ought to be prepared to address. Paragraph 1.5 states:

Paragraph 1.8 states:

Paragraph 1.10 states:

Finally, paragraph 1.29 states:

are met.

I began by saying that we support the principle behind the regulation, and we do—we want flexible, proportionate regulation—but some serious issues have been overlooked here. Devolution—the devolved Assemblies and devolved powers—is one. How can we ensure that that does not drive a coach and horses through what the Government are seeking to achieve? There is also the need for serious evaluation in one year, two years or three years from now.

4.30 pm

Lord Razzall: I join the noble Lord, Lord Hodgson, in saying that we on these Benches support the code and the order. I shall start by picking up on the point that the noble Lord, Lord Hodgson, made. As the Minister will be aware, Members on these Benches have long argued that, as with all regulations, the devil is in the detail and that what is essential from the Government’s point of view is that we should have a full impact assessment before any regulation is brought in. We have also argued for sunset clauses. In this provision, the Government are almost moving towards what we have asked for, in the sense that we have a full impact assessment, which is the document that I have in my hand. Also, taking into account what was said by the noble Lord, Lord Hodgson, we almost have a sunset clause, in the sense that the full impact assessment answers the question, “When will

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the policy be reviewed to establish the actual costs and benefits and the achievement of the desired effects?”. The answer is April 2011. So we are getting close in the approach to these provisions to what we on these Benches have been arguing in favour of for some time, which we have put into our last two general election manifestos.

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