Examination of Witnesses (Questions 83-99)
Mr Pat McFadden MP
22 JANUARY 2008
Q83 Chairman: I will not introduce us all because
you probably know a fair number of us and you can certainly see
the name badges we have in front of us. If you are content, we
will go straight to business.
Mr McFadden: Yes.
Q84 Chairman: Thank you very much
for coming this afternoon to help us. No doubt you have seen the
origins of our interest in this field, in terms of the report
of the inquiry we had previously, and this is in the nature of
a follow-up report in the light of that and our further experience.
Thank you for coming to help us with that. We are also grateful
for your colleague's letter, Michael Wills, explaining the difference
between his role and your role, which we have received. So we
will not go into detail on that, but we will have that as part
of our record. If you are content for us to start, I wonder if
we could kick off by asking you about your role as a Minister
for Better Regulation and, really, asking you what leverage you
have over your colleagues.
Mr McFadden: This is, for me, the second time
around as Better Regulation Minister. I did this first when I
was in the Cabinet Office in 2006. Then the Better Regulation
Executive was transferred to the Department for Business, Enterprise
and Regulatory Reform, but I was not the Minister—it was
your colleague, Lord Drayson. He then departed and I have taken
up the baton again for a second time some months ago. So what
is my role and the leverage—is your question. It has to
be a cross-government effort—better regulation; I do not
think any single minister can do it. So there is a role in co-ordinating,
there is a group of better regulation ministers and there is a
role in the departmental simplification plans which have provided,
I think, a very helpful focus across government to this effort
over the last two years—the second tranche of which were
published in December. Of course, there was an important legislation—and
I played some role in taking through the Bill[1]
a couple of years ago in this area. We now have the Regulatory
Enforcement and Sanctions Bill, which is currently being discussed
in your Lordships' House but, depending upon the proceedings there,
will come to the Commons at some point. So I think it is really
co-ordinating a team effort across government rather than being
a single person responsible for the whole field in every department.
We take the view that this will only work if departments themselves
take an interest and see this as a priority. In that sense I think
the work of the Better Regulation Executive, certainly in the
two years or so that I have been involved with them, has been
extremely helpful because they have been able to play a role not
just in producing simplification plans but, I think, in deepening
thinking about better regulation principles in terms of policies
that are coming up. There is a lot coming down the track that
could be done, if you like, in line with better regulation principles,
or, alternatively, could be done in a different way. So they have
a very important role in early policy advice, and other departments,
to help that.
Q85 Chairman: Maybe it is difficult,
but maybe you could give us a succinct picture as to what you
think is the state of progress and where things are going slowly
or poorly.
Mr McFadden: I think, probably, the best thing
to look at is the simplification plans. When I speak to ministers
abroad, as I do quite a lot in my role as Minister for employment
relations, Britain's effort in this regard is spoken of with some
admiration. They see our effort in, first of all, measuring the
admin burden on business, as being a very helpful thing to do—not
always an easy thing to do for a government to do because you
have to produce a figure for this—then setting a target
of reducing it by 25%, and then commissioning plans right across
government in order to do that. As I say, the second tranche we
have published in December. One of the things I was keen to do
with the second tranche was to make them, maybe, more specific
for the reader than they had been in the past. I think, being
candid, there is probably some doubt or scepticism among, certainly,
business audiences, when they hear the government talking about
cutting burdens by £3.5 billion by the year 2010, which is
our target. Sometimes a small measure—for example, one of
the things we did was get rid of a game licence which butchers
had to have, which is probably a very small part of that £3.5
billion—is something real and tangible for those businesses
involved. Another example from our own department would be removing
the requirement for small companies to have a company secretary
or to hold an AGM every year. Again, that might not add up, in
its own terms, to a huge amount in financial terms for the companies
involved but it is probably more real for them than some of the
big numbers in terms of percentages and overall totals that we
talk about. I think the simplification plans, in particular, have
focused government activity on the fact that this is an issue,
it is an important part of policy-making and departments have
to have a very serious regard to it in their activities, and you
can see that in ministerial discussions.
Q86 Baroness Kingsmill: I wanted
to ask to what extent you were concerned with risk-based analysis
when thinking about improving the regulatory framework.
Mr McFadden: Very much so. I think the field
of risk is a sort of fascinating part of this. You will have seen
the remarks of the Prime Minister about a week ago, I think, with
regard to taking Rick Haythornthwaite's Better Regulation Commission
and giving it a specific risk focus[2].
There are two sides to your question. First of all, we have tried
to make inspection and regulation more risk-based, in lines with
the Hampton principles. Also, the Risk and Regulation Advisory
Council have now been given a specific brief to build on the Commission's
work on risk analysis and the public debate about risk, which
they published a year or more ago. Again, I think specific examples
probably bring this to life. There have been some very controversial
issues, for example, around the MMR vaccination or around GM food,
which have been very hot in terms of political debate and public
discourse in recent years. This is a difficult area for politics
because very often, even if the risk is very small, even if the
risk is unproven, there is pressure sometimes from pressure groups
or from the media to do something to minimise or get rid of that
risk; far less do you hear about the downside of an action which
may be taken in removing what may be a very small risk. That is
a difficult debate to have in public. I also think, if we are
being honest, our structures of Parliamentary accountability can
sometimes lead to risk aversion, perhaps, in the machine. How
often in Select Committees like this or in other Select Committees
in both Houses, would senior officials be taken before a Committee
and be praised for taking a risk compared to the number of times
where they might be taken before a Committee and told: "In
your policy development did you not heed the warning from so-and-so
before taking your action? Are you not guilty of negligence in
not covering off this risk?" So we cannot live in a risk-free
society; to do so would be both impossible and, indeed, undesirable;
you need that for entrepreneurship, for creativity and for learning,
yet there are significant pressures on public policy-makers from
various quarters which push against risk-taking in one form or
another. I suspect that does have an impact on the amount of regulation
in society.
Q87 Baroness Kingsmill: Certainly
businesses think that risk-based analysis is something which is
very common to them, and they understand the difference between
a slight risk of something terrible happening and a big risk of
something minor happening. That is an approach, certainly, which
has found favour in a business context, I think.
Mr McFadden: Yes. Hopefully that has been reflected
now, increasingly, in the way that regulators are behaving. Certainly
in my discussions with regulators in recent years they are, I
think, trying to take the Hampton principles on board; trying
to adopt less of a sort of box-ticking approach to the businesses
that they may inspect and concentrate more on where the risk is
greater. We had this recently in discussion about employment agencies,
in a debate elsewhere in these buildings, and one of the points
put to me was: "Well, if you have only so many inspectors,
by the time you have inspected all the agencies that would take
X years", and so on. My answer was: "That is not the
way we should approach it; we should not be setting out to inspect
each one in the same way we would inspect others." We are
trying these days to take a risk-based approach. I think that
has to be right because resources will always be limited.
Q88 Baroness Maddock: In a way you
have touched on this but, of course, we deal with a huge volume
of secondary legislation all the time and it has not changed much
in recent years, despite the department's claims to be tackling,
largely, outdated or redundant regulation. You gave a couple of
examples, but what percentage of resources are you putting in
to the revocation of redundant secondary legislation?
Mr McFadden: There are a few things tied up
in your question. First of all, I think this is an important point.
The better regulation effort is not just about legislation or
about statutory instruments. I would argue that a significant
number of statutory instruments would not place an additional
burden on businesses. For example, I think it is round about 10%
of the 3,000-odd that are published each year which require an
impact assessment, or impact of greater than £5 million for
the public sector. Conversely, I think the better regulation effort
should go much deeper than just a tally of the number of statutory
instruments. You might be able to do some very good things without
doing a statutory instrument. I do not know if this is an example
that works or not but I will try it: we have produced single versions
of employment particulars to give to employers so that they do
not each have to go through the same learning process of drawing
up individual contracts of employment when, really, we know the
basic things that have to be covered in a contract of employment.
We calculate that could save businesses significant amounts of
money. I think I am right in saying we do not need a statutory
instrument to do it. So there is good work that can be done on
the better regulation front without necessarily, impacting on
the number of statutory instruments. By the same token, I think
it would be wrong to regard a sort of league table of the number
of statutory instruments as being the sole yardstick of how the
Government was doing on the better regulation front. I am not
sure they are quite the same thing.
Q89 Baroness Maddock: Can I pursue
it a little bit farther because what I was really referring to
was dealing with some of the redundant legislation, which you
did touch on earlier, which was game licences, for example. You
did have a notion of "one in, one out", with the aim
of reducing the legislation we had already got. I do not know
how far you have got on that, or what you can tell us about that.
Mr McFadden: In some ways we have gone further,
because the net burdens reduction of 25% by 2010[3]
will actually be more than simply keeping a level playing field
of one regulation in and one regulation out for admin burdens.
In terms of the specifics of getting rid of redundant legislation,
in order to facilitate this we passed the Legislative and Regulatory
Reform Act, as it now is, a couple of years ago. There are, I
am advised, some 20 legislative reform orders in the pipeline,
but there is an important point about this—if I could go
back to the debates on that Bill, just to remind the Committee.
One of the worries that both Houses had during the passage of
that piece of legislation was that it would somehow upset the
balance or traditions of Parliamentary scrutiny, and a lot of
safeguards were built in. The Government was being accused, perhaps
rhetorically, perhaps genuinely, of planning to abolish trial
by jury and other such important parts of the constitution through
this Bill. Ministers like me would stand up and say: "That
is not our intention at all"; MPs would say: "You might
be a good and genuine person but what about your successors?"
We went through the debates like that, and we tightened it up
and tightened it up and put more and more procedure into it, and
the warning that I gave at the time that it was going through
was that this was the third time Parliament had had a go at putting
in place a mechanism for doing what you are asking me about. Let
us beware of constructing such an elaborate system of scrutiny
and checks for these orders that, actually, departments think
twice about coming forward with them. You could argue, in some
cases, that the procedures that one has to go through as a result
of the Act to abolish some secondary legislation are far more
rigorous than the procedures of scrutiny that clause 37 of an
ordinary piece of primary legislation would get. So we have an
elaborate procedure. I understand why that developed but I did
say at the time: "Let's be careful this is not too elaborate",
and we now have about 20 reform orders in the pipeline. It has
taken some time to get the procedures in place, but I hope that
that can carry on and get off the ground in a productive way over
the next period.
Q90 Chairman: We get a fuller picture
of the simplification if we look at the simplification plans in
December? That will give us measures on what progress is being
made?
Mr McFadden: The simplification plans just published
in December will give you a very good picture because, to the
BRE's credit, they have listed, I think, over 200 specifics where
action has been taken. They have also listed the top ten impacts
on small and medium-sized businesses, and so on, and it is a much
more, reasonably speaking in this field, plain English version
of progress than the purely legislative agenda.
Q91 Viscount Eccles: Can I just explore
this a little bit further, Minister? I think it may be that this
Committee and, indeed, what it does, is not really the centre
of focus of the work that is going on, whether it is being done
by the Commission, which is disappearing, or by the Executive,
or indeed in the Bill that is now in this House, as you have said.
Are we right to think that the focus is really on the implementation
of all existing regulation rather than on the processes by which
secondary legislation comes before this Committee?
Mr McFadden: I would not put it like that; I
would not say this Committee was not really the focus. What I
would say is the work that is done here on statutory instruments
is part of the better regulation picture, but it is not the entire
picture; there are other things to it, some of which I have referred
to. On statutory instruments themselves, which is the core of
what this Committee looks at, we have tried to improve the process
in a number of ways. We have made changes to the impact assessment
process, making that clearer, and the summary sheets, and earlier
in the process, and so on, which I think when it comes to it—and
you have more direct experience because you are looking at this
on a daily basis—has improved the intelligibility of statutory
instruments and what their impact will be, and that is what it
was designed to do. We have also had changes to consultation processes,
which are often part of the secondary legislation process. So
I would not want you to get the impression from my answers to
earlier questions that statutory instruments were not somehow
in focus as part of the better regulation effort. They are, but
they sit alongside things like the simplification plans, things
like the primary legislation, which I have outlined, and a broader
cultural effort, if you will, on the better regulation front.
So it is in focus but it is part of a wider picture.
Q92 Baroness Butler-Sloss: If I could
move to a different point, Minister, which is accessibility to
existing statutory instruments. Last year we had, I think, the
most of the last four years—we had over 3,600 statutory
instruments—and although they are regularly amended and
regularly consolidated, by and large, those who need to read them
have got to go to a subscription list to be able to get it, like
LexisNexis, or whatever it may be. I can tell you, in an earlier
life that I had as a judge, it was a nightmare to find the up-to-date,
amended statutory instrument relevant to the particular subject
that might be looked at. Are you likely to, or can we encourage
you to, go to the Ministry of Justice to develop their free-to-access
statue law database to include a full up-to-date and in force
text of all secondary legislation as amended? It is not just the
lawyers it is the public dealing with particular areas who really
do need to know what it is that is being said, and part of the
law.
Mr McFadden: I could say that I, perhaps, should
have expected that the judge would ask a very tough question!
Q93 Baroness Butler-Sloss: I was
asked by the Chairman to do it, I have to say!
Mr McFadden: I suppose I could duck it by saying
"Look at it; it is a matter for the Ministry of Justice".
In the OPSI website you can find the lists of legislation, and
so on. Whether I can sit here and tell you that is a currently
perfect process or not—no, I cannot; it is their responsibility.
I am sure if the Committee feels strongly about this, I cannot
say they will definitely jump and do it but I think they will
take your view seriously on this. I had a look before coming along,
just to have a dig around on some of these websites on guidance,
and so on, that is available. I do not know if the list is complete
but, certainly, it seems to me to be quite extensive, in terms
of what you can find. That is a huge effort—you know the
volume of legislation produced by this place. Maybe it can be
improved, but one of the things that, I suppose, I have to do,
as Better Regulation Minister, is maintain some boundaries between
what I do and what departments are responsible for. I think they
are responsible for that. If the Committee has a view about it
you are in a strong position to let them know.
Q94 Chairman: I think we were feeling
that you, in your role, had an interest in it as well, because
part of minimising unnecessary regulatory burdens is that those
who have to (and, presumably, the Government wants them to) comply
with legislation should be able easily to access that without
cost burdens. That is not possible currently. I think we are surprised
that you are not more willing to have a go at this with your colleagues
in the Ministry of Justice—in the nicest possible way, of
course.
Mr McFadden: Do not get me wrong, I appreciate
that Baroness Butler-Sloss, in her previous life, would have had
reason to go and try and find the statutory instrument and read
the particular text and so on. There are many ways in which government
can advise either the public or business about what is contained
in legislation. Actually, the primary legislative text is not
often—or certainly not always—the best way to do that.
For example, if you take the Business Link website, and you want
to find out about your obligations as an employer on employing
people, there you have some very helpful, effective and user-friendly
advice on the "employing people" pages of that website,
which I think serves a very useful role.
Q95 Chairman: I am sure we would
agree, but we would still assert that the legislation should be
accessible and transparent.
Mr McFadden: I am not saying that you are wrong,
I am just slightly cautious about—
Q96 Chairman: So you will not do
anything about it?
Mr McFadden:—telling the Ministry of Justice
how to organise the information that is within their responsibility.
Q97 Baroness Butler-Sloss: I think
you could tell them that this Committee asked you.
Mr McFadden: I can certainly tell them that
the Committee obviously feels strongly about it.
Q98 Chairman: Partly because real
members of the public have said to us they have found it really
hard work at times to actually find out what the law is that the
Government, of whatever—
Mr McFadden: That is a slightly different point.
Q99 Chairman: It is the same point.
Mr McFadden: I am not sure it always is. If
members of the public want to find out what the law is, that is,
of course, absolutely right, and I think departments have an important
communication task in doing that. As I say, that is why I use
the example of something like the "employing people"
part of the Business Link website. That is a very user-friendly,
public-facing way of dealing with something which employers really
do want to know about and often are worried that if they get wrong
they are going to end up in a tribunal. So we, as a department,
have put a lot of effort into getting that right. I think that
is important and valuable.
1 The Legislative and Regulatory Reform Bill, which
became an Act and came into force on 8 January 2007. Back
2
The Risk and Regulation Advisory Council was established on 16
January 2008, replacing the Better Regulation Commission Back
3
The target relates to administrative burdens on business and
the third sector. Back
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