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Grand Committee

Wednesday, 24 February 2010.

Arrangement of Business


3.45 pm

The Deputy Chairman of Committees (Baroness Harris of Richmond): My Lords, if there is a Division in the House, the Committee will adjourn for 10 minutes.

Merits of Statutory Instruments Committee: Post-implementation Reviews

Copy of the Report

Considered in Grand Committee

3.46 pm

Moved By Lord Rosser

Lord Rosser: My Lords, first, I say that this report was undertaken during the excellent chairmanship of my predecessor in that role, my noble friend Lord Filkin.

Our report was prompted by earlier reports and inquiries that the committee had undertaken, not least one on the cumulative impact of statutory instruments on schools, which identified post-implementation review as an area of weakness. Rather than keep saying "post-implementation review", I shall for the most part use "evaluation". It still appears to be the case that government does not place as much emphasis as it might on reviewing existing secondary legislation. Cabinet Office guidance published in July last year referred to a new process but said:

"The new process applies only to primary legislation, in the sense that there is no separate process for post-legislative review of individual statutory instruments. However ... the preliminary assessment of the Act would cover how the principal delegated legislation under the Act has worked in practice".

That is a debatable assertion since statutory instruments are likely to continue to appear after the review of the Act in question, they continue to appear under Acts passed some years ago, and secondary legislation implements EU directives and would not be covered by the new process referred to. It is crucial that there should be robust systems for the review of secondary legislation as well as primary legislation.

Government departments provide the Merits Committee with Explanatory Memoranda and impact assessments in relation to the secondary legislation that we consider, and the quality and accuracy of the information provided in those documents is crucial to the effectiveness of our scrutiny work. We wanted to find out the extent to which government departments

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subsequently check up on secondary legislation to see whether it is having the impact anticipated, is achieving its objectives, is having unexpected consequences, and original estimates and assumptions are proving correct.

If post-implementation review of secondary legislation is not undertaken there is no effective way of establishing whether the policy change is achieving the desired results, or whether costs and benefits are in line with expectations. As a result, vital information which could inform and improve future policy development, improve delivery methods to achieve the best results and develop the techniques used to assess the impact of policy interventions is not available, ultimately to the detriment of us all.

We were extremely grateful to have the invaluable support and assistance of the National Audit Office, which provided us with solid evidence on which to base our findings through conducting a quantitative survey of a sample of statutory instruments from 2005-18 per cent of the 1,282 statutory instruments considered by the committee that year-to see how many had been reviewed. It is accepted good practice to review the implementation of a policy, usually three years after it has taken effect.

We also selected a few statutory instruments for more detailed review, seeking feedback from the relevant department and from those affected by the regulations, and those case studies and the key messages from the evidence are published in full in an appendix to our report. The instruments were drawn from our early reports or had attracted media attention at the time they were presented.

The Merits Committee's view is that, for every statutory instrument reviewed, the following criteria should be met. First, even if conducted as part of a broader review, the impact of each SI should be clearly identified and assessed. Secondly, the review should assess the extent to which the SI has achieved its objectives. Thirdly, the review should examine how the outcome compares with the success criteria set out in the impact assessment. Fourthly, the review should assess the costs and benefits compared with original estimates. Finally, the review should identify whether there have been any unintended consequences.

The survey by the National Audit Office found that 46 per cent of the sample of significant statutory instruments had not been subject to any degree of follow-up evaluation at all, and only 29 per cent to full post-implementation review. Although in the cases of 45 per cent of the 229 statutory instruments there had been a commitment to conduct a review, only half of them had been the subject of some sort of review four years later. In total, some sort of evaluation work, ranging from simple statistics to full post-implementation review, had been carried out in 54 per cent of cases.

In their response the Government have been broadly positive to the recommendations from the Merits Committee, since there is an acknowledgement that better co-ordination and clearer instructions for departments are required. Evidence from the National Audit Office survey revealed that there is no clear methodology for doing post-implementation reviews. The Government in their response have set out three principles for the evaluation of secondary legislation:

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namely, that it should be integrated, transparent and proportionate. I am sure that those principles would have wide support, but of course the key issue then is how they are going to be interpreted. That is where some problems start to arise.

In looking at the principle of proportionality, we were somewhat surprised to see that the Government in their response felt that a full reconsideration of the impact assessment and public consultation exercise would be appropriate only for statutory instruments that implemented policies imposing burdens of more than £50 million per year. Frankly, if the qualifying bar for a proper evaluation is to be placed that high, that seems to be a move designed more to water down the Merits Committee's recommendations than to implement them. Subsequent correspondence has indicated that the Government may have intended a sliding scale of evaluation and that forthcoming guidance, which we await to see with interest, would set this out. I hope my noble friend will address that point when he comes to reply because I am sure that the Committee, and I hope the House, would expect much smaller-scale projects than ones of £50 million included in meaningful evaluation and validation of the estimated costs and benefits.

The Government also appeared to reject a recommendation that we never made. They rejected our recommendation 7 on the grounds that it would be too resource-intensive to conduct a full review on all statutory instruments. What the recommendation actually proposed was that in all cases the Explanatory Memorandum should include an explanation of the department's plans to review the statutory instrument. A response from the department that they did not intend to review the instrument because it was simply a technical amendment, or that the instrument would be reviewed with, say, two or three others that were also related to the same policy or scheme, would be perfectly acceptable.

It is not a case of seeking a Rolls-Royce standard of review on all occasions. The objective is to see a more transparent approach to evaluation with departments considering and publishing their plans for reviewing the effectiveness of a policy at the time when it is being devised. Nor are we suggesting a one-size-fits-all approach. One of our case studies, on the report on the human fertilisation regulations, has both short-term and very long-term outcomes, which demonstrates clearly that a suitable approach must be judged on a case-by-case basis.

The Government say that Select Committees such as ours, the National Audit Office and others should hold departments accountable for their performance. That will be difficult unless the Government ensure that more than 15 per cent of evaluations are published, which is the current position, and unless the Government show greater enthusiasm for consulting stakeholders. Surely the Government should be taking steps to keep their own departments up to scratch. Guidance is issued, but there does not appear to be any evaluation of whether that guidance is proving effective. The official line is that it is for departments to take responsibility for the quality of their own legislation.

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However, this hands-off approach does not appear to be working; our report shows that there is a wide discrepancy between departments. The Department of Health had done some sort of evaluation on 63 per cent of its instruments in the sample, and Defra had completed the highest proportion-33 per cent-of formal post-implementation reviews, but other departments seemed less enthusiastic about following the guidance. There is no point having guidance unless it is implemented and evaluated.

One of the things that our investigation showed was the different interpretations of what constitutes success. The responses to our case studies suggested that departments often focus on the aspirational side of the policy, whereas the public focused much more closely on the practical aspects of the policy's delivery and how it could be improved. Together those two aspects make a very good basis for evaluation.

The Government clearly hold the view that evaluation is resource intensive and can only be done selectively to avoid wasting taxpayers' money. In principle, in relation to minor legislation, that is a not unreasonable stance. However, the Government need to bear in mind as well that poorly targeted legislation wastes resources and ineffective systems waste money and cause a lot of frustration. If something is not working properly, it is definitely in the taxpayers' interests to have a mechanism in place to identify and fix the problem promptly.

Evaluation of secondary legislation is not just an academic exercise, and if the Government are to continue to allow some departments to regard it as an unnecessary and unwelcome burden to be carried out as infrequently as possible and in the quickest possible time, the report we are discussing today might just as well have not been written. Our previous study of the cumulative impact of statutory instruments on schools showed teachers struggling under the constant stream of instruments. They complained that the department was not waiting to see whether the policy had bedded in before changing it and no one appeared to be evaluating to see what had been achieved before, metaphorically speaking, throwing the baby out with the bath water.

I hope that when my noble friend responds he will address the concerns raised in our report and be able to give us not just some warm words but some hard, specific, concrete evidence that the Government's approach to evaluation and post-implementation reviews of secondary legislation has changed; and that they do not regard the issuing of guidance as the end of their involvement but intend to take firm action to ensure that departments consistently and rigorously adhere to that guidance. After all, it is not much good introducing major changes in policy if evaluating the effectiveness of the implementation of the policy, and the delivery or otherwise of the benefits it was intended to achieve within the costs projected, is regarded as simply a burden rather than an invaluable way of accurately assessing outcomes against objectives and enabling steps to be taken to improve the quality and effectiveness of legislation, and the legislative process, in the future. I beg to move.

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3.58 pm

Lord Norton of Louth: My Lords, I very much welcome this report from the Merits Committee. I am a member of the committee but I was not at the time this report was produced. Rather, my interest stems from my period as chairman of the Constitution Committee when we produced the report Parliament and the LegislativeProcess. That report addressed the need for post-legislative scrutiny in respect of primary legislation. The committee's recommendations were referred to the Law Commission and led to the Government accepting the case for post-legislative scrutiny. Most Acts are now subject to review three to five years after enactment. I very much welcome that.

There is a very compelling case for secondary legislation to be subject to review and for the same reasons as primary legislation. It is important to check whether the legislation has had the intended effect, whether it has proved cost-effective, and whether there have been unintended consequences. It is not a case of simply looking to check whether something has gone wrong; it is important for identifying and disseminating best practice. It is also an important discipline on government; knowing that there is to be a review helps concentrate the mind. Enactment ceases to be the end of the process-rather, it becomes one step in a continuous process designed to ensure that legislation does what it is supposed to do. Given that, as the Merits Committee argues, post-implementation review should apply to secondary as well as primary legislation. The report is thorough and persuasive, and the Government's response is welcome as far as it goes. It is certainly a much more constructive response than that produced the last time I was involved in a debate on a report from the Merits Committee.

In the time available I want to focus on one core point, and which reinforces something that the noble Lord, Lord Rosser, has already said. In their response the Government identify three principles that should be satisfied by a system of post-implementation review. Like the noble Lord, Lord Rosser, I have no hesitation in endorsing those principles, and indeed I reiterate the point made in the response when discussing proportionality that it is important to avoid the processes that lead policy-makers to adopt a tick-box approach without adding value to the policy-making process.

The response seeks to be constructive and to move forward with post-implementation review. It is always satisfying to see in a government response to a committee report the words, "The Government agree with this recommendation", as the most frequent response. It is good that progress is being made in developing the framework for post-implementation review and that next month the Better Regulation Task Force and the Cabinet Office will clarify the link between post-implementation review of secondary legislation and post-legislative review of primary legislation. My concern is with what is missing. Like the noble Lord, Lord Rosser, when reading the response I looked for what mechanism is planned for ensuring compliance. The Government aim to embed both impact assessments and post-implementation reviews within the policy-making cycle. However, the response goes on to say:

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"Departments must bear the primary responsibility and accountability for their policies and for the quality of their policymaking and IAs".

How is this accountability to be achieved? The response states that the Government,

The Government will provide guidance and the Regulatory Policy Committee will provide scrutiny and analysis, but there is no mechanism within the Government for ensuring compliance, and in terms of external accountability-especially to Parliament-there is no mechanism for comprehensive and consistent accountability.

In its recent report The Cabinet Office and the Centre of Government, the Constitution Committee expressed some concern that the centre was undertaking tasks that should be fulfilled by departments. Here we have the reverse situation where the centre is leaving things to departments and not undertaking tasks which, if not fulfilled by the centre, are unlikely to be fulfilled at all. Leaving it to departments retains the potential for what exists at the moment, which as the noble Lord, Lord Rosser, indicated, is essentially a patchwork quilt of PIRs. As the Merits Committee notes, some departments are much better geared to undertaking PIRs than others. Even with the changes detailed in the Government's response, that situation may persist. The Government are not initiating a procedure that will ensure that all departments comply with what is recommended.

As I have already mentioned, on the last occasion that I participated in a debate on a Merits Committee report, in commenting on the Government's response, I noted that Ministers appeared to have been subject to departmental capture. I fear that we may be witnessing the same phenomenon on this occasion, albeit it is far more subtle and couched in a more conciliatory tone. The response here is more constructive and does seek to move forward in ensuring consistent post-implementation review. What is lacking is the means for ensuring the delivery of a consistent system. I invite the Minister to tell us precisely how the Government will ensure that such a system is delivered.

I also have a comment for the House rather than for the Government. The Government look to Parliament to hold departments to account for their post-implementation reviews. The problem here, as with post-legislative scrutiny, is that there is no single dedicated committee with a specified responsibility for overseeing the exercise. Departmental Select Committees in the other place can examine post-legislative or post-implementation reviews carried out by the relevant departments. But there are two problems. First, those committees are already heavily burdened. They are not likely to have much, if any, time for examining such reviews. Secondly, there is no committee with specified responsibility for looking at such reviews overall. That is especially important in the context of identifying and disseminating best practice.

I have advocated appointing a Joint Committee to consider post-legislative reviews. I shall return to that matter in debate in the House tomorrow. Such a

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committee could consider reviews that departmental Select Committees do not have the time or inclination to consider, identify good practice and review departmental practice. I see no reason why the terms of reference of such a committee should not include post-implementation reviews. If the other place is not willing to agree to a Joint Committee, this House should appoint its own committee on legislation.

I shall end with a more general observation. My comments, again, are directed to the House. We have the Merits of Statutory Instruments Committee. I have suggested the appointment of a Joint Committee on post-legislative scrutiny. If such committees are to be effective, there needs to be a clear link with the Chamber and a willingness on the part of the Chamber to uphold committee recommendations. If a statutory instrument is clearly deficient, and that fact has been drawn to the attention of the House, I see no reason why the House should not reject that SI. I do not accept that it is a convention that the House does not vote down secondary legislation. It may be the general practice not to do so, but it is not one that merits the designation of a convention. The Government can always come back with a better-drafted instrument.

If this House is more vigilant, be it through committee and a willingness not to accept poorly drafted or otherwise deficient SIs, it will ensure a more disciplined approach on the part of the Government to generate SIs which are more thoroughly thought through and properly drafted. The Government could help to avoid having to face the prospect of such action by the House by ensuring a more rigorous approach to SIs. Knowing that SIs may not be accepted and that, even if they are, post-implementation reviews will be subject to thorough scrutiny by parliamentary examination should ensure that the Government treat secondary legislation with considerably more care than they sometimes have in the past.

I welcome the Government's response as far as it goes, but I hope that I have prompted the Minister to consider how much further the Government could go.

4.07 pm

Baroness Butler-Sloss: My Lords, the Department for Children, Schools and Families did not have its statutory instruments under the scrutiny of the committee of which I am a member and was a member when our report was published. But that department stands out as one that requires considerable enthusiasm within it to look at post-implementation review, to the degree that we on the Merits Committee produced the report to which the noble Lord, Lord Rosser, referred on the accumulative impact of statutory instruments on schools on 13 March 2009.

I want to concentrate on that government department because it is a good example of bad practice and therefore should be under the microscope generally. An advisory committee, the implementation organisation unit, advises the schools department. However, it has become very clear that its advice is not necessarily listened to, which is, and has been shown to be in our report on schools, quite a serious factor.

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In that report, we expressed concern about the impact of large numbers of statutory instruments on schools, particularly on small schools, without sufficient staff to deal specifically with the volume of the statutory instruments that came through day by day and week by week. When one looks at that report, the peak in July 2008 of statutory instruments is almost off the page. The impression is that that government department does not take on board the effect on schools of the volume and complexity of the statutory instruments that pour out. The National Governors' Association reported to us, at paragraph 4 of the relevant report:

"For the professionals in schools the endless piecemeal change has become one of the main reasons given for leaving the job. It is not unruly and undisciplined children that are forcing good teachers and governors out of our schools; it is unruly and undisciplined legislation".

That requires PIR to see what is going on because the National Governors' Association is a highly respectable association giving evidence to a Select Committee. Therefore, it is pre-eminently an area in which this government department should engage in PIR.

In a letter from the Schools Minister dated 10 January 2009, having been asked whether PIR focused on individual statutory instruments, he said that it was the exception and not the rule; I paraphrase. The Association of Teachers and Lecturers said in its evidence to us that it was,

its next policy. They do not want to look at the policy that is in the statutory instrument because they are working on the next policy coming up. As teachers say, that means that feedback from them will not change the policy once it is implemented because, among other things, they know that the change that has been implemented will be short-lived because there will be another policy.

The Implementation Review Unit-this time round I have its name correct-said that the DCSF was "very poor" in the area of feedback, and that,

That is an extremely sad state of affairs. It said in its evidence, recorded at page 5, paragraph 8, of our report of March of last year:

"Recent research commissioned by the IRU shows that in the 2006/7 academic year the Department and its national agencies produced over 760 documents aimed at schools. The research also found that no single part of the Department was aware of the totality of what was being offered".

What appears to be happening-and what the Merits Committee was being told-was that individual policy-makers in the department had a specific issue, created a statutory instrument and did not look to see what other statutory instruments were coming out from the same department initiated by a different person with a different policy issue. They particularly did not look to see first, whether they clashed; secondly, whether they were co-ordinated-many times they were not-and, thirdly, how the schools were coping with them. This was another example of the lack of PIR.

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