House of Lords - Public Bodies Bill [HL] - Delegated Powers and Regulatory Reform Committee

Public Bodies Bill [HL] - Delegated Powers and Regulatory Reform Committee Contents

APPENDIX 2: PUBLIC BODIES BILL [HL]

Memorandum by the Cabinet Office

INTRODUCTION

1. This Memorandum has been prepared for the Delegated Powers and Regulatory Reform Committee ("the Committee") to assist with its scrutiny of the Public Bodies Bill ("the Bill"). The Bill was introduced in the House of Lords on the 28 October 2010.

2. This memorandum identifies the provisions of the Bill that confer powers to make delegated legislation. It explains in each case why the power has been taken and the nature of, and the reason for, the procedure selected.

Background to the Bill

3. The impetus for the Bill comes from the Government's review of public bodies in 2010, and the outcome of this review as reported to Parliament in oral and written statements by the Minister for the Cabinet Office, Public Bodies Review Programme, on 14 October 2010.[6]

4. The Bill provides a basis for changes to public bodies and offices where statutory authority for change is required, and includes provision to ensure that decisions regarding public bodies and offices take account of efficiency, effectiveness and economy and accountability to Ministers.

General ministerial powers

5. In outline, the following clauses of the Bill give Ministers powers to make orders in respect of certain public bodies and offices[7] specified in the corresponding Schedules to the Bill, to:

a. Clause 1 - power to abolish bodies specified in Schedule 1,

b. Clause 2 - power to merge a group of bodies or offices (or both) specified in Schedule 2,

c. Clause 3 - power to modify the constitutional arrangements of a body specified in Schedule 3,

d. Clause 4 - power to modify the funding arrangements of a body specified in Schedule 4,

e. Clause 5 - power to modify the functions or transfer the functions of a body to an "eligible person" specified in Schedule 5,

f. Clause 6 - power to authorise delegation of functions by bodies specified in Schedule 6.

6. The exercise of these powers is subject to consideration of the matters provided for in clause 8 and the restrictions provided for in clauses 20 to 22, which afford a number of substantive protections, outlined below. The procedural protections that apply are also explained below, in particular in relation to the future use of the general powers to bodies and offices listed in Schedule 7.

Matter to be considered

7. The Minister for the Cabinet Office said in his written statement of 14 October;

"The landscape for public bodies needs radical reform to increase transparency and accountability, to cut out duplication of activity, and to discontinue activities which are simply no longer needed".

8. Clause 8(1), which applies when a Minister is considering whether to make an order under clauses 1 to 6, provides that a Minister must have regard to the following objectives-

a. achieving the increased efficiency, effectiveness and economy in the exercise of public functions;

b. securing appropriate accountability to Ministers in the exercise of such functions.

9. In addition, clause 8(2) further provides that an order under clauses 1 to 6 cannot be made unless the Minister considers that the order does not;

a. remove any necessary protection; [8] and

b. does not prevent any person from continuing to exercise any right or freedom which that person might reasonably expect to continue to exercise.

10. This recognises that there are certain rights that it would not be appropriate to remove using an order. Any right conferred or protected by the European Convention on Human Rights is a right which a person might reasonably expect to keep.

11. In addition, clause 10 provides that orders under clauses 1 to 6 will be made by statutory instrument subject to affirmative procedure and, in accordance with normal practice, the Explanatory Memorandum accompanying the order will include a statement of compatibility with the Convention.

Restriction on the creation of functions

12. Clause 20 also provides that orders under clauses 1 to 6 may not create;

a. a power to make subordinate legislation,

b. a power of forcible entry, search or seizure, or

c. a power to compel the giving of evidence.

13. Clause 20 reflects restrictions provided for in sections 4 and 7 of the Legislative and Regulatory Reform Act 2006 in relation to orders made under the 2006 Act removing or reducing regulatory burdens.[9]

Restriction on the creation of criminal offences

14. Clause 22 provides that orders under clauses 1 to 6 may not create a criminal offence with penalties exceeding those set out in clause 22. Clause 22 reflects the restriction in section 6 of the Legislative and Regulatory Reform Act 2006, in relation to orders made under the 2006 Act (and provides the same threshold for the penalties that can be applied where an offence is created).

Restriction on the transfer and delegation of functions to private bodies

15. In addition to the matters to be considered and restrictions on the creation of functions and criminal offences outlined above, clause 21(2) provides that an order under the Bill may not transfer or delegate an 'excluded function' to a person not otherwise exercising public functions[10]; 'excluded functions' being;

a. a function of a tribunal which exercises the judicial power of the State,

b. a power to make subordinate legislation,

c. a power of forcible entry, search or seizure,

d. a power to compel the giving of evidence,

e. any function the exercise or non-exercise of which would necessarily interfere with, or otherwise affect, the liberty of an individual.

16. Clause 21(1) also provides that a function may not be transferred to any person not otherwise exercising public functions if that person has not consented to the transfer.

Devolution

17. Clause 9 also limits the powers of Ministers in relation to devolved matters.

Powers to amend Schedules 1 to 6

18. Clause 11(1) confers powers on a Minister to add bodies specified in Schedule 7 to Schedules 1 to 6. As the Minister for the Cabinet Office said in his written statement of 14 October;

"All remaining public bodies will be subject to a rigorous triennial review to ensure that the previous pattern of public bodies often outliving the purpose for which they were established is not repeated".

19. Schedule 7 includes bodies and offices where there is (at the time date of this memorandum) no policy intention to make changes to their status or functions.

20. These bodies are listed as they were subject to the review process that was the impetus for the Bill, and any changes that might be brought forward following a future triennial review process, or the conclusion of the existing review process (in the case of bodies which are still under consideration at this time), would require legislation.

21. As provided for by clause 12(1), an order under clause 11(1) adding a body specified in Schedule 7 to any of Schedules 1 to 6 is to be made by statutory instrument subject to affirmative procedure. Additionally, clause 12(2) precludes an order under clause 11(1) from being included in the same instrument as another order under the Bill.

22. It should additionally be noted that the bodies specified in Schedule 7 includes bodies where it is envisaged that the use of the powers in the Bill would not be used in relation to particular functions (for example, an economic or network regulatory function where the risk associated with the potential use of the powers could impact on regulatory stability or the cost of capital).[11]

23. Clause 11(6) provides that an order under clause 2 may also add a 'new' body created as the result of a merger, or a body which remains after a merger, to Schedule 7. Other than by primary legislation, this is the only way in which Schedule 7 can be amended.

Constitutional propriety of general powers in relation to public bodies and offices

24. Schedules 1 to 6 to the Bill specify the bodies to which the powers in clauses 1 to 6 apply. If a body is not specified in Schedules 1 to 6 then the powers can not be exercised in relation to it. Most of the bodies specified in Schedules 1 to 6 were established under statute (or otherwise they have significant statutory functions). Public bodies are usually established under statute to provide statutory authority to;

a. impose charges and fees,

b. enter premises,

c. require the provision of information, or

d. make binding decisions in a dispute.

25. It is an established principle that Government should not give public functions to independent public bodies (i.e. those without Crown status) without statutory authority. In addition, for reasons of Government accounting, statutory authority is required for new and continuing (lasting more than 2 years) expenditure by government departments which is not de minimis (currently under £1.5 million) and so statutory authority is required where new public bodies fall within these parameters.

26. Powers to make changes to public bodies by way of secondary legislation are not unprecedented. Section 8(4) of the Child Poverty Act 2010 provides a power for the Child Poverty Commission to be abolished by an order under that section. Further, section 125C of the Energy Act 2006 provides that the functions of 'the Administrator' (known as the 'Renewable Fuels Agency') may be transferred to another person appointed as 'Administrator' or any body corporate established for the purpose.[12]

27. There are also powers to transfer functions of existing statutory tribunals listed in Schedule 6 to the Tribunals, Courts and Enforcement Act 2007 into the First-tier and Upper Tribunal established under the 2007 Act, and to abolish the existing tribunal as a consequence of transferring functions into the new unified system.

28. Therefore, it is not considered inappropriate, in principle, for changes to be made to public bodies and their functions by way of secondary legislation. Further, as outlined above, the Government considers that the Bill contains significant substantive and procedural safeguards that apply to the use of the order-making powers.

29. It is acknowledged that, further to clause 27(2), provision which may be made by an order under clauses 1 to 6, including the consequential provision under clause 7(1), is likely to be made by amending primary legislation. The Government has thus had regard to the view of the Committee that the affirmative procedure should apply where such changes to primary legislation are to be achieved through secondary legislation.[13] All orders made under clauses 1 to 6 are to be made by statutory instrument subject to the affirmative procedure.

Powers of Welsh Ministers relating to environmental bodies

30. Clauses 13 to 15 together contain seven provisions delegating powers to the Welsh Ministers to make orders. The order-making powers will enable the Welsh Ministers to restructure the delivery of environmental regulation and forestry management in Wales in the way they consider best meets their policy aims, having had regard to the matters listed in clause 13(9), and subject to the restrictions set out in clause 13(10).

Background to powers of Welsh Ministers

31. The Welsh Assembly Government is currently consulting on 'A Living Wales'[14], the Government's Natural Environment Framework which proposes a new, integrated approach to managing the natural environment. The effective delivery of the principles contained within 'A Living Wales' is likely to require changes to the way that environmental policies are delivered in Wales. Consequently, and linked in to the wider consultation 'A Living Wales', the Welsh Assembly Government is considering a number of options in relation to how its environmental policies are delivered by its key delivery agencies, namely the Countryside Council for Wales, Environment Agency Wales and Forestry Commission Wales. The Countryside Council for Wales is a body corporate which exercises its functions solely in relation to Wales. The Environment Agency operates in Wales under the name Environment Agency Wales as an administrative sub-division of the Environment Agency. Like the Environment Agency, the Forestry Commissioners have a separate Welsh division, Forestry Commission Wales, which again constitutes an administrative rather than legal separation.

32. The order-making powers for Welsh Ministers in clauses 13 to 15, relating to environmental bodies seek to ensure that Welsh Ministers can make the changes that they conclude, in the light of the review, are desirable to the way in which environmental policies are delivered in Wales. In particular, the powers will enable the Welsh Ministers to modify the existing functions of the key delivery bodies; and/or to transfer individual functions between public bodies in Wales; and/or establish a new environmental body. The order-making powers clarify that particular environmental bodies can provide services to each other, carry out each others' functions, etc, thus facilitating an efficient and economic sharing of services and back-office resources.

33. The consultation on 'A Living Wales' concludes in December and will help inform decisions regarding the review of environmental delivery options.

Background to powers relating to the Secretary of State and Forestry Commissioners

34. Clause 17 provides the Secretary of State with a power, by order, to amend the Forestry Act 1967 and clause 18 provides the Secretary of State with powers in relation to the functions of the Forestry Commissioners. The Department for the Environment, Food and Rural Affairs made the following announcement on 29 October 2010:

"We are committed to shifting the balance of power from 'Big Government' to 'Big Society' by giving individuals, businesses, civil society organisations and local authorities a much bigger role in protecting and enhancing the natural environment and a much bigger say about our priorities for it. By including enabling powers in the Bill we will be in a position to make reforms to managing the estate. We will consult the public on our proposals later this year, and will invite views from a wide range of potential private and civil society partners on a number of new ownership options and the means to secure public benefits. We envisage a managed programme of reform to further develop a competitive, thriving and resilient forestry sector that includes many sustainably managed woods operating as parts of viable land-based businesses. We will not compromise the protection of our most valuable and biodiverse forests. Full measures will remain in place to preserve the public benefits of woods and forests under any new ownership arrangements. Tree felling is controlled through the licensing system managed by the Forestry Commission, public rights of way and access will be unaffected, statutory protection for wildlife will remain in force and there will be grant incentives for new planting that can be applied for. When publishing our proposals we will explore further the options for securing and increasing the wide range of public benefits currently delivered by Government ownership and how they might be achieved at lower cost."[15]

35. The Committee is referred to the explanatory notes accompanying the Bill for further background.

B. GENERAL MINISTERIAL POWERS

Clause 1: power to abolish

Power conferred on: a Minister

Power exercised by: order made by statutory instrument

Parliamentary procedure: affirmative procedure

36. Clause 1 confers on a Minister the power, by order, to abolish a body specified in Schedule 1. Subsection (2) provides that such an order may include provision transferring any or all of the functions of a body to an 'eligible person' (as defined in Clause 1(3)). Clause 7(2) also provides that where an order under clause 1 transfers functions the power includes a power to make consequential and supplementary provision to modify the functions or constitutional or funding arrangements of the transferor or transferee.

37. On this basis, an order made under clause 1 may abolish all of the functions of a body as a consequence of abolishing the body itself, or might transfer some or all of a body's functions to an 'eligible person'. A power to abolish a body and transfer its remaining functions by order will therefore provide Departments with the flexibility to determine how any remaining functions are delivered (subject to the matters and constraints referred to below).

38. A Minister must consider the matters provided for in clause 8 when making an order under clause 1. In particular, the Minister may only make an order if he considers the order does not remove any necessary protection and does not prevent any person from continuing to exercise any right or freedom which that person might reasonably expect to continue to exercise. The restrictions in clauses 20 to 22 on the creation and transfer of functions and on the creation of criminal offences apply to orders made under clause 1.

39. The powers under clause 1 are to be exercised by statutory instrument subject to the affirmative procedure. This level of Parliamentary scrutiny is considered necessary because, further to clause 27(2), provision in an order under clause 1 may be made by amending primary legislation and so it is consistent with the view of the Committee that the affirmative procedure should apply in such circumstances. It is also consistent with the level of procedure applied to other powers to abolish public bodies by order. For example, as noted above, the Child Poverty Commission may be abolished by an order under section 8(4) of the Child Poverty Act 2010. Subsections 8(5) and (6) of the 2010 Act provide that such an order may contain such transitional or consequential provision as is necessary in connection with the abolition and that this may include provision amending primary legislation. Consequently, section 28(4)(b) of the 2010 Act provides that an order made under section 8(4) is subject to affirmative procedure.

40. Only those bodies which are specified in Schedule 1 are subject to the power to abolish. An affirmative procedure will provide an opportunity for debate and Parliamentary approval on the details of the order, including any transfer of functions to an 'eligible person' further to clause 1(2). Consequently, it is not considered that any additional Parliamentary scrutiny is required.

Clause 2: power to merge

Power conferred on: a Minister

Power exercised by: order made by statutory instrument

Parliamentary procedure: affirmative procedure

41. Clause 2 confers on a Minister the power, by order, to "merge" any group of bodies or offices (or both) specified in Schedule 2. Subsection (2) provides that the merger can be effected either by;

a. abolishing all of the bodies or offices in the group and transferring some or all of their functions to a new body corporate or office created for that purpose; or

b. abolishing all but one of the bodies or offices and transferring some or all of the functions of the abolished bodies or offices to the remaining one.

42. An order under clause 2 may abolish a listed body and its functions but clause 2 also provides for the transfer of functions from a body being abolished to the new body created for the purpose of the merger or a remaining body, or (under clause 2(3)) to an 'eligible person' not included in the group. Clause 7(2) also provides that where an order under clause 2 transfers functions the power includes a power to make consequential and supplementary provision to modify the functions or constitutional or funding arrangements of the transferor or transferee.

43. Following the Government's review of public bodies some 118 bodies will be merged into 57 bodies, removing wasteful and complicating duplication of effort. This power will provide the necessary statutory authority for merging particular groups of bodies and offices specified in Schedule 2 and will provide Departments with flexibility to determine how functions are delivered, including whether any particular function would more appropriately be carried out by an 'eligible person' (subject to the matters and constraints referred to below).

44. A Minister must consider the matters provided for in clause 8 when making an order under clause 2. In particular, the Minister may only make an order if he considers the order does not remove any necessary protection and does not prevent any person from continuing to exercise any right or freedom which that person might reasonably expect to continue to exercise. The restrictions in clauses 20 to 22 on the creation and transfer of functions and on the creation of criminal offences apply to orders made under clause 2.

45. The powers under clause 2 are to be exercised by statutory instrument subject to affirmative procedure. This approach is considered appropriate because, as noted above, further to clause 7(5), provision in an order under clause 2 may be made by amending primary legislation and so it is also consistent with the view of the Committee that the affirmative procedure should apply in such circumstances.

46. Only those bodies which are specified in Schedule 2 are subject to the power to merge. An affirmative procedure will provide an opportunity for debate and Parliamentary approval on the details of the order, including any transfer of functions to an 'eligible person' further to clause 2(3). Consequently, it is not considered that any additional Parliamentary scrutiny is required.

Clause 3: power to modify constitutional arrangements

Power conferred on: a Minister

Power exercised by: order made by statutory instrument

Parliamentary procedure: affirmative procedure

47. Clause 3 confers on a Minister the power, by order, to modify the constitutional arrangements of a body or office specified in Schedule 3. Clause 3(2) sets out the type of internal arrangements of a body included within the 'constitutional arrangements'. Clause 3(3) sets out the type of arrangements of an office included within the 'constitutional arrangements'. These are a wide range of matters relating to the internal structure and governance of bodies and offices. The exercise of the power in clause 3 would allow, for example;

a. Provision to ensure a particular number of non-executive directors on the Board of a body;

b. Provision requiring a body to report publically on how it has sought to increase efficiency in the exercise of its functions;

c. Provision requiring permission from a Minister in relation to employment of staff, or remuneration of staff in excess of an agreed threshold;

d. Provision requiring that the chair of a body be required to undergo a pre-appointment hearing process before taking up their post.

48. The Government considers it appropriate to leave precise details of these modifications to 'constitutional arrangements' to be set out in orders under clause 3.

49. As outlined above, a Minister must consider the matters provided for in clause 8 when making an order under clause 3. In particular, the Minister may only make an order if he considers the order does not remove any necessary protection and does not prevent any person from continuing to exercise any right or freedom which that person might reasonably expect to continue to exercise. The restrictions in clauses 20 to 22 also apply.

50. The powers under clause 3 are to be exercised by statutory instrument subject to the affirmative procedure. This approach is considered necessary because, as noted above, clause 27(2) provides that provision in an order under clause 3 may be made by amending primary legislation and so it is consistent with the view of the Committee that the affirmative procedure should apply in such circumstances.

51. Only those bodies which are specified in Schedule 3 are subject to the power to modify their constitutional arrangements. An affirmative procedure will provide an opportunity for debate and Parliamentary approval on the details of the order. Consequently, it is not considered that any additional Parliamentary scrutiny is required.

Clause 4: power to modify funding arrangements

Power conferred on: a Minister

Power exercised by: order made by statutory instrument

Parliamentary procedure: affirmative procedure

52. Clause 4 confers on a Minister the power, by order, to modify the funding arrangements of a body specified in Schedule 4. Clause 4(2) provides that this includes;

a. Modifying the extent to which the body or office is funded by a Minister; or

b. Conferring power on the body to charge fees for the exercise of a function (and to determine the amount).

53. For example, the power to modify funding arrangements may be used to allow a body which has the function of granting licences to persons carrying out regulated activities to charge a fee for performing that function, and determine the amount of the fee. This will ensure that, where bodies do not have existing powers to charge or those powers are insufficient to ensure full cost recovery, that the body can recover its costs.

54. The Government considers it appropriate to leave precise details of these modifications to 'funding arrangements' to be set out in an order under clause 4.

55. A Minister must consider the matters provided for in clause 8 when making an order under clause 4. In particular, the Minister may only make an order if he considers the order does not remove any necessary protection and does not prevent any person from continuing to exercise any right or freedom which that person might reasonably expect to continue to exercise. The restrictions in clauses 20 to 22 also apply.

56. The powers under clause 4 are to be exercised by statutory instrument subject to affirmative procedure. This approach is considered necessary because, further to clause 27(2), provision in an under clause 4 may be made by amending primary legislation and so it is consistent with the view of the Committee that the affirmative procedure should apply in such circumstances.

57. Only those bodies which are specified in Schedule 4 are subject to the power to modify funding arrangements. An affirmative procedure will provide an opportunity for debate and Parliamentary approval on the details of the order. Consequently, the Government does not consider that any additional Parliamentary scrutiny is required.

Clause 5: power to modify or transfer functions

Power conferred on: a Minister

Power exercised by: order made by statutory instrument

Parliamentary procedure: affirmative procedure

58. Clause 5 confers on a Minister the power, by order, to modify functions or transfer functions of a body specified in Schedule 5 to an 'eligible person'.

59. Clause 5(2) further provides that 'modifying' functions includes;

a. Conferring a function,

b. Abolishing a function,

c. Changing the purpose or objective for which a function is exercised,

d. Changing the conditions under which a function is exercised.

60. Clause 7(2) also provides that where an order under clause 5(1)(a) modifies functions the power includes a power to make consequential and supplementary provision to modify the constitutional or funding arrangements of the body.

61. The Government considers it appropriate to leave the precise details of the modifications of functions and transfer of functions to be set out in orders under clause 5, with the associated flexibility for Departments to determine how functions are best delivered, including whether they would be more appropriately delivered by an 'eligible person' (subject to the matters and constraints referred to below).

62. A Minister must consider the matters provided for in clause 8 when making an order under clause 5. In particular, the Minister may only make an order if he considers the order does not remove any necessary protection and does not prevent any person from continuing to exercise any right or freedom which that person might reasonably expect to continue to exercise. The restrictions in clauses 20 to 22 on the creation and transfer of functions and on the creation of criminal offences apply to orders made under clause 5.

63. Also of particular relevance to an order making provision for the transfer of functions is clause 21(2), which provides that an order under clause 5 may not transfer an 'excluded function' to a person not otherwise exercising public functions[16]; 'excluded functions' being;

e. a function of a tribunal which exercises the judicial power of the State,

f. a power to make subordinate legislation,

g. a power of forcible entry, search or seizure,

h. a power to compel the giving of evidence,

i. any function the exercise or non-exercise of which would necessarily interfere with, or otherwise affect, the liberty of an individual.

64. The powers under clause 5 are to be exercised by statutory instrument, subject to affirmative procedure. This approach is considered necessary because, further to clause 27(2), provision in an order under clause 5 may be made by amending primary legislation and so is it consistent with the view of the Committee that the affirmative procedure should apply in such circumstances. It is also consistent with the level of procedure applied to other powers to transfer functions of public bodies by order. As referred to above section 125C of the Energy Act 2006 provides that the functions of 'the Administrator' (known as the 'Renewable Fuels Agency') may be transferred to another person appointed as 'Administrator' or any body corporate established for the purpose. Section 125C(8) of the 2006 Act provides that where an order makes provision appointing a body corporate as the Administrator, or amends primary legislation, the order is subject to the affirmative procedure.

65. Only those bodies which are specified in Schedule 5 are subject to the power to modify or transfer their functions. An affirmative procedure will provide an opportunity for debate and Parliamentary approval on the details of the order, including the identity of the 'eligible person' to whom functions are transferred. Consequently, the Government does not consider that any additional Parliamentary scrutiny is required.

Clause 6: power to authorise delegation

Power conferred on: a Minister

Power exercised by: order made by statutory instrument

Parliamentary procedure: affirmative procedure

66. Clause 6 confers on a Minister the power, by order, to authorise a body specified in Schedule 6 to enter into arrangements with an 'eligible person' for the functions of the body to be exercised by the 'eligible person'. Clause 7(4) provides that an order may also make consequential provision to modify the functions or constitutional arrangements of 'eligible persons' who exercise public functions.

67. Clause 6(2) provides that such arrangements may be subject to conditions specified in the order. Clause 6(3)(a) further provides that arrangements may be revoked at any time by the body authorised to enter into them. Clause 6(3)(b) provides that the arrangements do not preclude the body from exercising the function and clause 6(3)(c) provides that the arrangements do not affect the responsibility of the body in relation to the function.

68. The Government considers it appropriate to leave the precise details to be set out in orders under clause 6, with the associated flexibility for Departments to determine how functions are best delivered, including whether they would be more appropriately delivered by an 'eligible person' (subject to the matters and constraints referred to below).

69. A Minister must consider the matters provided for in clause 8 when making an order under clause 6. In particular, the Minister may only make an order if he considers the order does not remove any necessary protection and does not prevent any person from continuing to exercise any right or freedom which that person might reasonably expect to continue to exercise. The restrictions in clauses 20 to 22 on creation and delegation of functions and on the creation of criminal offences apply to orders made under clause 6.

70. Also of particular relevance to an order making provision for the authorisation of delegation of functions is clause 21(2), which provides that an order under clause 6 may not authorise arrangements for an 'excluded function' to be exercised by someone not otherwise exercising public functions[17]; 'excluded functions' being;

j. a function of a tribunal which exercises the judicial power of the State,

k. a power to make subordinate legislation,

l. a power of forcible entry, search or seizure,

m. a power to compel the giving of evidence,

n. any function the exercise or non-exercise of which would necessarily interfere with, or otherwise affect, the liberty of an individual.

71. The provision to 'enter into arrangements' provided for in clause 6 is not novel. Section 15 of the Marine and Coastal Access Act 2009 provides that the Marine Management Organisation (a public body) may, with the approval of the Secretary of State, enter in to an agreement with an 'eligible body' authorising the eligible body to perform any functions of the Marine Management Organisation. Further to section 15(3)(b) of the 2009 Act the Secretary of State's approval may be subject to specified conditions.

72. A further example is section 83 of the Government of Wales Act 2006, which provides that Welsh Ministers and a 'relevant authority' (a Minster of the Crown or any public authority) may enter into arrangements for any functions of one of them to be exercised by the other.

73. Arrangements entered into pursuant to section 15 of the 2009 Act and section 83 of the 2006 Act referred to above are not subject to any Parliamentary procedure.

74. The powers under clause 6 are to be exercised by statutory instrument subject to affirmative procedure. This approach is considered appropriate because, further to clause 27(2), provision in an order under clause 6 may be made by amending primary legislation and so it is also consistent with the view of the Committee that the affirmative procedure should apply in such circumstances.

75. Only those bodies which are specified in Schedule 6 are subject to the power to authorise delegation of functions. An affirmative procedure will provide an opportunity for debate and Parliamentary approval on the details of the order, including the identity of the 'eligible person' who may perform the body's functions. Consequently, the Government does not consider that any additional Parliamentary scrutiny is required.

Clause 11: power to amend Schedules

Power conferred on: a Minister

Power exercised by: order made by statutory instrument

Parliamentary procedure: affirmative procedure

76. Clause 11(1) confers on a Minister the power, by order, to amend the 'principal Schedules' (Schedules 1 to 6) by adding a body specified in Schedule 7. It also provides that orders made under clauses 3 to 6 may remove the body or office from the corresponding Schedule and that orders under clause 2 may add the 'new' or 'remaining body' of a merger to Schedule 7.

77. The power under clause 11(1) is to be exercised by statutory instrument subject to affirmative procedure. Importantly, clause 12(2) provides that an order under clause 11(1) adding a body to Schedules 1 to 6 may not be contained in the same instrument as any other order under the Bill. Thus, two affirmative orders will be required, one to move the body from Schedule 7 to Schedules 1 to 6 and another to exercise the order-making power corresponding to that Schedule.

78. The Government considers that clause 12(2) provides a significant safeguard in relation to the future use of the general powers under clauses 1 to 6 as it will provide Parliament with the opportunity to debate and approve both in principle that the relevant general power should apply to a particular body and provide the opportunity to debate the details of the order in relation to the exercise of the general powers, as outlined above.

Clause 13: power of Welsh Ministers

Power conferred on: Welsh Ministers

Power exercised by: order made by statutory instrument

Parliamentary procedure: affirmative procedure in the National Assembly for Wales

79. Clause 13 provides Welsh Ministers with the powers, by order, to:-

a. modify the functions of the Countryside Council for Wales ("CCW"), the Environment Agency ("EA") so far as relating to Wales and the Forestry Commissioners ("FC") also so far as relating to Wales;

b. transfer any function of CCW to a new body, the Welsh Ministers, the EA or FC or any other person exercising public functions in relation to Wales ("a Welsh public authority");

c. transfer any function of the EA or FC so far as relating to Wales to a new body, the Welsh Ministers, the CCW or a Welsh public authority;

d. transfer any Welsh Ministers' function relating to the environment to a new body, CCW, EA or FC;

e. transfer any Welsh devolved function to a new body, CCW, EA or FC.

80. The term "Welsh devolved function" is defined in clause 13(8).

81. Clause 13(7) requires the consent of the Secretary of State to any order made by the Welsh Ministers under clause 13(1) to (5) which modifies or transfers a non-devolved function of the EA or FC. This is in recognition of the fact that neither the EA nor the FC are Wales-only bodies.

82. The Government considers that these order-making powers are appropriate in light of the Welsh Assembly Government's desire to have sufficient flexibility to develop and implement its own policies in reforming provision of public functions by the named environmental bodies (to the timescales set out above).

83. The powers under clause 13 are to be exercised by statutory instrument subject to affirmative procedure in the National Assembly for Wales. Clause 14(1) provides that an order under clause 13 may contain consequential, supplementary, incidental or transitional provision, or savings. As above, clause 27(2) provides that provision which may be made in an order under clause 13 may be made by amending primary legislation. An affirmative procedure is therefore consistent with the level of procedure that applies to similar orders under clauses 1 to 6 making changes to other public bodies. Only those bodies which are specified in clause 13 are subject to the powers. An affirmative procedure will provide an opportunity for debate and approval by the National Assembly for Wales on the details of the order. Consequently, it is not considered that any additional scrutiny is required.

Clause 14: power of Secretary of State

Power conferred on: Secretary of State

Power exercised by: order made by statutory instrument

Parliamentary procedure: affirmative procedure

84. Clause 14 provides the Secretary of State with a power, by order to make consequential or supplementary provision modifying the constitutional or funding arrangements of the Environment Agency ("EA") or Forestry Commissioners ("FC") where the Welsh Ministers make an order under clause 13 modifying the functions of or transfer functions to or from the EA or FC.

85. This power is necessary because the Welsh Ministers do not have the power under clause 13 or 14 to modify the constitutional or funding arrangements of the EA or FC. The Welsh Assembly Government and Department for the Environment, Food and Rural Affairs agree and consider that this should be exercisable by the Secretary of State in light of the fact that EA and FC are not Wales-only bodies.

86. Clause 16(2) provides that an order under clause 14(4) is to be made by statutory instrument subject to affirmative procedure. Further to clause 27(2) provision in such an order may be made by amending primary legislation and so an affirmative procedure is considered appropriate.

Clause 17: Powers relating to the functions of Secretary of State

Power conferred on: Secretary of State

Power exercised by: order made by statutory instrument

Parliamentary procedure: affirmative procedure

87. Clause 17(2) enables the Secretary of State to amend the Forestry Act 1967 so as to modify the purposes or objectives for which, or conditions under which, the functions under s39 of that Act can be exercised in relation to land in England. Those functions are: the disposal of land acquired for forestry purposes (s39(2)); the management and use of that land (s39(3)(a)); and the letting of that land or the granting of any interest or right in or over it (s39(3)(b)). Under clause 17(3) provision can be made to secure that these functions can be exercised for any purpose or without condition.

88. Clause 17(4) provides that an order under this clause may contain consequential, supplementary, incidental or transitional provision, or savings.

89. The power in this clause is to be exercised by statutory instrument subject to the affirmative resolution procedure. This level of Parliamentary scrutiny is considered appropriate because this is a power to amend primary legislation. This is also consistent with the view of the Committee that the affirmative procedure should apply where consequential changes to primary legislation are to be achieved through secondary legislation. The affirmative resolution procedure is also considered appropriate because it will provide an opportunity for debate on the detail of the order, which will encompass a new approach to the management and ownership of forests in England.

Clause 18: Powers relating to functions of Forestry Commissioners

Power conferred on: Secretary of State

Power exercised by: order made by statutory instrument

Parliamentary procedure: affirmative procedure

90. Clause 18 provides the Secretary of State with powers to modify or transfer the Forestry Commissioners' functions in relation to England (18(1)(b) and (c)). Under clause 18(1)(d) the Secretary of State may authorise the Forestry Commissioners to enter into arrangements with another person for that person to exercise functions in England on their behalf.

91. Clause 18(1)(a) also provides a power for the Secretary of State to modify the constitutional arrangements of the Forestry Commissioners.

92. Clause 18(4) provides that orders under clause 18(1) may make consequential, supplementary, incidental or transitional provisions, or savings. Where an order is made to transfer a function of the Forestry Commissioners under clause 18(1)(c), it may also contain provision to modify the functions, funding or constitutional arrangements of the transferee (18(5)). An order under clause 18(1)(d) that authorises the Forestry Commissioners to enter into arrangements with another person exercising public functions may also contain provision to modify those functions or modify the constitutional or funding arrangements of that person (18(6)).

93. Clause 18(7) imposes a restriction on the exercise of these powers. Before making an order under this clause the Secretary of State must have regard to the objectives of achieving increased efficiency, effectiveness and economy in the exercise of public functions and securing appropriate accountability to Ministers in the exercise of those functions.

94. Clause 18(8) provides a safeguard on the exercise of the powers in that it only permits an order to be made where the Secretary of State considers that it would not remove a necessary protection or prevent any person from continuing to exercise any right or freedom which that person might reasonably expect to continue to exercise.

95. The powers under clause 18 are exercisable by statutory instrument subject to affirmative resolution procedure. This level of Parliamentary scrutiny is considered appropriate because provision, including consequential provision, in an order made under this clause may be effected by amending primary legislation. This is also consistent with the view of the Committee that the affirmative procedure should apply where consequential changes to primary legislation are to be achieved through secondary legislation. An affirmative procedure is also considered appropriate as it will afford an opportunity to debate the detail of the order.

Clause 23: Transfer schemes

Power conferred on:

a. a Minister in connection with orders under clauses 1 to 6,

b. the Welsh Ministers in connection with the transfer of a function under clause 13, and

c. the Secretary of State in connection with the transfer of a function of the Forestry Commissioners under section 18(1)(c)

Power exercised by: transfer scheme

Parliamentary procedure: affirmative where included in an order under clauses 1 to 6, otherwise no Parliamentary procedure applies

96. Clause 23 confers on a Minister the power to make a transfer scheme in connection with an order made under clauses 1 to 6. A transfer scheme is a scheme providing for the transfer of property, rights and liabilities; including rights and liabilities relating to contracts of employment. In the case of a scheme made by a Minister, the transfer of property, rights and liabilities must be to an 'eligible person' or any body corporate unless constitutional or funding arrangements are being modified under clauses 3 or 4, in which case the transfer must be to a Minister. In the case of other schemes in connection with transfers of functions under clauses 13 and 15 the transfer must be to the person to whom the function is transferred.

97. Clause 23(5) lists supplementary, incidental and transitional provision that may be made by a transfer scheme. These include making provision the same as or similar to the TUPE regulations (the Transfer of Undertakings (Protections of Employment) Regulations 2006 (S.I. 2006/246)).

98. The Government considers it appropriate that the details of transfers of property, rights and liabilities, which may be very complex, should be set out in a transfer scheme.

99. A transfer scheme made by a Minister under clauses 1 to 6 may be included in an order under clauses 1 to 6 (subject to affirmative procedure) but if not so included must be laid before Parliament. Similarly, a transfer scheme made by the Welsh Ministers or the Secretary of State may be made in an order under clauses 13 or 18 (subject to affirmative procedure) but if not so included must be laid before the National Assembly for Wales and Parliament respectively.

100. The Government considers this is an appropriate procedure as it will allow details of the transfer scheme to be combined with an order under the Bill if that is considered appropriate; but provide flexibility for transfer schemes to be made after orders have been made where this is considered the appropriate course of action.

Clause 25: Transfer schemes: taxation

Power conferred on: the Treasury

Power exercised by: order made by statutory instrument

Parliamentary procedure: negative procedure

101. Clause 25 confers on the Treasury the power to make an order to provide for varying the way in which certain tax provisions apply either for anything transferred under a scheme made under clause 23, or anything done for the purposes of, or in relation to a transfer under such a scheme. For the purposes of this power the relevant taxes are income tax, corporation tax, capital gains tax, stamp duty and stamp duty reserve tax.

102. This power will enable the Treasury to ensure that appropriate tax provision is made, and at the appropriate time, to ensure that a transfer does not give rise to a tax change or confer a tax advantage on either party.

103. The power under clause 25 is exercisable by statutory instrument subject to negative procedure in the House of Commons. This reflects the level of Parliamentary procedure applicable to equivalent powers in section 5 of the Legislative and Regulatory Reform Act 2006 (see section 5(6) of the 2006 Act) in relation to provision for 'tax neutrality' of transfers of property, rights and liabilities which may arise form the merger of bodies under an order under Part 1 of the 2006 Act. The Government also considers it appropriate that the order is not subject to any procedure in the House of Lords, as the House of Commons is the correct forum for input on taxation matters.

Cabinet Office

Department for the Environment, Food and Rural Affairs

Welsh Assembly Government

29 October 2010

6 http://services.parliament.uk/hansard/Commons/bydate/20101014/writtenministerialstatements/part003.html

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7 In this memorandum the term "body" is used to refer to both bodies and offices, unless the context requires otherwise. Back

8 Protections which would have been thought to be necessary in the past may no longer be considered necessary Back

9 The Government does not consider that the powers under the Bill would allow the creation of a tax and so the restriction provided for in section 5(1) of the Legislative and Regulatory Reform Act 2006, which prohibits the creation of a tax, is not reflected in the Bill.

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10 'Public functions' is defined in clause 28 to mean functions conferred under an enactment or royal charter. Back

11 See paragraph 84 of the Explanatory Notes accompanying the Bill. Back