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5 Apr 2001 : Column 524

Regulatory Reform Bill [Lords]

As amended in the Standing Committee, considered.

New Clause 1

Review of orders

'.--(1) Every order made under section 1 shall include a provision for the Minister to present a report on the operation of the order in the fifth year after it has come into effect and for the order to cease to be in effect if there is a resolution to that effect by either House of Parliament within ninety days of that report being laid.

(2) In reckoning the period of ninety days referred to in subsection (1) above, no account shall be taken of any time during which Parliament is dissolved or prorogued or during which either House is adjourned for more than four days.
(3) The report described in subsection (1) above shall include a review of the effectiveness of the order and of each of the matters set out in section 6(2) above in comparison to the statements laid before Parliament when the order was first made.'.--[Mr. Lansley.]

Brought up, and read the First time.

1.44 pm

Mr. Andrew Lansley (South Cambridgeshire): I beg to move, That the clause be read a Second time.

I am pleased to have the opportunity to move the new clause, which I tabled with my hon. Friends. In Committee, we had an opportunity not afforded to us on Second Reading to debate some of the purposes for which the Bill will be used by the Government. We did not, in Committee, seek to revisit the question whether the Bill should be wholly deregulatory, or whether it should have the scope to amend regulations in a manner that would create new burdens. We are concerned to use the structure of the Bill to best effect to deliver the objectives on which we all agree--to improve the quality of regulation--and wherever possible, from the Opposition's point of view, to ensure a reduction in the burden of regulation.

New clause 1 deals with the improvement of regulation and would ensure that in the long run it is put within a structure of regulation which helps to reduce the burden on citizens generally. I shall describe briefly how the clause would work and the benefit that it would bring. New clause 1 might be termed a sunset clause, but strictly speaking, it is no such thing. The purpose is not to disapply regulatory reform orders, but to provide that after a time--in the fifth year after a regulatory reform order has come into effect--a report should be made to the House about its effects. The new clause would give either House the opportunity to make a resolution disapplying the order.

The reason why we do not propose a sunset clause, as one might wish to do in relation to burdensome legislation, is that we continue to hope that the power will be used mainly, if not exclusively, for deregulatory regulatory reform orders. If that is the case, a sunset clause would reintroduce burdens that would otherwise have gone.

The new clause provides for review, expressly related to the original purposes for which a regulatory reform order was made. As the House knows, clause 6(2) provides for a substantial range of factors to be examined in relation to the proposal, including the burdens that will be affected and the extent to which those burdens will be reduced. The Bill requires Ministers to apply specific tests to legislation, to establish whether necessary protection is

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retained, whether reasonable expectations continue to be met, whether a fair balance is struck between the public interest and the interests of persons affected, and whether, on balance, given the benefits that may flow from the order compared with the burdens that may be created or imposed, it is desirable for the order to be made.

All those tests, and the savings and costs that would result from a regulatory reform order, are to be reported in the document to be laid before Parliament before an order is made.

Mr. Michael Fabricant (Lichfield): I am grateful to my hon. Friend for giving way. Is the purpose of new clause 1 to investigate the effect of legislation over the previous five-year period, because it is considered that the regulation might be wrong; or is it necessary, as I suspect, because although a regulation may not have a deleterious effect on business when it is introduced, it may begin to do so after a while, as a result of changed circumstances in the business community?

Mr. Lansley: My hon. Friend makes a good point. It is reasonably obvious that the first of the considerations to which he referred will apply. His point flows directly from the one I was making on the need to examine the impact of the new structure of regulation that will be delivered by the regulatory reform order process, and to compare it with what was intended or expected to flow from it. He was right to say that the structure of activity within industry can change. That is especially important with regard to the burden on business. The burdens that flow from any given structure of regulation can also change over time.

As my hon. Friend asked about the purposes for which the new clause could be used, I should point out the reasoning that underlies the proposed requirement for an order to be reviewed in the fifth year after it has taken effect. It is not simply that sufficient time must be allowed for the impacts to be made and measured, although that is true, but that, of necessity, the provision would ensure that a report on the operation of the new regulatory structure would be presented to the Parliament subsequent to the one in which the order was made.

The new clause does not represent an intention that the structure of regulations or legislative activity should be continually re-examined anew by every Parliament. It is important, however, that, without examining the whole structure of new primary legislation, we should be always looking at the structure of regulation and using the process of regulatory reform orders to try to deliver progressively reduced burdens.

Mr. Fabricant: I thank my hon. Friend for his answer, and for giving way a second time. The new clause refers to review of the

Does that requirement imply that there will be no further reviews after the review has occurred? Should there not be ongoing reviews every five years? I fully appreciate that the burden that such a requirement would place on Parliament--if not business--might become quite heavy.

Mr. Lansley: It is not our intention, as will be obvious to my hon. Friend, that the new clause should create a

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structure of continuous reviews. Of course, a balance must be struck in terms of the burden that we place on the House and on the civil service in producing the reports to which the new clause refers. We do not want to impose a bureaucratic process for the sake of it.

Mr. Peter L. Pike (Burnley) rose--

Mr. Lansley: I shall happily give way to the Chairman of the Select Committee on Deregulation.

Mr. Pike: A few moments ago, the hon. Gentleman listed all the tests that are applied. Has not the Deregulation Committee in the current and previous Parliaments carried out its duties carefully to ensure that all proposals meet those tests? Is it not reasonable to assume that, in the next Parliament, the new Committee will do its job in exactly the same way, whoever serves on it? If such a five-year clause is to be implemented, could not a similar provision be contained in almost every single other Bill that the House enacts?

Mr. Lansley: As Chairman of the Deregulation Committee, the hon. Gentleman will be only too aware of the structure into which the new clause would fit. He is perfectly right that it is one of the tasks of the House of Commons Deregulation Committee and the Delegated Powers and Deregulation Committee in the House of Lords to scrutinise in due course the tests that must be met under the regulatory reform orders. It is certainly our hope that the conscientiousness with which those Committees conduct their work will be reflected in the next Parliament, as it has been in this one.

The hon. Gentleman will perhaps understand that the new clause is in no sense intended to undermine the task of the Committees or to suggest that they might not do their job effectively when regulatory reform orders are made. It is simply to reflect the fact that, over time, decisions and judgments can change. For example, the fair balance test applies to the public interest versus the burdens that are imposed on others. Although that balance is expected to be fair and to pass the test, time may show that not to be the case.

To complete my answer to the hon. Member for Burnley (Mr. Pike), just as we hope to create a review structure for regulatory reform orders, there is also good case for introducing sunset clauses, which create burdens.

Mr. Robert Jackson (Wantage): Does not my hon. Friend agree that the mechanism in the new clause resembles the regulatory impact assessment that the Deregulation Committee sought to obtain from the Government? My hon. Friend seeks an assessment of regulatory impact after five years rather than when the measure is introduced.

Mr. Lansley: It is true that the document that new clause 1 proposes is a review of the regulatory impact. However, my hon. Friend knows that the tests that will be applied and reported under clause 6(2) are wider than conventional regulatory impact assessments. For example, the fair balance test does not test regulatory impact as such, but whether the balance between the benefits to the public interest and the burdens on private persons necessitate making the order. That is also true of benefits that accrue generally when burdens are imposed. A fair balance and

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desirability do not exactly constitute the mechanism of a regulatory impact assessment. A judgment must be made about costs and benefits. Ministers must review that after an order has been introduced.

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