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Finally, I emphasise the extent and depth of consultation with interested parties on the draft instrument. For over 13 weeks, officials actively consulted different stakeholders to seek their views on the draft order. Where necessary, officials met further with key stakeholders to discuss any concerns about the order. I am confident that the instrument enjoys the support of most key stakeholders. I beg to move.
Lord De Mauley: My Lords, I thank the Minister for explaining the order. Reducing unnecessary regulatory burdens on both the public and private sectors is a worthwhile aim, strongly supported on this side of the House. To that extent, the order is welcome. However, in the Making It Simple annual review 2008, the noble Lord, Lord Carter, stated that the Government were on target to reduce the overall burden of regulation by 25 per cent. The Minister himself just referred to this.
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The Better Regulation Task Force established five principles of good regulation, to which the Minister referred. Those principles were designed to be a useful toolkit for assessing and improving the quality of regulation. The principles, as the noble Lord said, are proportionality, accountability, consistency, transparency and targeting.
I make the following observation about the order, because it is drafted-as many orders are-simply as a series of amendments to extant legislation and, when read on its own, is completely incomprehensible. The first things that it comes to-after the wherefores and whereases-are amendments to the 2007 order, but you need to get hold of the 2007 order to know what it is all about. Even then, the lay man would be hard pushed to make head or tail of it. Does that not breach the transparency test? The Explanatory Memorandum is indeed helpful, but that is not quite the same thing. I ask the Minister how those who are in business, who are often untrained and inexperienced in reading and interpreting orders and legislation generally, would know whether it applied to them and in what way.
Turning briefly to the impact assessment, can the Minister tell me whether the figure of £2.8 million for one-off costs is per regulator or across the whole country? As to the range of total benefits, which is stated as being from £2 million to £45.2 million, I observe that under any interpretation of the word "materiality" this is sufficiently wide to cause some scepticism. What does it mean and why is it so wide?
Returning to the order, I note that it is stated that the traffic commissioners have been assured that the code and principles do not apply to their functions of conducting civil or criminal proceedings. It would be helpful to have on the record the reason for this exclusion.
2.30 pm
Lord Cotter: My Lords, I, too, thank the Minister for introducing this measure. Indeed, as has already been said, we cannot but approve of the aim to reduce the burden of regulation and bureaucracy on all people and businesses, particularly small businesses. However, one aspect that concerns these Benches is the difficulty of getting clarity as to exactly what is being proposed today in order that we may discuss it. That in itself is an area of concern.
Can the Minister give an assurance that, in order to achieve the aims set out, the order does not place too many burdens on small businesses? Trying to ensure that regulation is carried out in a proportionate and transparent way could have the reverse effect if small businesses, in particular, find difficulty in coming to terms with what they are being asked to do.
I believe that I am correct in saying that a review is proposed in 2011. How do the Government intend to carry out this review process? The Minister said that a
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Lord Young of Norwood Green: My Lords, I am not sure that I have the answers to all the questions, but I shall address those to which I do have answers.
The noble Lord, Lord De Mauley, asked about the exclusion of the traffic commissioners' judicial functions. The 2006 Act specifically excludes from the definition of regulatory function,
which means that, to the extent that quasi-judicial bodies are carrying out any function of conducting criminal or civil proceedings, such a function is excluded from the scope of the code. It is not the Government's intention to go beyond the specific language used in the Act.
I am looking for inspiration from behind me for an explanation as to why, according to the British Chambers of Commerce, the regulatory burdens barometer is moving towards stormy rather than fair weather. The UK now has the best ranked business environment in Europe and the fifth best in the world, according to the World Bank's "Ease of Doing Business" index, which analyses the regulatory environment of 183 countries. The Government have delivered more than £2 billion in annual net savings by cutting out-of-date and unnecessary paperwork for businesses. That is £5 million a day, every day. This is on track to meet the target of a 25 per cent cut and is expected to deliver £3.4 billion in savings.
As to the point about the British Chambers of Commerce, it is a question of the methodology that it uses. There is another phrase in my brief but I cannot decode it; I think that I have some cryptographers working behind me.
The noble Lord, Lord De Mauley, talked about the one-off costs per regulator. Those one-off costs are across the country, apparently, which I think answers another question.
A further point was made about the impact on SMEs. My understanding is that this will be beneficial regardless of the size of the business in reducing the regulatory burden. I can think of one area that I am sure impacts on most of us, which is to get it right when trying to open and close bank accounts and the amount of evidence that you are required to produce. There is certainly potential in that area. I hope that I am right in saying that the size of the business should not have anything to do with it. The aim and intention is at one with the Hampton review; the recommendations are exactly the same.
With regard to the point about the British Chambers of Commerce, although we agree with the methodology, we think that the figures that we have quoted about the savings are reliable, so we may have to agree to disagree on this. If I have not said it already, we have
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I thank noble Lords for their consideration of this draft instrument. I emphasise that its aim is to ensure that national and local regulators apply a risk-based and targeted approach to regulation so as to improve outcomes and minimise burdens on businesses. Many UK regulators are already working within the statutory framework provided by the Regulators' Compliance Code and to the principles of good regulation. This instrument will ensure that more and more regulators operate within the same framework. This is important because business, especially small businesses, needs an environment where regulation is effective and bureaucracy is minimised. In the current economic climate, I am sure that noble Lords would agree that this is more important than ever. It is also important because we can protect the environment, reduce accidents, protect workers and thus maintain an efficient and competitive economy only if we have appropriate and good-quality regulation that is properly and fairly enforced.
This instrument will bring real benefits to many groups: to regulators, because they will be able to target their resources more effectively; to business, because the costs of regulation will fall; to society, because rogue operators will be more effectively targeted and tackled; and to the economy, because removing burdens on business will enable the UK to retain its competitive edge in the global economy. On that note, I ask the Committee to approve the Motion.
Provision of Services Regulations 2009
Copy of the SI
22nd Report from the JCSI
Considered in Grand Committee
2.38 pm
Moved By Lord Young of Norwood Green
That the Grand Committee do report to the House that is has considered the Provision of Services Regulations 2009.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Lord Young of Norwood Green): My Lords, the regulations before the Committee today implement the EU services directive into UK law. The regulations concern both the provision and the regulation of services. They are therefore relevant to service providers and to authorities with a supervisory or regulatory role in relation to services-termed "competent authorities". The directive represents a great step forward for the internal market in bringing down barriers to business in the EU and is a major achievement of better regulation across the EU.
Although the freedom to provide services and the freedom of establishment are already set out in the treaty establishing the European Community, services
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As noble Lords will no doubt be aware, the directive covers around two-thirds of the service sector as a whole. The directive excludes some services industries, such as financial services, healthcare, gambling and transport. This is due to the fact that EU legislation exists in some of those excluded areas already and that liberalisation was seen as undesirable for others. However, the directive still represents the horizontal piece of legislation that we were striving for. Details on scope are in Part 1 of the regulations.
The directive, which these regulations will put into UK law, has been incorporated into the EEA agreement. The regulations therefore apply in relation to the EEA states of Iceland, Liechtenstein and Norway, as well as the 27 EU member states.
There are four main elements to the directive, and thus to the regulations, which I will outline in the order in which they appear in the regulations. First, Part 2 of the regulations concerns the quality of services provided to recipients. To increase recipients' confidence in buying services from abroad, all service businesses will have to provide consumers with certain information about the business and the service in question. The requirements are simple and should not present a burden for UK businesses as we anticipate that most of them will already be doing this as common practice. We hope that consumers will benefit from increased quality, competition and choice, and that this will result in a wider customer base for businesses offering services.
Secondly, Parts 3, 4, and 5 of the regulations set out legal requirements on competent authorities regarding their regulation and supervision of service providers and recipients. These provisions reflect the requirement in the directive that all such authorities across the EU remove unjustified, disproportionate or discriminatory legislative and administrative barriers to providing services. These could include requiring a prospective service provider to register with an authority or to establish premises in a particular country, in the absence of an adequate policy rationale. Part 6 of the regulations places several other requirements on competent authorities that will benefit both service providers and recipients. For example, authorities must recognise equivalent documentation and equivalent professional liability insurance from service providers and recipients from other member states.
Thirdly, the directive requires each member state to set up a point of single contact, which is termed the "electronic assistance facility" in the regulations and is provided for in Part 8. The electronic assistance facility
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This is a good opportunity for me to thank local councils and other competent authorities for their hard work in screening their processes and laws and preparing for the point of single contact. It has been a huge task, so my thanks go to them for their commitment.
The fourth element is enhanced co-operation between regulators across the EU, which is provided for in Part 9 of the regulations. Competent authorities will be able to communicate with each other through a secure web-based system called the Internal Market Information system, which my department is establishing now. Part 9 of the regulations requires authorities to provide information through the system to their counterparts in other countries regarding whether a service provider is duly authorised and other relevant matters. This will take the burden off the service provider to provide documentation repeatedly to different authorities. The system is also intended to ensure proper regulatory supervision of service providers and the services they provide across EU borders.
Effective implementation of the services directive across the EU is estimated to be worth about £4 billion to £6 billion per year to the UK economy, and about €30 billion per year to the EU economy. Member states must implement the services directive by 28 December of this year. The Provision of Services Regulations will also come into force on that date, and will apply to the whole of the UK. The devolved Administrations are amending their own legislation where necessary so that it complies with the directive.
I hope that noble Lords will agree that this is great news for UK businesses, whether they want to export their services to Europe, purchase services from providers in other member states or take advantage of the streamlined processes here in the UK. The increased opportunities are also there for foreign businesses to invest in the UK, all of which in turn is great news for the UK economy. I beg to move.
2.45 pm
Lord De Mauley: My Lords, I thank the Minister for introducing these regulations. I note from the Explanatory Memorandum that they set out rules relating to the provision of services and implement the services directive. If the directive works as we all hope it will, and if it is properly implemented across Europe, it should bring benefits to British businesses, which would be very welcome.
The objective of the services directive is to open up the single market by removing and reforming costly and time-consuming national standards and approval procedures. The Conservatives have been at the forefront of pushing for this in the EU Parliament. It will mean
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Having listened to the debate in your Lordships' House on Friday on the report of the European Union Committee, EU Consumer Rights Directive:Getting it Right, I was struck that it had certain threads in common with this debate. The noble Lord, Lord Whitty, said that,
those were his technical words-
"Some business practices are a greater inhibition to cross-border trade than the regulatory framework".-[Official Report, 23/10/09; col. 933.]
As the Minister explained, financial services are not included in the regulations. However, I raise the issue to make a broader point about cultural practices, on which he may like to comment.
The British Chambers of Commerce has communicated with me, as I am sure it has with other noble Lords, and one of its key concerns is about the pace and quality of implementation of the directive across the rest of the EU. This would not be the first time that the UK had entered zealously into the spirit of an EU directive only to find that it had not been followed with such alacrity in other EU nations. What are the Government doing to ensure that we do not, once again, welcome foreign competition in but find our own businesses not so welcomed elsewhere? I have learnt that in most EU states the web-based points of single contact will work only in the national language. If true, it does not sound very encouraging. What work are the Government doing with other member states to develop the single points of contact so that they operate as they should?
Paragraph 3.2 of the Explanatory Memorandum states:
"It is our view that imposing obligations on all service providers (and not just those set out in the Services Directive) ... is a proper exercise of the power".
The Minister will correct me if I am wrong but it appears that while here in the UK all suppliers, including those from outside the EU and EEA, are covered because the regulations extend beyond the requirements of the directive, in other countries suppliers from outside the EU and the EEA are not covered. Can the Minister confirm that this means that the directive does not create a level playing field elsewhere in the EU? If that is right, what representations have the UK Government made to the Commission to try to get this anomaly changed?
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I notice from paragraph 3.5 of the Explanatory Memorandum that the drafter has,
- "extended the provisions in Part 3 to cover a provider of UK origin supplying services to a recipient of UK origin".
Can the Minister confirm that domestic providers supplying services to recipients in their own countries-for example, in France, Italy, Spain or Poland-are not required by the directive to be covered? That is the implication. If that is so, is this not a somewhat blatant example of gold-plating?
I read at the top of page 4 of the department's Guidance for Business on the Provision of Services Regulations, published this month, that, among other things, the services directive requires each EEA state to,
the web-based point of single contact to which I referred earlier-
- "enabling service providers to apply and pay for authorisations (to offer or provide services) online".
I remind your Lordships that this directive applies fairly and squarely to a number of already perfectly adequately regulated providers of services. I hope that the Minister can convince me that this wording "and pay for" is not simply creating another opportunity for yet another stealth tax on business, which this Government can seize upon with their usual keenness.
I have a number of technical questions taken in order from the regulations. Regulation 2 refers to specific sectors and/or instruments where the rules do not apply. Regulation 6 refers to the relationship with other Community instruments. Concerns have been expressed to me that the test set out in the paragraph, which states:
"A requirement imposed by Parts 2, 5 or 6 of these Regulations on a competent authority or provider of a service does not apply, if or to the extent that, the competent authority or provider cannot comply both with that requirement and with a requirement to which this paragraph applies",
is a different test from that in Article 3 of the services directive.
"If the provisions of this Directive conflict with the provision of another Community act governing specific aspects of access to or exercise of a service activity in specific sectors, or for specific professions, the provision of the other Community act shall prevail and shall apply to those specific sectors or professions".
Can the Minister explain why the regulations do not more exactly reflect the directive?
In the definition of "regulated profession" under Article 4(11), the directive states that,
- "regulated profession means a professional activity or a group of professional activities as referred to in Article 3(1)(a) of the Professional Qualifications Directive 2005/35/EC".
The definition in the regulations restates this definition more or less, save for a change. The directive 2005/36/ED defines "regulated profession" as,
- "a professional activity, or group of professional activities, access to which, the pursuit of which, or one of the modes of pursuit of which is subject, directly or indirectly, by virtue of legislative, regulatory or administrative provisions to the possession of specific professional qualifications; in particular, the use of a professional title limited by legislative, regulatory or administrative provisions to holders of a given professional qualification shall constitute a
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However, the draft regulations express it as follows:
(a) access to which, the pursuit of which or one of the modes of pursuit of which is subject (directly or indirectly) by virtue of legislative, regulatory or administrative provisions to the possession of specified qualifications, or
(b) the pursuit of which is by persons using a professional title which is limited by legislative, regulatory or administrative provisions to holders of a given professional qualification".
Once again, can the Minister explain-perhaps not today but in writing afterwards-why the regulations do not more accurately reflect the directive?
On paragraph 2(2) of Regulation 12, can the Minister explain why the words "frivolous or totally without merit" were not inserted after the word "vexatious" to bring the regulation into line with, among other things, the terms of the Illegal Services Act 2007?
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